Do I need equipment breakdown coverage?

You likely have more costly appliances, equipment and electronic devices in your home now than ever before. For business owners, you probably rely on industry-specific machinery and equipment to run your business. Smart technology, security systems and connected homes are part of everyday life for many property owners. More people have set up home offices for remote work. Others upped their home workout game with the purchase of expensive gym equipment during the pandemic. Modern technology makes our lives more comfortable, keeps your household or business running efficiently and makes life more fun.

But when sophisticated equipment that you heavily rely on breaks down, your entire life can grind to a halt. Repairs are almost always inconvenient and usually expensive. Replacing or repairing your appliances and devices is costly. What if your insurance policy can help with that?

Sounds too good to be true, right? Not if you have equipment breakdown coverage on your insurance policy. An equipment breakdown coverage endorsement protects against certain mechanical and electrical breakdowns in your home or business.

What is covered under an equipment breakdown endorsement?

Equipment breakdown coverage protects many common personal belongings and systems from mechanical, electrical and pressure systems breakdown. Here’s a list of what’s typically covered:

• HVAC systems
• Electrical systems
• Security systems
• Smart home monitoring devices
• Refrigerators
• Personal computers
• Washers and dryers
• Water heaters
• Pool and jacuzzi equipment
• Home electronics, including computers
• Garden tractors
• Well pumps and more

In addition to covering mechanical items, an equipment breakdown endorsement includes other benefits like: coverage to expedite repairs, spoilage coverage for the loss of perishable goods, pollutant cleanup and removal, coverage for the equipment if the repair needs taken care of off your property, lost business income, liability coverage if a breakdown at your home or business causes damage to someone else’s property, additional living expenses, and safety, efficiency and environmental improvements.

Is equipment breakdown coverage expensive?

Adding this endorsement to your policy typically increases your premium by less than $10 a month and provides $100,000 of coverage (subject to a $500 deductible) for each covered equipment breakdown.

Isn’t the equipment inside my home or business already covered?

Many property owners mistakenly believe their appliances, technology and systems are covered for mechanical and electrical breakdown under their standard policies and warranties.

Homeowners insurance policies

Homeowners policies protect against sudden and fortuitous losses usually from external perils, such as weather events, natural disasters, fire and theft. Typically, there are exclusions for direct loss of property due to mechanical and electrical failure.

Home warranties

Home warranties are expensive, and they only cover specific items up to very limited amounts (such as $2,000) for failure due to normal wear and tear. Even requesting service often comes with a fee.

Businessowners policies (BOP)

Similar to a homeowners policy, a standard BOP pays for damage to your business premises, equipment and property and income losses. Standard coverage includes external perils like fire, weather events, natural disasters, burglary and theft. Factors like parts failure, electrical systems failure and power surges that cause equipment breakdown aren’t covered.

Manufacturer warranties

Manufacturers’ product warranties might only cover products for a certain period, not the entire lifetime, and are often only pertinent to specific defects. They can also easily be voided.

What is not covered by an equipment breakdown endorsement?

Equipment breakdown coverage does not apply to equipment breakdown caused directly by perils such as the following:

• Wear and tear
• Rust or other corrosion
• Hidden or latent defect
• Mold
• Smog
• Settling or cracking
• Nesting or infestation of birds, rodents or other animals
• Processing of data by any computer system
• Scratching and marring
• Any other peril covered under the base homeowners policy

Equipment and systems that stop functioning simply because they are old are not covered. The best way to keep things running smooth is to maintain your equipment with regular checks by trained technicians.

What are some examples of covered losses under an equipment breakdown endorsement?

A home’s hot water heater suddenly burst and requires replacement. It was well within its useful lifespan but suffered a mechanical failure. Upon inspection, it is determined that the water heater showed no signs of unusual wear and tear, corrosion or defect. The cost to replace it with an energy efficient model of the same capacity would be covered.

The heating element in your bakery’s oven shorts out and quits working. You can’t bake any product to sell and can’t open for business. Your bakery is forced to close for several days while waiting on replacement parts and installation. The repair and replacement costs to your oven and the thoroughly documented income you lost would both be covered.

A homeowner’s high-end amplifier used for his home theater system suddenly stops working. A technician has determined that the home theater has suffered an electrical failure due to a power surge not caused by lightning. As a result, the cost to repair or replace the damaged electrical components to bring the amplifier to its pre-loss condition would be covered.

Equipment breakdown coverage provides an easy and cost-effective way to protect your valuable equipment against mechanical, electrical and pressure system breakdowns. It’s a smart solution to bridge the coverage gaps of standard business and home insurance policies and other warranties.

Talk to your insurance representative today to find out about available equipment breakdown coverage options. Protect your home or business with just a few extra dollars added to your monthly premium.

_{No coverage is provided by this summary, nor can it be construed to replace any provision of your policy. You should read your policy for complete information on the coverages you are provided. If there is any conflict between the Policy and this summary, THE PROVISIONS OF YOUR POLICY SHALL PREVAIL.}