A home insurance policy can help you fix or replace a major household system or appliance if a covered event, such as fire or lightning, damages it. But what about an appliance or system that stops working due to a mechanical issue or electrical breakdown?
A standard home insurance policy alone likely won’t help in those scenarios; however, equipment breakdown coverage, also known as mechanical breakdown insurance, often can.
How does equipment breakdown coverage work?
Equipment breakdown coverage is optional coverage you can purchase as an add-on (endorsement) or stand-alone policy. This type of insurance can provide financial protection for many of your home's major systems and appliances after a sudden, accidental breakdown. Damage can stem from motor burnouts, electrical shorts and surges, ruptured pipes, broken valves, and internal pressure issues.
Should you experience a covered loss, you can file an equipment breakdown insurance claim, and your insurer will help cover the cost of repairs or replacements, up to your policy limit and minus your deductible.
What does equipment breakdown coverage cover?
Coverage can vary by policy and insurer, but equipment breakdown coverage typically will help you pay for repairs or replacements for the following:
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Electrical systems, including panels, circuit breakers, and wiring
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Hardwired and central security and safety systems, such as burglar alarms, fire and carbon dioxide detectors, and surveillance systems
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Heating/cooling systems, including furnaces, boilers, central air, and heat pumps
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Household appliances, such as refrigerators, dishwashers, ovens, washers, and dryers
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Water systems, including sump pumps, well pumps, and water heaters
What isn’t covered by equipment breakdown coverage?
Equipment breakdown coverage can cover unexpected, accidental malfunctions and breakdowns, but it generally won’t help you cover repairs or replacements due to the following:
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Normal wear and tear
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Lack of maintenance or neglect
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Rust, corrosion, and cracking
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Mold or rot
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Damage caused by animals, such as birds or rodents
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Damage caused by fire, theft, windstorms, and other issues commonly covered by a standard home insurance policy.
What’s the difference between equipment breakdown coverage and a home warranty?
Both equipment breakdown coverage and home warranties can provide financial protection for your home’s major systems and appliances, but there are significant differences between the two.
As mentioned above, equipment breakdown coverage is a type of insurance you can purchase as a stand-alone policy or potentially add to your existing home insurance policy. It covers home systems and major appliances if they break down due to sudden electrical or motor failures.
A home warranty is a service contract, not an insurance policy. It helps pay for major system and appliance repairs and replacements after electrical and mechanical breakdowns, but it also usually covers general wear and tear issues. As such, home warranties are often more expensive than equipment breakdown coverage.
Both equipment breakdown coverage and home warranties usually have coverage limits and deductibles. However, depending on your provider and plan, home warranties may require you to pay a service fee.