Your home is your sanctuary, a place to recharge. But you need a multitude of appliances working hard to preserve that haven: When they break down, it’s chaos.
And it’s not just the things in your home you need to worry about. If a severe storm knocks out your power, for example, the electrical surge can cause significant damage to your equipment (even a brownout can cause your home appliances to short-circuit).
Appliances aren’t cheap — and the smarter they get, the more expensive they are. Many have sensitive onboard computers that are costly to repair and even more costly to replace. Your home insurance policy might provide for some mechanical failure, but there’s a good chance the coverage is minimal.
Despite sounding similar, a home warranty and an equipment breakdown endorsement cover different things.
Home warranties are stand-alone policies that are separate from your home insurance policy. They cover wear and tear and other damages to home equipment. Most home warranties don’t require a catastrophic event to trigger coverage. As the name implies, a home warranty responds when machines or equipment fail, regardless of why. Aging appliances might be a reason to buy a home warranty, but be clear on what it covers and the cost to you each time the equipment breaks down.
For example, you buy a home warranty to protect an aging water heater. Soon after, the water heater breaks down. You notify the home warranty service; they dispatch a repair person to your home and you’re charged $100 for the house call (per the warranty agreement). Each time a repair person is dispatched, you pay a fee. (The home warranty policy requires them to repair the water heater until it’s deemed unrepairable.) The process takes multiple breakdowns and repairs. After several service calls, they replace the water heater with an equivalent model.
Home warranties vary, so you’ll need to read the fine print. Some home warranties:
You’ll need to do the math on whether a home warranty makes sense for your situation. If you’ve got a mix of old and new home equipment, you could mix it up and layer a home warranty with an equipment breakdown add-on. Utilize your Home Inventory List for easy reference to all of your appliances and their values.
Home insurance covers damage to your appliances, equipment, and belongings caused by a danger listed in your policy (fire, lightning, power surge, theft, etc.). Most equipment breakdown coverage includes damage caused by:
When you add equipment breakdown to your home insurance, your home equipment and appliances are covered as long as the mechanical or electrical failure results from a covered peril (like the ones listed above). Unlike a home warranty, equipment breakdown coverage typically allows you to choose your repair person. It can help with the cost to repair or replace systems and devices like:
In addition to repair or replacement charges, equipment breakdown insurance helps with these extras.
Ask your agent about the exclusions on the types of equipment and mechanical failures covered since they vary by policy.
The cost to add equipment breakdown to your home insurance is fairly inexpensive (usually less than $100 per year) when you compare it to the out-of-pocket cost for some home appliances:
|Equipment||Average cost to replace|
|Home entertainment systems||$5,000|
|Major appliances||$1,800 to $20,000|
|Chair lifts and elevators||$1,500 to $25,000|
|Heating, ventilation, and air conditioning systems||$2,000 to $14,000|
|Solar panels or green energy systems||$10,000 to $50,000|
|Water purification systems||$1,500 to $5,000|
|Riding lawnmower or robotic mower||$2,200 to $5,000|
If you have even a few luxury brand appliances in your home or condo, the price to repair or replace quickly shoots well into the thousands.
Nothing says pandemonium like a power surge or an extreme weather event! Protect your budget and the things that keep your home operational and comfortable. Connect with us, and we can figure out if it makes sense for you to add equipment breakdown coverage to your homeowners (or condominium) insurance policy.
At General Insurance Services, we are a team of insurance professionals with an array of experience, backgrounds, and interests. We’re advisors with a mission to secure the future of the communities we serve. Share our knowledge through this blog allows us to get one step closer to achieving our mission.