ISO EQUIPMENT BREAKDOWN PROTECTION COVERAGE FORM OVERVIEW

(June 2020)

INTRODUCTION

The Insurance Services Office (ISO) Equipment Breakdown Protection Coverage Form insures losses to covered property caused by the breakdown of covered equipment. Eligible property includes all property the named insured owns. It also includes property it does not own but that is in its care, custody, or control and for which it is legally liable.

ELIGIBILITY

There is no limitation on the type of business that can purchase this coverage. However, there is a limitation on the types of equipment that qualify for coverage.

COMPARISON

ISO introduced the 01 13 edition of this coverage form to replace the 09 11 edition. This is the fourth revision in seven years. The changes are more to align the coverage form with other ISO property coverage forms instead of being specific to this particular coverage.

POLICY MAKEUP

The ISO Equipment Breakdown Protection Coverage Form can be written as part of a Commercial Package Policy or as a stand-alone monoline policy. In any event, a policy requires at least the following four forms:

IL DS 00–Common Policy Declarations

The individual insurance company's equivalent declarations may be used in place of IL DS 00.

IL 00 17–Common Policy Conditions

This form contains the conditions common to all commercial lines of insurance. It is a mandatory form for most simplified monoline or multi-line policies.

EB DS 07–Equipment Breakdown Protection Coverage Form Declarations

EB 00 20–Equipment Breakdown Protection Coverage Form

COVERAGE FORM

EB 00 02 will pay for loss or damage caused by the breakdown of the named insured's covered equipment.

Primary Coverages

There are ten separate coverages available in the basic coverage form.

Property Damage
Expediting Expense
Business Income and Extra Expense or Extra Expense Only
Spoilage Damage
Utility Interruption
Newly Acquired Premises
Ordinance or Law
Errors and Omissions
Brands and Labels
Contingent Business Income and Extra Expense or Extra Expense Only

Exclusions

There are a number of exclusions similar to the same exclusions in commercial property coverage forms. However, there are some exclusions that are unique to only this coverage.

Limits of Insurance

The most paid for all loss or damage that results from one breakdown is the limit of insurance on the declarations for the coverage. A breakdown is similar to an occurrence. Multiple breakdowns that occur simultaneously or as a chain reaction are treated as a single breakdown. As a result, only one limit and one deductible apply to the loss or damage.

The named insured has the option to select separate limits of insurance for each primary coverage that is subject to the one breakdown limit or to select only a per breakdown limit that applies to all coverages selected. That limit applies when the word “INCLUDED” is entered in the limits space for the coverage(s) on the declarations.

Deductibles

Four different types of deductibles are available:

Dollar Deductible
Time Deductible
Multiple of Daily Value Deductible

This is subject to optional minimum and maximum fixed-dollar amounts.

Percentage of Loss Deductible

This is subject to optional minimum and maximum fixed-dollar amounts.

Conditions

EB 00 02 has many conditions to consider. There are two that are especially significant with respect to equipment breakdown coverage:

Suspension

This condition allows the insurance company to immediately suspend coverage on one or more specific items of equipment because of safety concerns.

Joint or Disputed Loss Agreement

This condition gets the named insured out of the middle of arguments between the property and the equipment breakdown carriers as to how much of a loss each will pay.

Definitions

Seventeen terms are defined. Breakdown, Covered Equipment, and Covered Property are the most important ones.

ENDORSEMENTS

The coverage EB 00 20 provides is very broad. However, there are a number of endorsements that are available to tailor the coverage to the named insured’s specific needs.

UNDERWRITING

Underwriting equipment breakdown coverage means identifying hazards, evaluating risk, and controlling losses. The equipment that could breakdown must be identified, and the properties that could be damaged must be evaluated. Loss control must focus on the identified equipment and how to prevent any breakdown.

RATING

Rating is very specific but relatively complicated. All equipment, location, and coverage information are used to develop the final premium.