Historically insurance has been there to cover your large assets such as your home, vehicles, or business. Most insurance policies will exclude coverage for your appliances, air conditioner, or furnace if they were to just simply break down.
There are new insurance packages or endorsements that are starting to hit that market that will cover those gaps in your insurance. These companies have realized that there can be a large financial burden if your home equipment were to break down and need replacing. With this in mind, they have put together insurance endorsements that will cover that exact type of scenario.
We are hoping that this article will show you that there are more options for your home appliances and equipment than the extended warranties being offered from the manufacturers and often with better coverage for a smaller fee.
What Types of Home Equipment Are Covered?
From the wordings of the companies we know that are offering this type of coverage, they have listed the coverage being for personal property covered under your home insurance package that generates, transmits, or utilizes energy. They also include equipment that operates under vacuum or pressure such as boiler systems.
That description can be quite vague, so we dug in a little deeper to fully understand. We went to the insurance companies for examples and they gave us this list of items that would fall under that description above:
- Air conditioning systems
- Built-in Dishwashers
- Built-in Stove
- Hot tubs
- Swimming pool heater
- Water heater
- Heat pump
- Pool filter
- Emergency generator
What Type of Breakdowns Are Usually Covered?
As with all insurance policies, every insurance company will have different rules, exclusions, and coverages. It is always best to refer to your own policy wordings or have your insurance broker comb through the coverages for you.
From the wordings of these policies that we have combed through at the time of writing this article, the type of breakdowns that listed are:
- Sudden and accidental:
- mechanical breakdown;
- electrical breakdown; or
- bursting, cracking or splitting
Is There a Deductible?
Yes, these policies will come with a deductible. Usually the deductible will be $500.
Are There Exclusions?
Yes, as with all insurance policies, there are exclusions. As stated above, every insurance company will have its own exclusions for its own policy. Always refer to your own policy wordings or have your broker go through those wordings for you.
Some examples of common exclusions:
- Electrical power surge or brown out.
- Rust, erosion, deterioration or gradual loss of efficiency or functionality.
- Leakage or seepage
- Programming or software issues
- Complete or partial loss of electrical power, fuel, or “water” supply (deliberate or accidental)
- Any condition that can be corrected by resetting, recalibrating, or by the performance of maintenance.
- Cosmetic damage that does not impair functionality
Real Life Examples
Usually reading the coverage and the exclusions only paints a small portion of the entire picture. Real life examples should put this new type of coverage into a better perspective.
Air conditioning systems
An air conditioning compressor operating in an overheated condition for an extended period failed electrically and had to be replaced.
Total loss: $5,101.
Main electrical panel
A main electrical panel’s circuit breaker failed to trip as designed, overloading and overheating wiring, lighting switches, outlets and appliances which had to be replaced along with the circuit.
Total loss: $13,992.
An engine driving an emergency generator broke down when the lube oil pump failed. Damage to the engine and generator bearings and rotating elements required replacement of the entire unit.
Cost to replace: $6,500
The Final Word
As you can see above, these new types of endorsement could potentially save you thousands of dollars if your home equipment were to have a sudden and accidental breakdown. Some insurance companies will also not remove your claims free discount on your home insurance policy if you put in a claim under this endorsement.
If you feel like a sudden breakdown of your home equipment could leave you in any financial hardship, it could be worth adding this endorsement to your home insurance policy. Be sure to call your broker today to find out more.