What is equipment breakdown coverage?


Equipment breakdown coverage protects household systems and appliances if they're damaged due to a mechanical or electrical failure.

Pat Howard 1600


Pat Howard

Pat Howard

Senior Editor & Licensed Home Insurance Expert

Pat Howard is a senior editor and licensed home insurance agent at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Updated January 14, 2021 | 3 min read

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If your household appliances are damaged in a fire or weather event, your homeowners insurance can reimburse you for the loss. Appliances that break down due to electrical and mechanical failure typically aren’t covered by home insurance, but some insurers give you the option of supplementing that gap in coverage by adding equipment breakdown coverage to your policy for an additional premium.

Equipment breakdown coverage functions similarly to a home warranty, covering everything from refrigerators to furnaces to home entertainment systems in the event they break down.

Equipment breakdown coverage is a pretty cheap add, typically costing anywhere from $25 to $50 annually for $50,000 of coverage. Check out what kind of additional coverages your insurance company offers. If you want additional protection for your home appliances, you should consider an equipment breakdown coverage endorsement.

Key Takeaways

  • Equipment breakdown coverage is a homeowners insurance policy endorsement that covers electrical and mechanical breakdown

  • Equipment breakdown coverage protects most equipment and built-in systems in your home, including your HVAC, water heater, and personal computers

  • Property that breaks down due to normal wear and tear typically isn’t covered by equipment breakdown coverage

How does equipment breakdown coverage work?

Equipment breakdown covers damage to household systems, appliances, and electronic equipment that is caused by mechanical or electrical failure. Many insurance companies now offer equipment breakdown coverage as an add-on to your homeowners insurance for as little as $2 a month.

Equipment breakdown coverage can help cover the cost of physical loss or damage resulting from the following:

  • Mechanical breakdown, like if your water heater ruptures

  • Electrical breakdown from a power surge

  • Breakdown due to improper installation

  • Pressure systems breakdown

What does equipment breakdown coverage not cover?

You won’t be reimbursed for appliance repairs or replacement if the damage or loss is caused by wear and tear, including rust or corrosion, deterioration, any defects, mold, cracking, shrinking or expanding, or pest damage.

Like homeowners insurance, equipment breakdown coverage won’t reimburse you for something that breaks down because it’s old, corroded, or just poorly taken care of. If you have old appliances, you may need to self-insure for their replacement.

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What type of systems and appliances are covered by equipment breakdown coverage?

Equipment breakdown coverage protects a variety of different appliances and devices in your home when they break down because of a covered incident. It may even cover certain residual losses like food spoilage.

Here are some examples of covered equipment:

  • Heating and air conditioning systems

  • Computers and computer equipment

  • Data restoration

  • Refrigerators and freezers

  • Food spoilage

  • Washers and dryers

  • Ovens and microwaves

  • Boilers and furnaces

  • Water heaters

  • Back-up generators

  • Home entertainment systems

  • Sump pumps

  • Home gym equipment like a treadmill

  • Jacuzzis

  • Electrical power panels

  • Home security systems

A typical equipment breakdown endorsement will give you around $50,000 in coverage for damaged appliances per occurrence. An occurrence could be a single power surge that destroys multiple appliances in your home, or something smaller like your refrigerator breaking down and the resulting food spoilage.

With equipment breakdown coverage, you typically have to pay anywhere from a $250 to $500 deductible before coverage kicks in, meaning your insurance company will only reimburse you after you pay that amount.

Once you pay your deductible your insurer may reimburse you for the following:

  • Any temporary repairs you already made

  • Cost of expediting permanent repairs or replacement

  • Cost of any spoilage that resulted from a covered occurrence

  • Additional living expenses resulting from a covered occurrence

Is equipment breakdown coverage worth it?

An equipment breakdown endorsement is a tremendous value for the amount of coverage you’re getting. At $25 to $50 a year, you’re essentially getting protection for pennies a day.

Many carriers also now offer high-efficiency replacements for appliances, like Energy Star water heaters, HVAC systems, and refrigerators if yours go kaput. If you live in an older home or recently moved into a house with aging systems and appliances, adding equipment breakdown coverage to your policy is a no-brainer.

Is equipment breakdown coverage the same as a home warranty?

No. A home warranty is a separate product that’s typically sold by a home warranty company, not a property insurance company. Equipment breakdown coverage is simply an upgrade you can choose to add to your homeowners insurance policy.

Home warranties are also more expensive than equipment breakdown coverage, costing anywhere from a couple hundred to a thousand dollars a year, and you’re typically only covered for equipment that’s specifically listed in your warranty. With an equipment breakdown endorsement, your coverage is for all applicable property in your home.

Additionally, home warranties are typically bound by a contract — typically up to a year — whereas equipment breakdown coverage lasts as long as your home insurance policy is in force.

Curious about the best insurance companies for equipment breakdown insurance and other types of additional coverages? Look no further than a licensed agent at Policygenius who can help you find that extra bit of coverage for your home.