What is Equipment Breakdown and What Does it Cover?

Homeowners Equipment Breakdown Coverage is an OPTIONAL endorsement alternative to costly product and home warranty plans - Equipment Breakdown Coverage through your Homeowners Insurance Policy. Whether you are a renter or a high-value homeowner, we have your equipment breakdown exposures covered. The modern home contains many expensive systems and appliances subject to equipment breakdown. These include:
• Clothes Washers and Dryers
• Computer Equipment
• Dishwashers
• Freezer Units
• Garbage Disposals
• Heat Pumps
• High Efficiency Home Heating and Central A/C Systems
• High Energy Electrical Service Panels
• Home Security Systems
• Kitchen Refrigerators
• Lighting and Home Environment Monitoring
• Microwaves
• Ovens
• Sump Pumps
• Surround Sound Systems
• Swimming Pool Equipment
• Televisions (Plasma, LCD, etc)
• Water Heaters
• Well Water Pumps
Even items that you typically think of as disposable; such as, garage door openers, exhaust/ceiling fans, DVD players and much more, could benefit from this coverage as a result of an electrical power surge.

“If it uses electric power, it is most likely subject to Equipment Breakdown.”
Often this equipment requires sophisticated diagnostic tools and skilled technicians to oversee a potential repair. Equipment breakdown coverage protects you against unexpected repair or replacement costs due to a electrical, mechanical, or pressure systems breakdown. In addition to coverage, loss prevention information and loss adjustment services are customized at a fraction of the cost of limiting home warranty products. Best of all, this additional coverage follows the terms and conditions of your insurance policy. Off-Premises Coverage can now be included. 

Did You Know?
Thirty-eight percent of all equipment breakdown losses are mechanical in nature. without this coverage, along with electrical breakdown, these losses are typically excluded under your homeowners policy.

Typical Losses:
A domestic water 230-volt deep well pump short-circuited to ground. Upon being pulled from the well to determine its condition, it was concluded that cost to repair the motor was greater than the cost of replacement.
Cost of Replacement: $1,850
Loss of Use: $186

During a family vacation, a storm caused a power outage. A laptop computer and cell phone were charging when the outage occurred. When power was restored, a voltage spike damaged the items beyond repair and required their replacement. With the Off-Premises Coverage the homeowner would now be covered!
Cost of Repairs: $3,750

A personal computer (PC) used to control multiple systems (HVAC, lighting and irrigation) within the home sustained
electrical damage from a power surge. Replacement of the computer and the unique programming was required.
Property Damage: $2,975

An air conditioning system suffered an ice buildup in the evaporator due to a cracked compression fitting. The ice plugged the condensate drain causing water to flow into the control cabinet, short-circuiting the solid state controls for the air conditioning system and furnace.
Cost to Repair: $2,800

Q: What does Equipment Breakdown cover?
A: It covers the perils of mechanical, electrical and pressure systems breakdown, which are excluded or limited perils in the homeowner’s policy.

Q: What are some examples of covered property?
A: Examples of covered property are items in a home that can break mechanically or electrically; for
example, wine cooling unit, heat pumps, swimming pool equipment, air conditioning systems, electrical
panels, televisions & media equipment, as well as other household appliances.

Q: What are some examples of real losses?
A: An insured’s property was hit with an artificially generated power surge. The boiler and water heater controls, security system and media equipment were damaged.
Amount of loss: $18,341

During a family vacation, a storm caused a power outage. A laptop computer and cell phone were charging when the outage occurred. When power was restored, a voltage spike damaged the itmes beyond repair and required their replacement. With the Off-Premises Coverage the homeowner would now be covered!
Amount of loss: $1,495

An insured’s air conditioning system experienced an electrical short causing loss of cooling to the home. The air conditioning compressor needed to be replaced.
Amount of loss: $3,295

The circuit board in a subzero freezer arced. Due to the age and availability of a circuit card, the whole unit had to be replaced. The cost to replace the unit was $9,259. The endorsement also extended
additional coverage for food spoilage.
Amount of loss: $11,345

Q: Are other structures (i.e. pool house, garage, shed) covered property?
A: Yes. The equipment breakdown form follows covered property as defined in the homeowner’s policy.

Q: What is the benefit of adding equipment breakdown coverage to my homeowner’s policy?
A: There are specific exclusions for mechanical and pressure systems breakdown in the homeowner’s
policy. Typically, electrical breakdown coverage is limited in the homeowner’s policy. By adding the equipment breakdown enhancement endorsement, loss caused by, resulting from, or consisting of an electrical, mechanical, or pressure systems  breakdown, will be covered.

Q: How does this coverage differ from a home warranty?
A: A home warranty is expensive. It may also restrict certain equipment or include it at an additional cost. By adding the equipment breakdown enhancement endorsement to your homeowner’s policy, coverage applies to all real and personal property in your home.

Q: What happens if multiple pieces of (real and personal) property breakdown at the same time?
A: These items can be combined together to form one submitted loss if the cause of loss is the same occurrence for all pieces of property.

Q: Can damaged equipment be replaced with more efficient equipment?
A: Yes, the equipment breakdown endorsement will pay up to 150% for replacement of equipment that is
more efficient and better for the environment.

Q: Is there coverage for personal property away from the insured’s described premises (i.e., laptop
at college, GPS, etc.)?
A: Yes, Off-Premises Coverage is now included. Coverage was previously limited to “Residence Premise” and now we’ve extended coverage for property that is away from the described premises.

Q: What is the difference between wear and tear and mechanical breakdown?
A: A mechanical breakdown usually occurs suddenly. Wear and tear usually occurs over time. In instances where wear and tear occurs, performance of the equipment slowly declines and its capacity
diminishes; however, the equipment continues to operate but does not perform as expected. Therefore, because coverage for wear and tear is excluded in the homeowner’s policy and no equipment breakdown has occurred, there would also be no coverage provided by the equipment breakdown endorsement.