Does homeowners insurance cover furnace replacement?

Homeowners insurance covers built-in appliances, including your furnace and other parts of your heating, ventilation, and air conditioning system (HVAC) when they are damaged by a covered loss. If your furnace or another part of your HVAC system are destroyed by a house fire or randomly explode, you may be reimbursed by homeowners insurance for repairs or a new furnace.

But furnaces that break due to mechanical breakdown, improper installation, or years of use likely aren’t covered by standard homeowners insurance. You also won’t be covered for furnace replacement or repairs if it’s damaged in an earthquake or flood.

Are broken furnaces covered by homeowners insurance?

Given the fact that a new furnace or boiler can run homeowners thousands of dollars, you’re probably wondering if homeowners insurance will pay out if your existing unit stops working one day. The answer is, it depends.

Homeowners insurance will generally pay to repair or replace your broken furnace, boiler, outdoor condensing unit, or another part of yourHVAC unit if it’s damaged by a covered peril. Common causes of furnace damage that are covered by homeowners insurance include:

Sudden and accidental occurrences

If a burst pipe causes your basement to flood and your furnace incurs water damage, homeowners insurance may pay for its repairs or a new unit. If your furnace suddenly explodes or cracks because of a mechanical issue, that may be covered as well.

Freezing

If your furnace freezes up, homeowners insurance may cover replacement or repairs as long as you maintained heat in your home at the time of the loss.

Falling objects

If a windstorm causes a healthy tree to fall onto your outdoor condensing unit and causing damage, that may also be covered by homeowners insurance

Other common causes of furnace damage

Additionally, homeowners insurance will reimburse you for a new furnace if your home is destroyed in a fire. If a lightning strike causes a power surge that damages your furnace, that should also be covered by homeowners insurance.

When are broken furnaces not covered by homeowners insurance?

Homeowners insurance likely won’t reimburse you for the cost of furnace repairs or a new unit if it’s damaged by any of the following:

Earth movement

Standard home insurance policies typically exclude damage caused by earth movement or “acts of God” including sinkholes, mudslides, landslides, and floods. Your policy won’t cover your furnace if it’s damaged in an earthquake either, but you may be able to purchase a separate earthquake policy to protect against quake damage and tremors.

Certain types of water damage

A standard policy will cover water damage that is sudden and accidental, but flash floods, sewage backup, and gradual leaks are generally not covered. To protect a furnace in your basement from flood water damage, consider a separate flood insurance policy.

Regular wear and tear

Home insurance likely won’t reimburse you for your broken furnace if it gives out due to poor maintenance, old age, or neglect. If smog, rust, or corrosion cause your furnace to break down and go kaput, a standard policy won’t cover the damage. However, you can protect your furnace against mechanical and electrical failures with equipment breakdown coverage, a policy add-on offered by some insurance companies. Furnaces that are improperly installed or damaged by artificial electrical currents can be reimbursed with equipment breakdown coverage for as little as $25 to $50 a year.

Pest damage

Pest damage is common when it comes to HVAC systems, but if a rat chews through the electrical components of your furnace, you probably won’t receive coverage for repairs. In general, damage from birds, vermin, rodents, insects, and even your own pet may not be covered by standard homeowners insurance.

Other perils that are typically not covered by a standard policy include power failure, intentional loss, government action (such as war), and nuclear hazards.

How to file an HVAC insurance claim

Furnaces and other HVAC units are covered by the dwelling and personal property provisions in a standard policy. Both coverages come with a deductible, requiring you to pay a certain amount of money upfront before your insurer will cover the rest. If your furnace requires $1,000 in repairs and your deductible is $500, you’d pay that amount before the insurance company covers the remaining $500 of the loss.

When you’re ready to file a claim, contact your insurance company to kickstart the process. (If your furnace was damaged in a criminal act, call 911 first to file a police report). Your insurer will ask you to provide your policy information, photos of the damage, and other documentation, like a home inventory, to verify the value of your furnace.

You may be assigned a claims adjuster who will investigate the furnace and determine how much the damage is worth. The declarations page of your home insurance policy will tell you whether or not you’ll be reimbursed up to your furnace’s replacement cost value (meaning how much it would cost to replace it with a new or similar version), or its actual cash value which (which refers to how much the furnace was worth at the time of the damage).