Equipment Breakdown Coverage for Amusement Parks

equipment breakdown coverage

The risks and costs of equipment breakdowns can be astronomical for amusement parks. If a rollercoaster malfunctions or an electrical breaker short-circuits, these untimely mechanical failures could seriously disrupt operations—triggering costly repairs and dreaded downtime. Although mechanical issues are inevitable, amusement parks can protect themselves against damage and loss with equipment breakdown coverage.

In this article, we’ll explain the advantages of this coverage and why it’s essential for amusement parks, carnivals, and entertainment centers to carry.

What is equipment breakdown coverage?

Equipment breakdown insurance covers accidental damage caused by mechanical failure. This type of policy covers the cost to repair or replace the damaged equipment. Additionally, it can cover income losses caused by interruptions of business operations due to equipment breakdown.

For example, if a gear on a rollercoaster breaks because of misalignment, this coverage would pay for the necessary replacement and repairs. It may also cover the lost revenue from ticket sales that resulted from having the attraction shut down.

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What equipment is covered?

This type of insurance was traditionally known as “boiler and machinery coverage,” leading to a common misconception that it only applies to conventional equipment that could combust and explode. Many companies assume that if their business doesn’t run on a boiler, they don’t need this coverage.

However, as technology has advanced, equipment breakdown coverage has evolved to encompass a wider variety of machinery and electronics. This can range from computers, HVAC systems, and electrical equipment to specialized machines like rollercoasters and other attractions.

Common equipment losses covered by this policy might include:

  • Motor burnout due to a power surge
  • Mechanical breakdown caused by centrifugal force
  • Gears broken by vibration or misalignment
  • Explosion of steam boilers, engines, or turbines
  • Electrical arcing of circuit breakers or transformers
  • Rupture of equipment due to corrosion or fatigue

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Who needs equipment breakdown insurance coverage?

Equipment breakdown coverage is particularly essential for amusement parks, carnivals, waterparks, and other organizations that depend on specialized machinery. When highly sophisticated equipment breaks down, the time and expense to repair the damage can be significant.

Even Disneyland, the world’s premier theme park, experienced an average downtime of 4% across its attractions in Anaheim in 2019. This downtime can pose a serious risk to an amusement park’s financial profitability. But with proper equipment breakdown coverage in place, these financial losses can be mitigated if not prevented entirely.

Isn’t equipment covered under property insurance?

Many operators assume that losses related to equipment breakdowns will be covered under a standard property policy. While property insurance does cover some hazards like fire, it does not cover accidents that result from equipment failure, short circuits, or power surges. Equipment breakdown coverage fills the gaps left by these exclusions, making it a critical addition to your standard business policies.

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Why do amusement parks need equipment breakdown coverage?

Damage to a key attraction could result in substantial financial loss, especially if repairs require specialized technicians and customized parts. In addition to repair costs, operators must also consider the potential revenue losses that add up every minute of downtime.

Without equipment breakdown coverage, amusement park owners would be solely responsible for the financial burden of these repairs and losses. This type of insurance policy mitigates revenue losses and damages so businesses can reopen and resume operations as quickly as possible.

McGowan Allied Specialty Insurance specializes in insuring amusement and entertainment business for issues like equipment breakdown. With more than 35 years of risk management expertise specific to this industry, we help operators account for all possible exposures with effective coverage. For more information about equipment coverage, contact McGown Allied Specialty Insurance.

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