Most standard home insurance policies will not pay to repair or replace your furnace or home cooling system if it breaks down. But the good news is that some insurers offer you the option of purchasing additional equipment and home systems breakdown coverage to help foot the cost.
It can be expensive keeping home systems and appliances in operation, especially when you never know when they may go on the blink. Therefore, it can be to your benefit to buy equipment breakdown insurance that provides you with added protection and is more affordable than the expense of repairing or replacing a furnace or other home equipment if things go wrong.
Mechanical Breakdowns Excluded
Unless damaged or destroyed by a covered peril, such as fire or water, standard policies generally exclude coverage for the mechanical or electrical breakdown of equipment and major appliances in your home. But for an extra cost, you can add the coverage. Premium costs, coverage limits, and policy terms vary.
Newer units and appliances that operate more efficiently typically don't break down as easily. Consequently, coverage may be cheaper since the repair costs are less. Although some policies offer protection for home equipment and systems no matter how old, coverage can cost you more for older furnaces, water heaters, and major appliances that may break down more often and for which it may be difficult to find the necessary repair parts.
What Equipment Breakdown Covers
Equipment or home systems breakdown coverage pays to repair or replace a furnace, water heater, air conditioning unit, or large appliance that is damaged during sudden and accidental breakdowns. Home appliances covered under the insurance generally include major appliances such as refrigerators, freezers, ranges, washing machines, and clothes dryers. Some policies even cover the loss of a home security system, chairlift, well pump, electrical service panel, and home entertainment electronics including computers, televisions, and stereo systems.
Equipment breakdown coverage also may pay for additional living expenses if you need to leave your home during the repairs. For example, your furnace breaks down in below freezing weather and the parts to fix it must be special ordered and won't arrive for days or even weeks. Naturally, you can't remain living in your home without heat. Your policy will state the amount of additional living expenses you will receive for each day you need temporary housing.
How Breakdown Coverage Differs from a Warranty
Unlike warranties that are limited and provide coverage for only a specific length of time, you can renew your breakdown coverage. A warranty also may require that you use a particular contractor to repair the equipment. Breakdown coverage usually allows you to choose your own repair professional.
How Payment of a Claim Works
Like other claims, the insurance company kicks in its portion after you pay the deductible. Your premium will be higher if you choose not to have a deductible. If you choose a deductible, how much you pay out of pocket toward the repairs or replacement depends on the amount of your deductible.
Consult with an insurance agency, like Collins Advantage Insurance Agency, for more information.