Homeowners insurance typically only covers appliances and home systems, like your heating, when a covered peril damages them. But home insurance usually doesn’t cover breakdowns from a mechanical or electrical failure.
Equipment breakdown insurance provides coverage for certain types of unexpected damage, like electrical surges. This add-on coverage is relatively inexpensive and can help cover the cost to replace or repair your appliances or home systems.
Here’s what you need to know about how equipment breakdown coverage works and who may want to consider this type of protection.
Equipment breakdown coverage is an optional endorsement that home insurance companies offer. Small-business owners and landlords may also benefit from this optional coverage to protect their investments.1
In general, equipment breakdown coverage provides financial protection for household systems, appliances, and electronics if they break down due to sudden mechanical or electrical system failure. But it may cover the repair or replacement of other types of equipment as well (up to the coverage limit).
Below are some examples of issues equipment breakdown insurance covers:
Unplanned mechanical breakdown: Sudden, accidental equipment failure that happens due to uncontrollable circumstances may qualify for coverage. Failure due to improper installation is also typically covered.
Electrical surges: Electrical surges often wreak havoc on electrical systems and appliances in the home, including air conditioning units, home entertainment systems, computer equipment, kitchen appliances, and more. After a surge, you may be able to rely on equipment breakdown coverage to help cover repair or replacement costs (minus your deductible).
Steam boiler bursting or rupturing: Equipment coverage may protect you if a gas water heater tank ruptures suddenly or if you experience the sudden failure of a furnace, boiler, or heat pump for a covered reason.
Equipment breakdown coverage won’t protect you in every situation. Here are some examples of exclusions this type of insurance might not cover:
Scheduled maintenance costs: Equipment breakdown coverage won’t help you pay for everyday maintenance expenses. Consider purchasing a home warranty to help pay for scheduled maintenance costs.2
Lack of maintenance: Your equipment breakdown insurance typically won’t cover appliances and systems that go unserviced. For instance, if your air conditioner breaks down because you never change the filter, you’ll likely have to pay out of pocket for repairs or replacement.
Pre-existing conditions: Your insurance company might deny your claim if an equipment malfunction happened because of a problem that existed before you purchased your insurance coverage.
Improper use damage: Equipment breakdown insurance most likely won’t cover you if you’re using an appliance or household system the wrong way and it leads to damage.
Consider adding an equipment breakdown coverage endorsement as an add-on to your insurance policy if you could use financial protection for the appliances and systems in your home, business, or rental property. Below are three groups of people this type of policy might benefit.
In general, your homeowners insurance won’t cover the appliances or systems in your home if an equipment breakdown occurs.3 Yet paying to repair or replace home appliances and systems such as HVAC systems, water heaters, alarm systems, electronics, pool equipment, and more can easily cost thousands of dollars or more if something goes wrong.
Equipment breakdown coverage helps homeowners pay for the costs of expensive repairs and replacements when covered losses happen.
Small businesses that operate equipment may want to consider carrying machinery insurance to cover unexpected mechanical failure or equipment breakdowns.
Not only can it be expensive to repair or replace faulty equipment or machinery when breakdowns happen, but you may also have to deal with lost business income. Equipment breakdown coverage helps protect business owners financially.
Landlords typically have landlord insurance to protect a real estate investment. But it could also be a good idea to add on equipment breakdown coverage in case you need to respond to mechanical equipment breakdowns at your rental properties.
This type of insurance coverage provides landlords with financial protection against sudden electrical or mechanical breakdowns.
The exact claims process may differ from one insurance company to another. So it’s important to review your homeowners insurance policy for more details before you file a claim. Here are the basic steps to file an equipment breakdown coverage claim:4
If you’re considering adding equipment breakdown coverage, here’s some additional information that may help.
Equipment breakdown coverage is a type of insurance endorsement you may be able to add to your homeowners insurance policy to cover sudden electrical and mechanical damage to appliances and household systems. Business owners and landlords may also be able to purchase this type of insurance.
Equipment breakdown coverage won’t pay for damage from normal wear and tear. And if you fail to maintain your appliances or household equipment, your insurance company won’t pay for damages that take place as a result.
If your refrigerator breaks down after a power surge during a lightning storm, your equipment coverage will most likely cover the loss. In addition to paying to fix or replace your refrigerator, your insurer may also cover the cost of any spoiled food in the fridge after you meet your deductible.
Equipment breakdown insurance is an optional insurance endorsement that some insurance companies offer as an add-on product in addition to the protection that traditional homeowners insurance provides. If available, you’ll pay an additional fee to add this extra coverage to your policy. This type of endorsement can provide protection from potential financial loss that other homeowners insurance policies exclude.
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