Final answer:
Boiler and machinery insurance does not require the property to be owned by the insured; it can cover leased or rented equipment if the insured has an insurable interest. It can be part of a commercial package policy or a monoline policy, and it is typically valued on a replacement cost basis, with supplemental payments within policy limits.
Step-by-step explanation:
All of the following are true about boiler and machinery insurance EXCEPT for the statement that 'The property must be owned by the insured'. Boiler and machinery insurance, also known as equipment breakdown insurance, provides coverage for the breakdown of boilers, machinery, and other electrical and mechanical equipment. It is an essential coverage for businesses that rely heavily on functioning machinery for their operations.
This type of insurance can be structured as a monoline policy, meaning it is a standalone policy, or it can be part of a commercial package policy, bundled with other types of coverage. As for the valuation of the covered equipment, it is typically written on a replacement cost basis, but can be modified to actual cash value (ACV), depending on the terms of the policy. Furthermore, supplemental payments, such as for expediting expenses or hazardous substance release, are usually provided within the policy limits, rather than in addition to them.
It is important to clarify that the ownership of the machinery is not a requisite for the coverage to apply. The misconception that the property must be owned by the insured is false. Coverage can also apply to leased or rented equipment, as long as the insured has an insurable interest in the equipment.