Property Equipment Breakdown Coverage

Generally, our homes are packed with several appliances that may be subject to damage. If your household appliances are damaged in the case of a detrimental weather event or fire, your homeowner’s policy can reimburse you for your losses as these are your insurable interests. However, your homeowner’s insurance doesn’t cover you for appliances that break down because of electrical or mechanical failure. Some insurance companies will provide you with the option to add the equipment breakdown coverage endorsement to your policy. The equipment breakdown endorsement works similarly to a home warranty. The policy can cover a wide range of appliances, from home entertainment systems to refrigerators and microwaves if they experience some malfunction.Equipment breakdown coverage is not an expensive add-on to your homeowner’s policy. Usually, it can cost between the region of $25 to $50 annually for up to $50,000 of appliance cover. Please Note: Wear and tear to your equipment or appliances is not usually covered by this endorsement. Also, equipment breakage coverage insurance is commonly used in Business Owner policies. To help cover costs in the event of equipment breakage.

What is Not Covered by Equipment Breakdown Coverage?

Usually, any repairs or replacements to your appliances will not be reimbursed if the loss or damage to your appliance is caused by wear and tear, as mentioned above. Other damages such as pest damage, mold, rust, corrosion, deterioration, or other defects will also not be covered. Just like a standard homeowner’s insurance policy, adding the equipment breakdown coverage will not offer you reimbursement for an appliance that stops functioning because it is poorly taken care of or old.

Key Insight: If you have old items or equipment that you want to be covered, then it will be best to look at individually insuring them.

What Appliances and Equipment Types are Covered?

The equipment breakdown coverage helps protect a wide variety of appliances and devices within your home if they break down or become damaged because of a covered incident. In some instances, the endorsement policy may even protect losses that cause food spoilage.There are five main categories of equipment or appliances that this Equipment Breakdown Coverage endorsement covers:

  1.    Electrical breakdowns: which includes home entertainment systems, as well as electrical power panels and cables
  2.    Communications and computers: including computers and computer equipment, phone systems, fire alarm systems, security systems, and many others.
  3.    Air conditioners and refrigerator systems
  4.   Mechanical breakdown: which includes gym equipment like treadmills, generators, water heaters.
  5.    Boiler and pressure equipment breakdown
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    How Much Does It Cost?

    Most insurance companies will provide the equipment breakdown add-on to your homeowner’s policy for as little as $2 per month.

    Close up of couple calculating costs

    Adding the equipment breakdown endorsement to your policy will give the average home around $50,000 coverage for any losses caused to household appliances for each damage occurrence.An occurrence could be anything from a single rise in power that causes multiple appliances in your house to malfunction or your refrigerator breaking down and cause food spoilage.Before your insurance company processes your reimbursement, you, the insured, must pay your deductible. Typically, you can expect to pay between $250 to $500 deductible before the cover applies. If your deductible amount has not been paid, you will not receive any coverage.Once your insurance company has received your deductible pay, they may reimburse you for the following:

    •      Cost of any food spoilage that resulted from a noted occurrence
    •      Cost of carrying our permanent repairs or replacements
    •      Any patch up repairs you made temporarily
    •      Further living expenses that arise from a covered occurrence

    Home Warranty vs. Equipment Breakdown Coverage

    Unlike the equipment breakdown coverage that is an add-on to your homeowner’s policy, a home warranty is separate protection sold by a home warranty company.Home warranties are a lot pricier than equipment breakdown coverage and usually cost between $300 to $1000 per year.Equipment breakdown cover protects a wide range of appliances found within your home; however, there is a specific list of equipment detailed in your warranty under a home warranty scheme.

    Roundup: Is Adding the Endorsement Worthwhile?

    Equipment Breakdown Coverage will only cost you between $25 to $50 per year, and for the amount of coverage (up to $50,000), you receive its definite value for money.Several companies now provide high-efficiency appliance replacements for equipment such as refrigerators.Furthermore, if you live in an older home with outdated appliances, adding the endorsement will help protect such items.Equipment breakdown cover lasts for as long as your home insurance policy is in date, so you do not need to worry about renewing your policies separately.Or, if you run a business with expensive machinery that helps you provide your core services or products, then this coverage is a small investment compared to a machine breaking down.

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