Equipment Breakdown Coverage for Homeowners - Do You Need It?
What is Equipment Breakdown Coverage for Homeowners?
Equipment breakdown coverage is a relatively new optional endorsement on your homeowners insurance policy. Not all carriers offer this type of coverage.
Equipment breakdown coverage can provide additional protection for common home appliances, such as furnaces and HVAC systems in case of mechanical or electrical failure. However, the biggest misconception is that equipment breakdown coverage insurance will cover normal wear and tear. A home warranty through PSEG or the equipment manufacturer may cover wear and tear, but equipment breakdown insurance Does Not cover normal wear and tear.
What Does Equipment Breakdown Insurance Cover?
You should read your policy form for the exact definition, coverage and exclusions they use for equipment breakdown. For purposes of this article, we will use one provided by Travelers [Form HQ-855 CW (05-17)].
Equipment Breakdown:
Means direct physical damage to "covered equipment" from an unexpected event caused by or resulting from:
Failure of pressure or vacuum equipment;
Mechanical failure;
Electrical failure, including arcing or insulation breakdown; or
Rupture, bursting, bulging, implosion or steam explosion;
That necessitates repair or replacement of the "covered equipment."
Examples of Covered Equipment:
Central air conditioning systems
Central vacuum systems
Home entertainment systems
Electrical vehicle charging stations
Heating systems, including boilers and water heaters
Well water pumps and sump pumps
Water treatment systems
Home automation and security systems
Saunas, hot tubs and therapeutic baths
Swimming pool pumps and filtration systems
Stoves, wall ovens and refrigerators
Outdoor maintenance equipment including lawn mowers, garden tractors and snow removal equipment
An important exclusion to covered equipment is the exclusion of "vessels and piping buried below ground and require the excavation of materials to inspect, remove, repair or replace".
Claim Examples
Air Conditioning
Air conditioner started blowing out hot air. Test showed lack of lubricant caused the compressor to seize up: Replacement Cost = $3,700.
Appliances
Electronic controls no longer available for double-oven, requiring total replacement: replacement cost = $3,750.
Boilers
Faulty water pump circuit causes boiler to continuously fire without adding water for cooling, cracking six sections of the boiler: replacement cost and additional living costs = $6,325
*Many insureds have put in claims for Boiler Leakage. If the water leakage is due to wear and tear, the claim will most likely be denied.
What's the BIG Difference?
Should you add equipment breakdown to your home insurance policy?
Add it for peace of mind. Most carriers only charge approximately $50 annually, while other carriers can charge substantially higher. If it affordable, I'd say add it. But only consider using it for expensive items like your HVAC system or Furnace.
In my experience, I have personally seen more claims denied than covered. But that should not be an absolute gage on whether you should purchase it. Those insureds may have put in claims for wear and tear or other exclusions. Remember, this is not a maintenance policy, wear and tear is not covered. Also, look through the exclusion list carefully.
Hope this helps!
"Disclaimer: The content contained in this blog is for informational purposes only. It should not be considered insurance advice since every client's needs and circumstances are different.. Bergen Insurance Group, LLC makes no representation as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All statements represent the sole opinion of the author and is provided on an as-is basis. For an actual description of all coverages, terms and conditions, refer to your insurance policy.”
