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Homeowners equipment breakdown coverage
While your homeowners policy covers your appliances and other household systems against perils like lightning and windstorms, it will not cover such equipment against mechanical breakdown or certain other perils. This is where equipment breakdown coverage steps in. Find out more about how this coverage can add more protection to your home insurance policy and how it compares to a manufacturer or home warranty.
Homeowners equipment breakdown coverage — table of contents:
- What is equipment breakdown coverage?
- What does equipment breakdown insurance cover?
- How much does equipment breakdown insurance cost?
- Equipment breakdown coverage vs. home warranty
- Is equipment breakdown coverage worth it?
Equipment breakdown insurance is an add-on insurance coverage that protects many appliances and household systems against mechanical or electrical failure. It is not a standard coverage on home insurance policies, and can oftentimes be purchased as an endorsement.
This coverage works in much the same way as a warranty in that it will pay to repair or replace your property if it breaks down or is damaged by a covered peril. However, instead of a standard manufacturer warranty, this coverage can protect multiple items in the event that they are damaged by a singular event such as a power surge. Below, you can find a more detailed description of the specific items often covered.
Many home systems, devices, and appliances are covered by equipment breakdown insurance. Though it can vary by company, some of the types of equipment commonly protected by this coverage include:
- Air conditioning systems
- Water heaters
- Security systems
- Sump pumps
- Steam boilers
- Garbage disposals
- Washing machines
- Computer systems
- Riding lawn mowers
These items tend to be much more expensive to replace or repair than standard home appliances. As such, most equipment breakdown endorsements will provide up to $50,000 in coverage (up to $100,000 with some preferred carriers). There is typically a deductible associated with this coverage, which is usually in the neighborhood of $500 or lower.
According to their website, equipment breakdown insurance from The Hartford even offers appliance upgrades at 125% of cost if you make the switch to more energy-efficient equipment.
What types of losses does equipment breakdown insurance cover?
Equipment breakdown coverage will oftentimes cover a variety of mechanical malfunctions or other perils. Policies are typically clear on what types of breakdowns that they will or won’t cover, so you’ll want to study your homeowners policy so you are not left without coverage. Below are some of the more common perils that equipment breakdown coverage protects against.
- Motor burnout
- Power surge or electrical arcing
- Mechanical breakdowns
- Short circuits
- Pressure system breakdowns
What isn’t covered by equipment breakdown insurance?
If your items are damaged due to general wear-and-tear they will not be covered under this coverage type. As with most forms of insurance, you are required to maintain your property and personal possessions.
How does equipment breakdown coverage work?
When you report a claim to your insurer, they will establish that the incident was indeed a covered peril. Once the claim is accepted, your insurance company will then reimburse you for the following expenses:
- The cost of repair or replacement
- Cost of food spoilage (if applicable)
- Expedited repair costs (especially if the damaged system could cause further damages)
- Extra expenses arising from the breakdown, e.g., hotel stays
In many cases, you will be reimbursed for the full value of the appliance or the full cost of repair, whichever is the cheapest. Most companies will not factor in depreciation, though some may cover your goods at actual cash value. You will need to check with your home insurance company to verify this.
Equipment breakdown coverage is usually very affordable. Many insurance companies offer this coverage somewhere in the neighborhood of $20 to $50 per year. According to its website, American Family Insurance charges $30 per year for such coverage. Considering how much replacing even one of these systems would cost out of pocket, equipment breakdown coverage could be worth considering.
Equipment breakdown insurance is different from a home warranty in that you can add it to a homeowners insurance policy as an endorsement. A home warranty must be purchased through a separate entity and is basically a service contract that you may use to repair certain covered appliances. They work similarly to standard product warranties, only that they often cover a variety of different appliances. Oftentimes, warranty companies allow you to choose a package that fits your specific needs, such as a warranty that covers only kitchen appliances like refrigerators and dishwashers. In many cases, you can also add on a warranty for other systems or even swimming pools.
The cost of a home warranty is something that should be considered. It's typically far more expensive than equipment breakdown coverage. Purchasers of a home warranty often face further costs associated with service visits and deductibles. If you are looking to save money, but still want your appliances protected against damage, then equipment breakdown coverage makes sense.
Appliances and home systems can be some of the most expensive items in your household. As such, any breakdown or failure not covered by your homeowners policy can end up costing you a lot of money. Equipment breakdown insurance is an affordable way to avoid unnecessary expenses.
If you are worried about the cost of adding coverage to your homeowners policy, consider searching for a provider. The Zebra can help by allowing you to compare home insurance quotes side-by-side, allowing you to get the right policy at a price that works for you.
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