Homeowners policies come with a variety of endorsements, packages, and bundles – each with their own unique or clever name. It’s important to understand what endorsement or coverage is included in your homeowners policy. While there are a variety of very important endorsements that you should consider adding to your homeowners policy, we are going to be discussing one today: Equipment Breakdown Coverage.
Those who are familiar with commercial policies may be more familiar with equipment breakdown coverage (especially if that business has a boiler or a similar piece of equipment). Most individuals are not aware that many (but not all) insurance carriers offer a similar endorsement for their personal policies. It is often quite inexpensive and covers a variety of equipment for causes that would not be covered otherwise.
Let’s start by defining what the coverage is: coverage for mechanical breakdown, electrical breakdown and power surge to all real and personal property. Usually the policy deductible would apply to all covered losses and some companies place a maximum limit that would be paid out for any one occurrence. It’s also important to ask if there is any waiting period for coverage to be effective if the endorsement is added mid-term.
Coverage is generally provided for all electrical and mechanical equipment such as furnaces, air conditioners, water heaters, dishwashers, refrigerators, washers, dryers, computers, televisions, etc. While these items are covered under your personal property coverage on your home policy – it is the cause of loss where this endorsement creates value. The cause of loss is unique to this endorsement (and parts of it would be covered under special personal property coverage (see next blog post for more info)).
An important note: although mechanical breakdown carries a broad definition in most insurance policy forms – many times there are important exclusions to this coverage. For example, a policy form may exclude coverage for normal wear and tear or breakdown due to negligence.
As always, please ask your insurance professional any additional questions you may have regarding this topic. We feel as though there is value in this endorsement – if the company you are with offers this coverage. Please read policy forms for exact coverage.