What is equipment breakdown coverage for home insurance?

What is equipment breakdown coverage?

Equipment breakdown insurance is an optional coverage that can be added to your homeowners insurance policy. Home insurance doesn’t include coverage for the breakdown of major appliances and systems in your house, only damage from covered perils.

When equipment like your furnace breaks down, it can be very expensive to repair, and it’s not usually something that can wait. Equipment breakdown coverage will pay for repairs so it doesn’t affect your budget. However, there are limits to the coverage, and it’s not quite the same as a warranty.

What does equipment breakdown cover?

Equipment breakdown coverage typically covers HVAC systems, major appliances, water heaters, sump pumps, smart home systems and other expensive equipment. What's covered varies by company, but these items are often covered:

Major appliances like refrigerators, ovens, washing machines and dryers
Water heaters
HVAC systems including furnaces and air conditioning units
Solar panels
Sump pumps
Computer equipment
Home gym equipment
Smart home systems
Spoilage of food due to refrigeration failure

This endorsement covers losses from electrical, mechanical and other failures.

“Coverage for items will vary with each insurance company. Some of the items covered may include a sump pump, washer/dryer, water heaters, air conditioning and heating equipment and computer equipment,” Mckenzie says.

Equipment breakdown coverage exclusions

Equipment breakdown coverage doesn’t cover wear and tear over time or poor maintenance, anything covered by your homeowners insurance, intentional damage and pre-existing damage. Because what’s covered and what’s not differs by company, it’s essential to read the endorsement thoroughly before you buy.

“Coverage for these items do not include normal wear and tear, or damage due to age (wear and tear), or poor maintenance of the equipment,” Mckenzie says.

Who should buy equipment breakdown coverage?

Anyone who can't afford to pay out of pocket for the repair or replacement of a major home system should consider equipment breakdown coverage. As home systems and appliances become more complex and expensive to repair, equipment breakdown coverage is a good choice for most homeowners.

Consider the cost of your appliances and systems and research how much they’d cost to replace, and look at any other coverage available to you including manufacturer’s warranties and home warranties.

If you can afford to repair or replace even the most expensive systems in your home out of pocket, you probably don’t need this coverage.

How does equipment breakdown insurance work?

Home equipment breakdown insurance provides coverage for the repair of systems from causes not covered by standard homeowners insurance policies, allowing you to get major systems, appliances, and even computer equipment repaired when they break down. You'll file a claim with your insurance company and pay your deductible, and the covered system or item will be repaired or replaced as long as the issue falls within the policy terms.

A home equipment breakdown endorsement is similar to a home warranty in that it covers repairs home insurance won't, but there are differences.

Equipment breakdown coverage vs. a home warranty

Equipment breakdown coverage pays for accidental damage to major equipment in your home, while a home warranty covers wear and tear.

A home warranty is often provided during the home-buying process to give buyers peace of mind about systems that may be aging or need repair or replacement shortly after the home sale is complete. It’s a standalone policy that isn’t part of your home insurance.

Home warranties and equipment breakdown coverage have some specific differences. Here’s a quick breakdown.

Home warranty vs. Equipment breakdown: Key coverage differences
Features	Home warranty	Equipment breakdown
Covers wear and tear	Yes	No
Covers accidental damage	No	Yes
Waiting period	Usually 30 days from closing	None
Choice of contractor	Must use warranty’s network	Choose your own or use the insurance company’s network
Deductible	Yes, most plans*	Yes

*Some plans call it a service fee, and a few don’t have one.

How to file an equipment breakdown claim

Follow your insurance company’s claims procedure to get an equipment breakdown claim started. You may have the option to file online or via a mobile app, or you might need to call a claims line. If you have an agent, they can usually file a claim on your behalf.

When filing a claim, make sure you have any needed information on hand, including documentation of the damage and information on the equipment that’s been damaged.

Equipment breakdown coverage examples

Equipment breakdown coverage covers major appliances and home systems for accidental damage and sudden mechanical failure, but doesn't cover age or neglect-related damage. The table below provides several examples.

Equipment breakdown insurance: Coverage examples by item and damage type
Item	Type of damage	Is it covered?
Refrigerator	Power surge	Yes
Air conditioning unit	Compressor fails due to age	No
Washing machine	Sudden mechanical failure	Yes
Furnace	Motor fails due to dirty filter	No

As you can see, some of the examples above are sudden, accidental damage or mechanical failure, while others are wear and tear or failure to properly maintain systems. Equipment breakdown coverage won’t pay for damage caused by age, normal wear and tear or due to the owner’s failure to keep up with proper maintenance.

Is equipment breakdown coverage worth it?

Equipment breakdown coverage is a low-cost endorsement you can add to your homeowners insurance, but it can save you a lot of money when something goes wrong. It costs an average of $25-$50 a year, according to major insurer The Hartford. That’s a lot of coverage for very little money.

“Homeowners should consider looking at the additional cost to add this coverage to their home policy in the event something were to happen, especially if they own several of these expensive items to help financially in the event of a loss,” Mckenzie says.

As with any insurance, it’s worth the premium when you have to file a claim. You’ll have to weigh the likelihood of needing that coverage against the extra cost and the out-of-pocket cost if you don’t have it when you need it.

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