Hawaii Insurance License Practice Exam

What type of insurance covers equipment breakdown?

1. Property insurance

2. General liability insurance

3. Business interruption insurance

4. Boiler and machinery insurance

The correct answer is: Boiler and machinery insurance

Boiler and machinery insurance specifically addresses the risks associated with the breakdown of equipment and machinery used in business operations. This type of coverage is designed to protect against the financial losses incurred when essential machinery fails. It often covers repairs or replacement costs for the equipment and may also provide coverage for income loss due to downtime. This type of insurance is particularly crucial for businesses that rely on specific machinery or equipment for their day-to-day operations, ensuring they can recover from unexpected breakdowns without significant financial strain. In contrast, property insurance typically covers physical assets against risks like fire and theft but does not specifically address breakdowns. General liability insurance protects against claims of bodily injury and property damage to third parties, not equipment-related issues. Business interruption insurance, while it covers lost income due to operational disruptions, does not specifically cover the costs associated with equipment breakdown itself. Therefore, boiler and machinery insurance is the optimal choice for coverage of equipment breakdown.