What Is Equipment Breakdown Coverage

Homeowners insurance often covers damage to your property and valuables caused by fire, theft, or hail. However, it normally does not cover damage to your home’s appliances or systems caused by an electrical or mechanical failure. This is where equipment breakdown coverage comes in. 

What is equipment breakdown coverage?

Equipment breakdown coverage covers damage to your home’s systems and appliances caused by unexpected malfunctions. This optional add-on can assist cover the cost of repairing or replacing covered goods that fail due to electrical or mechanical faults.

What does equipment breakdown insurance cover?

Equipment breakdown insurance would cover damage to:

• Heating and cooling systems.
• Electrical panels and wiring.
• Water heaters, boilers and heat pumps.
• Air and water filtration systems.
• Kitchen appliances include refrigerators, freezers, ovens and dishwashers.
• Washer and dryer.
• Alarms and home automation equipment.
• Computers, electronics, and home entertainment devices.
• Exercise equipment.

Some policies may cover the cost of damaged food caused by a broken appliance, as well as living expenses if the damage renders your home uninhabitable.

What isn’t covered by equipment breakdown insurance?

Equipment breakdown insurance only covers failures caused by electrical or mechanical faults. It does not cover damage caused by normal wear and tear or lack of maintenance. So, if your air conditioner stops working due to a blocked air filter, it is not covered by equipment breakdown insurance.

Similarly, equipment breakdown coverage excludes damage caused by fire, lightning, wind, or hail. Those occurrences are covered by your ordinary homeowner’s policy. 

What’s the difference between equipment breakdown coverage and a home warranty?

While equipment failure coverage and a home warranty may appear to be comparable, they have some significant variations.

Equipment breakdown coverage is usually an endorsement or add-on to your homeowner’s insurance policy. It protects against electrical or mechanical harm to your household systems and appliances. A home warranty is a service contract that covers the repair or replacement of certain appliances and systems in your home. 

Equipment breakdown insurance is often more comprehensive than a home warranty. Equipment breakdown coverage can cover a broader range of appliances and systems, but a home warranty only covers the items specified in the contract.

Another difference is cost. Equipment breakdown coverage normally costs $25 to $50 per year and includes a coverage limit and deductible, which is frequently $500. Your deductible is the amount you must pay before insurance kicks in, but your coverage limit is the highest amount the insurance company would pay for a covered claim.

Home warranties can be more expensive, often costing $500 or more per year. You may be required to pay a deductible or service fee ranging from $50 to $100 per claim. You rarely get to choose your contractor or the brand of a replacement appliance.

If you’re deciding between equipment breakdown coverage and a home warranty, read the terms and conditions carefully to understand the differences.

How much does equipment breakdown coverage cost? 

Equipment breakdown coverage normally costs between $25 and $50 per year. Not all insurance companies give equipment breakdown coverage, so check with your homeowners insurance carrier to see whether it is offered. 

Is equipment breakdown coverage worth it?

Equipment breakdown coverage can offer you additional financial protection for your home’s most expensive systems and equipment. Although the coverage has limitations, knowing that you won’t have to pay the full amount if your air conditioning compressor fails or your hot water tank ruptures may provide you with additional peace of mind.

If you are unsure whether equipment breakdown coverage is correct for you, consider the potential cost of repairs vs the cost of adding this endorsement to your policy.

You should also consider the coverage’s limits and deductibles to guarantee you are protected if you need to utilize it. Some insurers, for example, may provide equipment breakdown insurance with a deductible of $500 and coverage of $100,000.

Make sure the limits are sufficient to replace your appliances or home systems, and select a deductible that is within your budget.