Equipment breakdown coverage protects homeowners from the cost of repairing or replacing certain home systems or appliances if they malfunction or experience damage from mechanical or electrical problems.
Business owners are much more likely to purchase equipment breakdown coverage, but some insurance companies also offer it to homeowners.This is because home insurance doesn’t usually cover an important home system or major appliance when it breaks down or short circuits. When these or similar failures occur, equipment breakdown coverage assists with repair costs.
How does equipment breakdown coverage work?
While you may be able to find a standalone equipment breakdown policy, you’re more likely going to have to add this coverage as an endorsement. You’ll also likely need to ask about it when you apply for or renew your home insurance policy because it’s not a standard coverage option. It’s also not offered by all insurance carriers, so you may need to shop around if having equipment breakdown coverage is important to you.
Coverage amounts are usually limited. You may only be able to insure your equipment for up to $10,000. Plus, equipment breakdown coverage also might come with a separate deductible that must be paid before your coverage kicks in.
What does equipment breakdown coverage cover?
Equipment breakdown insurance typically covers sudden and accidental damage to your home’s systems from events like power surges, electrical shorts, power outages, and motor burnout. Some insurers may even cover operator error.
What systems and appliances are covered varies by insurance company. Depending on your insurer, your coverage may reimburse you to repair or replace your:
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HVAC systems.
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Computer equipment.
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Home entertainment systems and other electronics.
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Electrical panels and wiring.
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Water heaters and boilers.
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Air and water filtration systems.
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Emergency generators.
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Home gym equipment.
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Major kitchen appliances.
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Washers and dryers.
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Security alarms and home automation equipment.
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Sump pumps.
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Washers and dryers.
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Swimming pool equipment.
What does equipment breakdown coverage not cover?
Equipment breakdown coverage is explicitly designed for sudden and accidental losses due to unexpected breakdowns. That means it may not cover damage due to:
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Normal wear and tear.
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Age, rust, or corrosion.
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Manufacturer defects.
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Mold.
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Expansion or shrinking.
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Pest damage.
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Poor maintenance.
Additionally, an equipment breakdown endorsement doesn’t cover perils already covered by your home insurance. So if an event like fire, lightning, wind, or hail damages your air conditioner or some other covered equipment, your home insurance policy helps pay for repairs.
How much does equipment breakdown coverage cost?
Equipment breakdown coverage is often an add-on to a standard home insurance policy. Not all insurance companies offer it, and among those that do, the cost varies. A good estimate for the cost of equipment breakdown coverage is around $25 to $50 per year.
Factors that impact equipment breakdown coverage cost
The cost of equipment breakdown coverage varies depending on a number of factors, including:
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Your insurance company.
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The amount of coverage you purchase.
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The types of equipment covered by your policy.
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Your equipment breakdown insurance deductible.
Is equipment breakdown coverage worth it?
Equipment breakdown offers enhanced protection for some of the most expensive features and contents of your home. If you’re concerned about power surges and mechanical failures affecting your home systems and major appliances, this coverage can offer you the peace of mind and financial protection you need.
To decide if it’s right for you, consider the potential cost for repairs versus the cost of the coverage. What’s more, equipment breakdown coverage might be particularly beneficial if you have older appliances that may need to be replaced with newer, more expensive models.
One important point to note: Some policies restrict coverage based on the age and condition of the appliances and systems covered when you buy the policy. Check with your insurance agent about any such restrictions before you purchase coverage.
What is the difference between equipment breakdown coverage and a home warranty?
A home warranty covers many of the same items that equipment breakdown coverage does, but it’s not the same as equipment breakdown coverage. Some primary differences include:
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Equipment breakdown coverage is insurance. Equipment breakdown coverage is most often an endorsement to your home insurance policy. Home warranties are service contracts purchased from a home warranty company to cover specific items in your home.
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Equipment breakdown coverage offers more protection. Typically, this endorsement covers a wider range of appliances and systems than a home warranty, which only covers specific items listed in the contract.
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Equipment breakdown coverage gives you more control. In many cases, you get to pick who makes repairs or what brand you’ll get when you have to replace an appliance. This isn’t always the case with a home warranty.
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Home warranties are more expensive. Where equipment breakdown coverage is usually less than $50 per year, the annual average for home warranties range between $350 and $700.
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Home warranties may require a service fee. With a home warranty, you may end up paying $85 and $125 to have a contractor make repairs. That’s less expensive than most equipment breakdown deductibles, but home warranties usually don’t let you pick who does the work or what brand replaces your property.
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Home warranties often cover more types of problems. An equipment breakdown endorsement typically excludes coverage for normal wear and tear, general maintenance, and other problems that a home warranty will often cover.
Who needs equipment breakdown coverage?
Business owners generally want equipment breakdown coverage because their viability often depends on equipment. Imagine being a restaurant owner whose refrigeration system breaks down or an IT professional after a power surge takes out their computer.
Equipment breakdown coverage for homeowners is a lot less common – and for good reason. When equipment malfunctions in a home, the damage is usually much less detrimental than when it malfunctions in a business.
