The difference between Commercial Property Insurance and Boiler & Machine Breakdown Insurance.
Lloyds defines Boiler & Machinery as a sudden and accidental failure that necessitates repair and/or replacement. I tell my hydro clients that a B&M loss is when any piece of machinery that is twisting, turning, generating or transmitting that suffers a sudden catastrophic and unexpected failure during normal operations.
Commercial Property Insurance protects your operation against fire, theft, vandalism, lightning and a few other causes of loss.
It is very important for hydroelectric owners and operators to know the differences. For instance, if a fallen tree branch gets through a malfunctioning gate and destroys your runners that is a Boiler and Machinery loss. If a vandal throws a cinder block down your intake and destroys the runners that is a Commercial Property loss.
We have tracked losses for the last 30 years and find that hydro owners are three times more likely to have a Boiler & Machinery Breakdown loss then a Commercial Property loss. Many power purchase agreements only require liability insurance or a commercial property and liability policy. We always recommend that a hydroelectric owner review their requirements, equipment and operational needs to determine if Boiler & Machinery Breakdown is right for them. If in doubt, we can always provide you with a quote.
Carrying the minimum amount of hydro insurance places more of a risk of loss back onto the owner. Having a package policy that includes Commercial General Liability, Commercial Property, Boiler & Machinery Breakdown, Flood, and Quake coverage is the best way to protect your hydro project.