Two of the Killingbeck’s here in the office recently brought new babies home. We welcome the newest members of the Killingbeck family.
Welcoming these new baby girls reminds me about another couple who just had a newborn daughter. They were preparing to bring her home when the home’s air conditioning system unexpectedly failed. The timing was terrible, because this all happened during a heat wave!
It turned out the compressor needed replaced from an internal mechanical failure. The happy couple was unprepared for the expense, but luckily all they had to pay was their equipment breakdown deductible of $500. The home insurance policy paid $2,800 to fix the compressor. This coverage provided a wonderful relief for the new family, and made the home safe for their newborn daughter.
Such grand life events make me thankful for homeowner’s insurance coverage – peace of mind that’s just there in case of an emergency. Equipment Breakdown is one of the best, little known coverages. About two-thirds of our homeowners carry this coverage, but few seem to know about it.
What does Equipment Breakdown Cover?
If the item uses electricity, it is most likely covered by equipment breakdown. However, it’s always a good idea to check your own home insurance policy to confirm what is/is not covered. Here’s a short list for a general idea of what is covered:
- Heat Pumps
- Freezer Units
- Kitchen Refrigerators
- Water Heaters
- Clothes Washers and Dryers
- Computer Equipment
- Home Security Systems
This coverage protects you from electrical, mechanical, or pressure systems malfunctions causing a sudden breakdown of equipment.
An artificially generated power surge hit an insured home, causing the boiler and water heater controls, media equipment, and security system damage. Cost: $18,341
A subzero freezer circuit board arched, causing the entire unit to need replaced. Cost: $9,259
Air conditioning compressor needed replaced after an electrical short. Cost: $3,295
A power surge destroyed a personal computer used to control multiple systems (HVAC, lighting, irrigation). Cost: $2,975
Average Replacement Costs of Home Equipment
Washing Machine and/or Dryer $375 - $1,400
- Heating or Boiler System $2,250 - $10,000
- Garbage disposal $199 - $399
- Refrigerator $600 - $2,200
- Dishwasher, Stove $350 - $1,400
- Electrical panel, breakers, etc $700 - $1,400
What’s Not Covered
Wear and tear is excluded from Equipment Breakdown. Wear and tear is the natural deterioration of a machine. Basically, everything has a life expectancy. As a machine is used over and over, it slowly declines in performance over time. When it reaches life expectancy and breaks down, it tends to be from the natural deterioration, or wear and tear, from regular use.
A good example of wear and tear is a tire. As you use a tire, the tread slowly wears off. This is how the tire naturally deteriorates, or is used up. When the tread is mostly worn off, or most likely before, the tire has reached life expectancy and must be replaced.
Why Choose Equipment Breakdown Coverage?
Sudden equipment failures are normally excluded from a homeowner’s insurance policy. If they are included, there is limited coverage. The high cost of home warranties, and rather confusing terms, make equipment breakdown a great alternative. It is relatively cheap to add to your home insurance policy, maybe around $25 a year.
Equipment Breakdown is an additional coverage on your homeowners policy. If you don’t already have it, it is simple to add on. Check your policy, or give us a call and we can get it added on right away.
Photo Credit: “Current TV Setup” by William Hook. 24 Jan 2008. Original. Flikr. CC BY-SA 2.0.