Are AC Units Covered by Homeowners Insurance?

Homeowners insurance policies protect the physical structure, personal belongings, and liability risks associated with property ownership. Air conditioning units are integral components of modern homes, and understanding their coverage under these insurance plans is important for homeowners.

How Standard Homeowners Policies Cover AC Units

Standard homeowners insurance policies, such as HO-3 and HO-5 forms, extend coverage to air conditioning units under specific conditions. Coverage depends on the AC unit type and the cause of damage. Central air conditioning systems, permanently affixed to the home’s structure, are generally covered under the dwelling portion of the policy.

An HO-3 policy covers the dwelling on an “open perils” basis, meaning damage is covered unless excluded. Window or portable AC units are classified as personal property, falling under personal property coverage (Coverage C). This personal property coverage is on a “named perils” basis, covering damage only from specific events.

Common perils that trigger coverage for AC unit damage include fire, lightning, theft, vandalism, windstorms, hail, or falling objects. For instance, if a powerful windstorm dislodges a tree limb that crashes onto an outdoor condenser, the resulting damage would likely be covered.

Common Causes of AC Unit Damage Not Covered

While homeowners insurance offers protection against many risks, AC unit damage is often not covered by standard policies. Exclusions often relate to predictable risks or maintenance issues rather than sudden, unforeseen events. Damage resulting from normal wear and tear, or gradual deterioration due to age and regular use, is almost universally excluded.

Mechanical or electrical breakdowns, such as compressor failure or a faulty fan motor, are typically not covered unless they are a direct result of a covered peril like a power surge caused by lightning. Policies generally do not cover damage from lack of routine maintenance or neglect, including clogged coils or neglected air filters that lead to system failure.

Gradual damage, such as rust, corrosion, or mold growth, is usually excluded because it develops over time and is often preventable with proper upkeep. If an AC unit leaks water due to a maintenance issue, any resulting water damage to the home might be covered, but the AC unit repair cost would likely not be. Damage caused by pests like insects or rodents is generally not covered.

Standard homeowners policies also typically exclude damage from certain environmental events. Floods and earthquakes, for example, require separate, specialized policies. Damage stemming from improper installation of the unit or inherent manufacturer defects are also common exclusions, as these are outside the scope of typical homeowners insurance.

Expanding Coverage for Your AC Unit

Homeowners have options to secure coverage for AC unit damage that falls outside the scope of standard homeowners insurance policies. A significant avenue for expanded protection is Equipment Breakdown Coverage (EBC). This endorsement can be added to a homeowners policy and covers mechanical or electrical failures not caused by named perils.

Equipment Breakdown Coverage provides financial protection for internal failures like burnt-out motors, malfunctioning compressors, or electrical surges. It fills the gap left by standard policies, covering unexpected breakdowns of essential household systems and appliances. This coverage addresses costs for repairing or replacing components that fail due to internal mechanical or electrical issues.

Another option is a home warranty, which operates differently than insurance. Home warranties are service contracts that typically cover repair or replacement of major home systems and appliances, including AC units, due to normal wear and tear or mechanical breakdown. Unlike insurance, which covers sudden and accidental damage from specified perils, home warranties are designed to protect against failures that occur through ordinary use. While a home warranty can be a valuable supplement for predictable repairs, it is a service contract, not an insurance policy, and does not cover damage from external, sudden events.

Steps to Take When Your AC Unit is Damaged

When an AC unit sustains damage, a structured approach to the claims process is beneficial. First, ensure the area around the damaged unit is safe and take steps to prevent further damage, such as turning off its power.

Next, document the damage with clear photos and videos. Record the date, time, and a detailed description of the incident and visible damage. Gather information about the unit, including its model, serial number, and past maintenance records.

Contact your insurance provider promptly to initiate the claim process. Provide the collected details and documentation. Obtain written repair estimates from at least two qualified HVAC professionals. These estimates should detail necessary repairs or replacement costs.

Cooperate fully with the insurance adjuster assigned to the claim, providing all requested documentation and access to the damaged unit. Remember to consider your policy’s deductible, as the repair cost must exceed this amount for financial assistance. Finally, review any settlement offer to ensure it aligns with the estimates and policy terms.