Damage to property under the Equipment Breakdown Protection Coverage Form is covered on what basis?

The Equipment Breakdown Protection Coverage Form provides coverage for losses due to mechanical breakdowns, electrical failures, and other similar realities that affect various types of equipment. The coverage is offered on a replacement cost basis. This means that in the event of a covered loss, the insurer will pay for the cost to replace the damaged equipment without deducting for depreciation.

This approach is beneficial for policyholders as it allows them to replace their damaged equipment with new materials, ensuring that they can maintain operations without suffering a financial setback from the depreciation of older equipment. By using the replacement cost basis, the insured can recover fully from losses and restore their equipment to its original operational capacity more quickly and effectively. Thus, the replacement cost basis aligns with the purpose of the Equipment Breakdown Protection Coverage Form, which aims to minimize disruptions in business operations by ensuring that policyholders can replace impaired equipment promptly.