How does an insurer typically respond to a loss of inventory from mechanical failure in a commercial policy without endorsements?

In a standard commercial property insurance policy, coverage for losses due to mechanical breakdown is often excluded. Insurers typically incorporate exclusions for specific types of losses to clearly define the risks they are willing to insure. The Mechanical Breakdown exclusion specifically limits coverage when losses result from failure or malfunction of machinery or equipment, rather than external causes such as fire or theft.

Thus, when an inventory loss occurs due to mechanical failure, the insurance company would generally deny coverage based on this exclusion. This encourages businesses to understand the limitations of their policy and consider additional endorsements or separate coverage options if they wish to protect against such risks.