Equipment breakdown coverage is an optional insurance coverage that protects against sudden electrical or mechanical breakdowns of home appliances and systems.
Michelle Lambright Black is a credit expert, freelance writer, and founder of CreditWriter.com. She has over 20 years of experience writing and speaking about credit and money, and focuses on helping families and small business owners make smart, informed decisions about their credit, money, and financial products (including insurance). Michelle's work has appeared in publications such as Yahoo! Finance, Reader's Digest, Parents, FICO, Forbes, Bankrate, The Seattle Times, MarketWatch, BuySide from Wall Street Journal, USA Today, and more. She's also a three-time finalist for the best personal finance freelancer award from the Plutus Foundation. When she isn't writing or speaking about credit and money, Michelle loves to travel with her family or read a good book. You can connect with Michelle on Instagram or Twitter.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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Homeowners insurance typically only covers appliances and home systems, like your heating, when a covered peril damages them. But home insurance usually doesn’t cover breakdowns from a mechanical or electrical failure.
Equipment breakdown insurance provides coverage for certain types of unexpected damage, like electrical surges. This add-on coverage is relatively inexpensive and can help cover the cost to replace or repair your appliances or home systems.
Here’s what you need to know about how equipment breakdown coverage works and who may want to consider this type of protection.
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What equipment breakdown coverage includes
Equipment breakdown coverage is an optional endorsement that home insurance companies offer. Small-business owners and landlords may also benefit from this optional coverage to protect their investments.[1]
In general, equipment breakdown coverage provides financial protection for household systems, appliances, and electronics if they break down due to sudden mechanical or electrical system failure. But it may cover the repair or replacement of other types of equipment as well (up to the coverage limit).
Below are some examples of issues equipment breakdown insurance covers:
Unplanned mechanical breakdown: Sudden, accidental equipment failure that happens due to uncontrollable circumstances may qualify for coverage. Failure due to improper installation is also typically covered.
Electrical surges: Electrical surges often wreak havoc on electrical systems and appliances in the home, including air conditioning units, home entertainment systems, computer equipment, kitchen appliances, and more. After a surge, you may be able to rely on equipment breakdown coverage to help cover repair or replacement costs (minus your deductible).
Steam boiler bursting or rupturing: Equipment coverage may protect you if a gas water heater tank ruptures suddenly or if you experience the sudden failure of a furnace, boiler, or heat pump for a covered reason.
What equipment breakdown coverage excludes
Equipment breakdown coverage won’t protect you in every situation. Here are some examples of exclusions this type of insurance might not cover:
Scheduled maintenance costs: Equipment breakdown coverage won’t help you pay for everyday maintenance expenses. Consider purchasing a home warranty to help pay for scheduled maintenance costs.[2]
Lack of maintenance: Your equipment breakdown insurance typically won’t cover appliances and systems that go unserviced. For instance, if your air conditioner breaks down because you never change the filter, you’ll likely have to pay out of pocket for repairs or replacement.
Pre-existing conditions: Your insurance company might deny your claim if an equipment malfunction happened because of a problem that existed before you purchased your insurance coverage.
Improper use damage: Equipment breakdown insurance most likely won’t cover you if you’re using an appliance or household system the wrong way and it leads to damage.
Who needs equipment breakdown coverage
Consider adding an equipment breakdown coverage endorsement as an add-on to your insurance policy if you could use financial protection for the appliances and systems in your home, business, or rental property. Below are three groups of people this type of policy might benefit.
Homeowners
In general, your homeowners insurance won’t cover the appliances or systems in your home if an equipment breakdown occurs.[3] Yet paying to repair or replace home appliances and systems such as HVAC systems, water heaters, alarm systems, electronics, pool equipment, and more can easily cost thousands of dollars or more if something goes wrong.
Equipment breakdown coverage helps homeowners pay for the costs of expensive repairs and replacements when covered losses happen.
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Business owners
Small businesses that operate equipment may want to consider carrying machinery insurance to cover unexpected mechanical failure or equipment breakdowns.
Not only can it be expensive to repair or replace faulty equipment or machinery when breakdowns happen, but you may also have to deal with lost business income. Equipment breakdown coverage helps protect business owners financially.
Landlords
Landlords typically have landlord insurance to protect a real estate investment. But it could also be a good idea to add on equipment breakdown coverage in case you need to respond to mechanical equipment breakdowns at your rental properties.
This type of insurance coverage provides landlords with financial protection against sudden electrical or mechanical breakdowns.
How to file an equipment breakdown coverage claim
The exact claims process may differ from one insurance company to another. So it’s important to review your homeowners insurance policy for more details before you file a claim. Here are the basic steps to file an equipment breakdown coverage claim:[4]
1. Document the damages
Take pictures of any damaged appliances or household systems. If you have receipts that show the prices you paid for the items in question, it can be helpful to include this information as well.
2. Make temporary repairs
In some cases, you may need to make temporary repairs to protect your home from further damage. If you have to spend money on these repairs, save and submit your receipts for reimbursement.
3. File the claim
Next, contact your insurance agent or company to file your equipment breakdown coverage claim. Depending on your insurance company, you may be able to start this process online, over the phone, or on the insurer’s mobile app. Be sure to complete any paperwork your insurance company requests and submit documents such as pictures, receipts, and proof of loss forms in a timely manner.
4. Communicate with your adjuster
Insurance companies typically assign an adjuster to review your claim. The adjuster’s job is to determine if your loss is eligible for coverage and, if so, to estimate the cost of repairs or replacement of your damaged equipment. Keep in mind that if you disagree with the insurance company’s decision during this process, you may be able to negotiate or appeal in the case of a claim denial.
Equipment breakdown coverage FAQs
If you’re considering adding equipment breakdown coverage, here’s some additional information that may help.
What does equipment breakdown coverage mean?
Equipment breakdown coverage is a type of insurance endorsement you may be able to add to your homeowners insurance policy to cover sudden electrical and mechanical damage to appliances and household systems. Business owners and landlords may also be able to purchase this type of insurance.
What does equipment breakdown coverage exclude?
Equipment breakdown coverage won’t pay for damage from normal wear and tear. And if you fail to maintain your appliances or household equipment, your insurance company won’t pay for damages that take place as a result.
What is an example of equipment breakdown loss?
If your refrigerator breaks down after a power surge during a lightning storm, your equipment coverage will most likely cover the loss. In addition to paying to fix or replace your refrigerator, your insurer may also cover the cost of any spoiled food in the fridge after you meet your deductible.
How does equipment breakdown insurance work with other types of insurance?
Equipment breakdown insurance is an optional insurance endorsement that some insurance companies offer as an add-on product in addition to the protection that traditional homeowners insurance provides. If available, you’ll pay an additional fee to add this extra coverage to your policy. This type of endorsement can provide protection from potential financial loss that other homeowners insurance policies exclude.
Michelle Lambright Black is a credit expert, freelance writer, and founder of CreditWriter.com. She has over 20 years of experience writing and speaking about credit and money, and focuses on helping families and small business owners make smart, informed decisions about their credit, money, and financial products (including insurance). Michelle's work has appeared in publications such as Yahoo! Finance, Reader's Digest, Parents, FICO, Forbes, Bankrate, The Seattle Times, MarketWatch, BuySide from Wall Street Journal, USA Today, and more. She's also a three-time finalist for the best personal finance freelancer award from the Plutus Foundation. When she isn't writing or speaking about credit and money, Michelle loves to travel with her family or read a good book. You can connect with Michelle on Instagram or Twitter.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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