The origins of boiler and machinery insurance date back to the second half of the 19th century when the mechanization of everything from transportation to manufacturing created the need to protect the machinery and equipment that were making these new systems possible.
The premium charged for boiler and machinery insurance includes an inspection charge for the highly qualified professional engineers involved in the inspection work, along with the customary charges found in other property or casualty coverages for loss payments, claim expenses, and expected profit.
A unique feature of boiler and machinery insurance provides that, when an unsafe condition is found, the insurer has the right to immediately suspend the insurance on that object (by giving written notice of the suspension to the insured) until the hazard is corrected, after which the suspension can be lifted.
ISO provides boiler and machinery insurance either as a separate policy or by addition to a package policy including other property/casualty coverages.
How much boiler and machinery insurance should be carried?
Again, unlike most property and casualty coverages--where payment of losses and claim expenses are the largest part of the cost--with boiler and machinery insurance, if the inspection services are done properly and followed up to assure the correction of hazards, the largest cost factor is the underwriting, inspection, and loss-prevention service.
The answer lies surprisingly in the origins of boiler and machinery insurance and in legislative developments since then.
The most important benefit many organizations derive from their boiler and machinery insurance is the inspection and loss-control service that started the whole thing.
What boiler and machinery insurance does is give you access to a certified boiler inspector who has your interest at heart.