What Is Equipment Breakdown Coverage on a Homeowners Policy?

Homeowners insurance provides financial protection against various risks to your home and belongings, such as fire, theft, or wind damage. However, standard policies typically do not cover unexpected mechanical or electrical breakdowns of home systems and appliances. Equipment breakdown coverage is an optional addition designed to address these specific types of failures. It helps cover the costs of repairing or replacing essential home equipment when it stops working due to internal issues, offering a layer of protection beyond traditional peril-based coverage.

Understanding Equipment Breakdown Coverage

Equipment breakdown coverage is added as an endorsement to a homeowners insurance policy. It focuses on internal failures of home systems and appliances, which are generally excluded from standard homeowners insurance. It addresses issues like mechanical failures, short circuits, motor burnouts, or ruptures caused by centrifugal force. This coverage responds to sudden and accidental breakdowns, not damage from external events like fires, windstorms, or theft, which are covered by the main policy.

The coverage is distinct from manufacturer warranties or home warranties. While manufacturer warranties cover defects during a limited period, and home warranties are service contracts often covering wear and tear, equipment breakdown coverage specifically targets unforeseen electrical or mechanical malfunctions that are not due to normal aging or neglect.

What Types of Equipment and Incidents Are Covered

This coverage extends to a broad range of home systems and appliances that experience sudden and accidental mechanical or electrical failures. Common examples include heating and cooling systems, such as furnaces, central air conditioning units, and heat pumps. Water heaters and boilers are also covered for issues like pressure system ruptures or electrical malfunctions.

Major kitchen and laundry appliances, such as refrigerators, dishwashers, washing machines, and dryers, are often included. Beyond these, home electronics like televisions, computers, home theater systems, and smart home devices can also be covered. The coverage is for the breakdown of the equipment itself, and some policies may even include coverage for related losses like spoiled food due to a refrigerator failure.

What Equipment Breakdown Coverage Does Not Include

Equipment breakdown coverage has specific exclusions. It does not cover damage resulting from normal wear and tear, rust, or corrosion, as these are considered expected deteriorations over time. Gradual deterioration or pre-existing conditions are also excluded, focusing the coverage on sudden and unexpected events.

Damage due to a lack of maintenance or improper use is not covered, emphasizing the homeowner’s responsibility for upkeep. Cosmetic damage that does not affect the equipment’s functionality is also excluded. Damage caused by perils already covered by a standard homeowners policy, such as fire, lightning, or theft, would fall under the main policy, not this endorsement. Issues covered by a manufacturer’s warranty or product recall are not included.

Making a Claim and Policy Details

When an equipment breakdown occurs, the first step involves contacting your insurer promptly to report the issue. It is important to document the damage thoroughly, often by taking photos or videos, and to gather any relevant purchase records or repair estimates. The insurance company will assign an adjuster to assess the damage, verify the cause of the breakdown, and determine if it falls within the policy’s terms.

Equipment breakdown coverage has specific coverage limits, which can vary but range from $10,000 to $100,000 per occurrence or aggregate. A deductible also applies, which is the amount you pay out-of-pocket before the insurance coverage begins. A deductible for this coverage is $500. Reimbursement methods can vary, with some policies offering actual cash value and others providing replacement cost, which influences the amount received for repair or replacement.