Are your clients ready for today’s equipment breakdown risks?

Ten years ago, most businesses thought of equipment breakdown insurance in terms of boilers and busted belts. Today, the risks are more complex — and far more critical to operations.

“Businesses are more automated, more reliant on digital systems, and increasingly exposed to frequent unpredictable weather events like extreme heat, cold and humidity, that can impact their equipment,” explains Allen Babista, Senior Manager, National Distribution, Equipment Breakdown, with Sovereign Insurance.

The equipment itself has evolved. A single sensor or piece of circuitry can now bring an entire machine — or an entire operation — to a halt. And with inflation pushing up repair and replacement costs, the stakes have never been higher.

Emerging risks and overlooked gaps


In this new environment, businesses can’t afford to make traditional assumptions about equipment breakdown. “The conversation used to be about mechanical breakdowns or fire,” Babista explains. “Now we’re seeing failures in smart components, sensors, hybrid systems, and HVAC units — the kinds of risks that weren’t even on the radar five or 10 years ago.”

Too often, he says, these risks are underestimated. “Equipment breakdown is sometimes treated like an afterthought. Clients don’t realize that losses from these types of failures usually aren’t covered by standard commercial property policies — and the impacts can be major.”

In fact, climate-related claims are revealing just how vulnerable businesses have become. Heat waves and longer operating seasons strain HVAC systems. Extended cold snaps test machinery not designed for prolonged downtime. And the ripple effects, which can include costly business interruption, are often overlooked until it’s too late.

From hardware to networks: what brokers should ask

Babista encourages brokers to help clients think beyond physical machines. “Most equipment today is connected, whether to a cloud system, a network, or a remote sensor,” he says. “Ask clients, ‘What happens if your equipment needs to run longer due to a changing climate? What if it doesn’t start up after months of dormancy?’”

Equally important, brokers should review whether clients have the right business interruption coverage. “That’s their revenue stream,” Babista points out. “If the

equipment fails, they need to make sure they can still make ends meet and recover quickly.”

Supporting smarter protection

Sovereign takes a tailored approach to equipment breakdown coverage, offering broad protection that includes mechanical, electrical, and electronic failures.

“Whether it’s production machinery or small devices, we work with our broker partners to understand what the client’s actual equipment exposure is, and how best to protect it,” he says.

Its dedicated underwriters, jurisdictional inspections, and in-house risk engineering teams help Sovereign identify and manage exposures before they lead to a costly claim. That prevention-first model is a key part of Sovereign’s value proposition. “Our goal is to take the worry off the client’s plate so they can focus on running their business,” Babista says.

Start with relevance, not hard sell

When brokers dig deeper and reframe equipment breakdown as a critical part of risk strategy, not just an add-on, they help clients build real resilience.

However, it can be challenging to bring these insights to clients who may not see equipment breakdown as a priority, Babista says.

“Real-life examples go a long way. If a broker can say, ‘Here’s a claim that happened to a similar business and here’s how it could’ve been prevented,’ it opens the door to a value-driven conversation,” he says.

Sovereign can support brokers with such examples and provide expert engineering insights and tailored risk advice. “Being informed is the best way to be proactive, and we’re here to help brokers do just that. Because protecting businesses today isn’t just about replacing what’s broken, it’s about anticipating what can go wrong, preventing unnecessary downtime, and keeping operations running when the unexpected hits,” Babista says. “It’s not just about the equipment. It’s about everything that depends on it.”

WATCH: Sovereign Insurance’s expert provides top risk management tips to guide your next client conversation on equipment breakdown