The Importance of Equipment Breakdown Coverage

Equipment Breakdown Coverage Endorsements protect against sudden, accidental and unexpected damage to or breakdown of home systems or appliances, such as HVAC, security, generators, pool equipment, media, smart home and/or other residential equipment. 
Equipment Breakdown Coverage is meant to supplement your Homeowners policy by providing missing coverage for costly repairs or replacement of today’s increasingly complex and expensive household systems. While a homeowners policy may cover ensuing damage, i.e. water damage to flooring caused by a sudden crack in a water heater, the Equipment Breakdown Coverage Endorsement would cover repair or replacement of the appliance itself. These endorsements are alternatives to home warranties or appliance extended warranties that are generally more costly and may include only certain equipment and often have many exclusions.
In addition to coverage for the sudden breakdown of home systems and appliances, these endorsements may include Additional Living Expenses (if your home becomes uninhabitable as a result of a covered breakdown), food spoilage, more energy-efficient replacements, labor costs, and a lower deductible than on your homeowners policy. However, wear and tear, or the natural deterioration or aging of a system or appliance over time, is excluded (as it is on a Homeowners policy). 
Equipment Breakdown claims examples (coverage will vary by carrier and by State):

• The parts in an A/C compressor cracked and the compressor, condenser and evaporator had to be replaced – total claim including additional living expense $8,600.
• Kitchen refrigerator must be replaced after compressor fails – claim value $9,500.
• Boiler damaged due to covered failure in a low water shut off valve – claim value $25,000.
• A home automation system broke down when the controller overheated and shorted out. The original components and wiring were not compatible with new equipment; a wireless system had to be installed – claim value $63,239.

Many, but not all, insurance carriers now offer this coverage enhancement. Some insurance companies have various options available, such as Off-Premises coverage and various coverage limits or deductibles to choose from. Equipment Breakdown Coverage may be offered as a separate endorsement, a separate policy or included in a specific policy package. Costs vary by carrier, ranging from as little as $40 for $100,000 basic coverage to $165 for $500,000 enhanced coverage, both with a $500 deductible.
Consumer Reports has stated that 25% of new appliances often fail within the first 5 years. As appliances and home systems have become more complex and expensive, the option to add a reasonably priced Equipment Breakdown Coverage Endorsement should be seriously considered.
Equipment Coverage ensures your home is properly protected against unexpected or accidental damage to home systems or appliances. To learn how to protect your home from costly repairs or replacements, visit AssuredPartners Personal Insurance.