Other Than Life (OTL) Practice Exam

Which statement regarding risks to boilers and machinery is FALSE?

1. Explosion is a main risk for pressure vessels

2. Breakdown is a chief peril for machinery

3. Business interruption insurance is not available for machinery

4. Damage to the boiler is excluded under the boiler policy

The correct answer is: Business interruption insurance is not available for machinery

Business interruption insurance is an essential aspect of risk management for many businesses that rely on machinery and equipment to operate. The availability of business interruption insurance for machinery is not only feasible but is actually commonly included in commercial property insurance policies. This form of insurance provides coverage for lost income and additional expenses incurred when a business operations are interrupted due to machinery breakdowns or other issues. In contrast, the other statements highlight genuine risks associated with boilers and machinery. For example, explosions do pose a significant risk for pressure vessels due to the high-pressure environment they operate in, and equipment breakdown is also a common concern for machinery in various industries. Additionally, while boiler damage can be excluded under specific boiler insurance policies, this exclusion does not imply that such damage cannot be covered under other policy types or endorsements that address the full scope of risks.