I am occasionally asked by a new or existing client whether their home insurance policy covers an air conditioning compressor or water heater that’s going bad. In most cases, the answer is no, unless it’s caused by an event justifying a claim such as a lightning strike, a tree limb that fell on it, etc. Two home insurance carriers offer a coverage option worth considering for their policy holders called Equipment Breakdown coverage and it may provide an attractive option worth adding to your policy.
Equipment breakdown coverage from both home insurance companies offers some very attractive coverage including:
- Repair or replace a major home system such as the central heating and cooling system, swimming pool systems, ventilation, emergency generators, well pumps, air and water filtration, chair lifts and elevators, home entertainment systems and computer equipment.
- One of the companies extends this coverage to include appliances.
- One even includes coverage for additional living expenses if the home becomes uninhabitable due to the equipment breakdown.
- Both offer to replace the failed equipment with greener replacement by paying to replace a non-Energy Star device with Energy Star rated equipment.
- One won’t surcharge the renewal rate if such a claim is filed and paid.
Where these two home insurance companies differ is in the cause of the equipment failure that may trigger a claim.
- One company excludes equipment breakdown coverage due to normal wear and tear. It requires a triggering event that is sudden, direct, and accidental such as a broken part or electrical arcing.
- The other covers a sudden, direct, and accidental failure and goes on to cover failure due to human error such as an improper installation of the unit and improper operation and maintenance of the equipment by the homeowner.
The cost to add this option to either equipment is very affordable depending on the amount of coverage and deductible selected. It can range from $24 to $100 a year which is much less than most home warranties. The biggest difference is the home warranty is designed to cover normal wear and tear.
Equipment breakdown coverage is a fairly new option. Given the competitive nature of home insurance, I expect most companies will provide it within the next couple of years. If offered, would you choose to add it to your policy? Share your “decision” along with your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
