Your home relies on more mechanical and electrical equipment than you may realize, and when one of those systems breaks, the repair or replacement bill can add up fast.
Heating and cooling systems, water heaters, well pumps, refrigerators, security systems, computers, generators and other home technology all play a part in keeping your home comfortable and running smoothly.
You probably don’t think much about how your homeowners insurance applies to that equipment until something goes wrong. When it does, one of your first questions may be whether your policy will help pay for the damage.
The answer depends on what failed, what caused the problem and what your policy actually covers.
Topics Covered
- What Is Equipment Breakdown Coverage?
- What Types of Home Equipment and Losses May Be Covered?
- How Is Equipment Breakdown Coverage Different From Your Homeowners Insurance?
- What Does an Equipment Breakdown Actually Look Like?
- What May Not Be Covered?
- Equipment Breakdown Coverage vs. Warranties and Service Contracts
- Questions to Ask Your Insurance Agent
- Know What Protection You Have Before Something Breaks
What Is Equipment Breakdown Coverage?
Equipment breakdown coverage is insurance that may be added to your homeowners policy to help pay for repair or replacement of certain sudden mechanical, electrical or pressure-related failures involving covered home systems and equipment.
Depending on your policy, coverage may apply to certain household systems, appliances and electronics damaged by qualifying mechanical or electrical failures. Exactly what counts as a covered breakdown can vary, and so can deductibles, coverage limits and exclusions.
That makes it important to review your actual policy rather than assuming every equipment failure will be covered.
What Types of Home Equipment and Losses May Be Covered?
Depending on your policy, equipment breakdown coverage may apply to a wide range of household systems and equipment.
Common examples can include:
- Furnaces, boilers, heat pumps and central air-conditioning systems
- Water heaters and well pumps
- Refrigerators, freezers and other major appliances
- Electrical panels and related electrical equipment
- Home security and alarm systems
- Generators
- Water-treatment equipment
- Computers, networking equipment and other electronics
That doesn’t mean every device in your home is automatically covered. Policies can define covered equipment differently, so it’s important to talk to your insurance agent about what your particular coverage includes.
Coverage May Extend Beyond the Equipment Itself
Depending on your policy, equipment breakdown coverage may do more than help repair or replace damaged equipment. Some policies may also provide protection for related losses.
For example, if a covered refrigerator or freezer breakdown causes water damage or food to spoil, certain policies may provide coverage for that loss. Some policies may also help with additional living expenses if a covered equipment breakdown makes your home temporarily uninhabitable.
How Is Equipment Breakdown Coverage Different From Your Homeowners Insurance?
Your homeowners policy is designed to protect you against covered causes of loss spelled out in your policy. For example, if your refrigerator is damaged in a covered fire, that’s one type of insurance loss.
But what if your refrigerator’s compressor suddenly fails, an electrical short damages your home’s control panel, or a mechanical component inside your heating system breaks?
Those situations may be treated differently.
Equipment breakdown coverage can help fill certain gaps involving qualifying mechanical, electrical or pressure-system failures that may not be covered under your base homeowners policy.
The key isn’t simply what broke, but why it broke.
What Does an Equipment Breakdown Actually Look Like?
Equipment breakdown coverage can feel abstract until you see what a real loss might look like.
Here are a few examples:
- An air-conditioning compressor fails and needs to be replaced
- An installed generator suffers a mechanical breakdown
- Electrical arcing damages a service panel and other equipment
- An electrical short damages a home security system
An equipment failure can turn into a repair bill of several thousand dollars, and in some cases, the damage may extend beyond a single piece of equipment.
What May Not Be Covered?
Equipment breakdown coverage isn’t a catch-all repair plan for everything in your home.
One important limitation to understand is normal wear and tear. If an appliance, furnace or other system gradually wears out over time, that doesn’t necessarily qualify as an equipment breakdown loss. Homeowners insurance isn’t a maintenance contract, and homeowners are responsible for normal upkeep.
Coverage may also depend on:
- The type of equipment involved
- What caused the breakdown
- Whether the equipment meets the policy’s definition of covered property
- The applicable deductible
- Coverage limits
- Specific exclusions in the policy
Rather than relying on a general list, review the actual terms of your coverage and ask your insurance agent how your policy handles the systems and equipment you rely on most.
Equipment Breakdown Coverage vs. Warranties and Service Contracts
Equipment breakdown coverage is also different from a manufacturer’s warranty or home service contract.
A manufacturer’s warranty generally comes with the product and provides protection under the terms set by the manufacturer, importer or seller.
A service contract is separately purchased protection that may cover repairs or replacement involving defective parts, mechanical or electrical breakdown, labor or even normal wear and tear, depending on the agreement.
Equipment breakdown coverage, by contrast, is insurance connected to your homeowners coverage. The protections can overlap in some situations, but they’re not interchangeable.
Questions to Ask Your Insurance Agent
Equipment breakdown coverage can vary from one insurer and policy to another.
Before adding coverage or assuming you already have it, ask your insurance agent a few specific questions:
- Does my homeowners policy already include equipment breakdown coverage, or is it optional?
- Which systems, appliances and electronics are considered covered equipment?
- What types of mechanical, electrical or pressure-related failures qualify as a covered breakdown?
- What deductible and coverage limits apply?
- Are there exclusions or limitations?
- Does the coverage include related losses such as water damage, food spoilage or additional living expenses?
Know What Protection You Have Before Something Breaks
You may not think much about your home’s systems and equipment until something suddenly stops working. Before that happens, talk with your independent insurance agent about what your homeowners policy covers and whether equipment breakdown coverage is available. Knowing what protection you have ahead of time can help you avoid surprises when something goes wrong.
Need to learn more about equipment breakdown insurance?
Our agents are ready to help, so contact us to learn how we can customize your insurance policies to meet your needs.
*Disclaimer: We offer content for informational purposes; Co-operative Insurance Companies may not provide all the services or products listed here. Please get in touch with your local agent to learn how we can help with your insurance needs.
Sources
National Association of Insurance Commissioners. A Consumer’s Guide to Home Insurance.
https://content.naic.org/sites/default/files/publication-hoi-pp-consumer-homeowners.pdf
Massachusetts Division of Insurance. Service Contracts. https://www.mass.gov/info-details/service-contracts
Travelers BoilerRe. Equipment Breakdown Coverage for Homeowners. https://boilerre.travelers.com/boiler-reinsurance-who-we-cover/personal
HSB / Munich Re. Personal Equipment Breakdown Insurance. https://www.munichre.com/hsb/en/products/equipment-breakdown-insurance/personal-equipment-breakdown-insurance.html
Safety Insurance. When the Systems That Run Your Home Break Down: Understanding Home Systems Protection Coverage. https://www.safetyinsurance.com/resource_center/homeowners/systems.html
Westfield. Equipment Breakdown Insurance for Homeowners.
https://www.westfieldinsurance.com/home-and-auto/homeowners-insurance/home-equipment-breakdown