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Southern Colorado Insurance Center Blog

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Equipment Breakdown Insurance for Apartment Owners

As an apartment building owner, you have a lot of balls in the air. And just when you think you’ve got the rhythm down and are juggling everything just right, another ball is thrown into the mix. Would you be prepared?

As a property owner, you probably have property insurance, but what does it cover? Say, for instance, Southern Colorado experiences record-breaking low temperatures. Your tenants have the heat set on high and they are all staying indoors instead of risking the bitter cold and treacherous roadways. Hot water heaters are working overtime and all of a sudden, the boiler cracks – leaving all of your tenants without heat and hot water. What would you do?

If you are currently shopping for building insurance, be sure to check with our experts at Southern Colorado Insurance Center. We can find the most affordable, comprehensive coverage that will include equipment breakdown coverage for property owners.

Many property owners have the misconception that their property policies include coverage for equipment that is installed in their buildings. Make sure that you have and Equipment Breakdown Coverage Policy to keep the following protected:


Electrical systems, which can be a significant investment in the overall building value, are critical for the normal operations of all businesses. Since transformers, panels, and electrical systems are typically interconnected, a short circuit can quickly spread and destroy large sections of the system. The costs most often associated with this type of loss include system repairs, generator rental, relocation of tenants (when required due to extensive damage), and loss of revenue caused by building inaccessibility.


Air conditioning and refrigeration breakdown can result in business closures, spoilage issues, and revenue loss for both property owners and tenants. This equipment seems to break down at the most inconvenient times and repairs can be very expensive. HVAC units are often located on the roof of the building and so replacement can require rental of a crane or helicopter.


Boilers and pressure vessels are subject to explosion, cracking, collapse, and bulging. Any of these can result in loss of hot water or heat for a building, and would require that the owner arrange for necessary temporary equipment, as well as take care of the permanent equipment repairs or replacement. With an Equipment Breakdown policy, the insurance carrier performs annual inspections of insured boilers to make sure that they meet jurisdictional requirements.


The Equipment Breakdown policy covers damage to sensitive electronic equipment caused by a power surge. A surge can impact phone systems, computers, satellite systems, retail systems, security and fire alarms, and other equipment that relies upon electronic technology. Frequently, the surge protection systems in place are inadequate, providing protection only for computers.


Mechanical equipment includes water pumps, ventilation fans, elevators, escalators, motors, engines, and most other mechanical equipment used to run your building. A breakdown can instantly place a building owner or tenants in a serious situation. Water pump failure can result in extensive water damage to owner’s and tenants’ property. In the event of an elevator system breakdown in a high rise building, tenants may be inconvenienced or trapped, and look to the building owner for compensation.


The Equipment Breakdown policy covers damage to insured equipment and resulting loss of revenue (Business Income) while the equipment is being repaired or replaced. It does not pay for normal wear and tear. Primary causes of loss include power surges, short circuits, and mechanical breakdown.

Equipment Breakdown coverage can be obtained through your property carrier or as a stand-alone coverage. If Equipment Breakdown is not already included in your current property insurance program, our experts at Southern Colorado Insurance Center will be happy to discuss coverage options with you.


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