A client called me two weeks ago. Their air conditioner died and they wanted to know whether or not it was covered by their home insurance policy. Given the cost of replacing an air conditioning system, I would ask the question too. The answer though, is it just depends on how they answer my next question.
I begin our discussion with the question, did something happen to the air conditioner which damaged it. Examples include a power or electrical surge, a lightning strike, a tree limb or tree falling onto it. In a case like this, there is a claimable action, or peril, which occurred. In this case most home insurance policies will cover it, and filing a claim makes sense.
In the case where no action, or peril, such as one of the above didn’t happen, then it’s not covered. An insurance company will view this as a maintenance related event related to the normal wear and tear of owning a home. Home insurance policies are not designed to cover heating and cooling units, water heaters, appliances, or other items when they wear out or need to be repaired or replaced.
Home insurance policies are designed to cover damage to the home when something happens which is caused by one of the perils they recognize. Perils may include lightning strike, electrical surge, falling objects, etc. When a peril occurs and results in damage to an appliance or home system, repairs or replacement of the unit are covered less any applicable deductible.
A related question is what if something fails that damages part of your home. An example of this is a water heater that leaks or ruptures and damages sheetrock or flooring. In this instance, the water heater repair or replacement will be considered a maintenance item, however the damage it causes to carpet, hardwoods, sheetrock, and even contents is covered by the home insurance policy.
While home insurance policies do not cover repairs due to normal wear and tear or failure, home warranties and some service agreements do cover these items when they break or fail. When that happens, warranties will usually pay to repair and in some cases replace the appliance or system. Personally, I wish it was covered. My air conditioner unit failed hours before Sheri and I left for vacation. We’re now faced with the expense of replacing our system since no peril or event caused its failure. It’s simply worn out and ready to be replaced.
What do you think? Share your comments, questions, and experiences with me on my Google +, Facebook, or LinkedIn pages. I’d love to hear from you!