The Importance of Equipment Breakdown Coverage


One insurance coverage that is extremely important to property owners – and is sometimes overlooked – is Equipment Breakdown Coverage. Equipment Breakdown insurance has been available for commercial property owners for quite a while, but it is now commonly available as an endorsement to homeowner and rental dwelling policies.

This valuable line of protection typically covers three types of losses:

1.Electrical breakdown
2.Mechanical breakdown
3.Rupture, bursting, bulging, implosion, or steam explosion

And this definition leads to a couple of commonly asked questions:
1.What exactly does it cover in my home?
2.Is this needed if I just bought my house and had a home warranty?

All covered property – your dwelling as well as your personal property – is covered by Equipment Breakdown insurance. Typical examples include air conditioning units, water heaters, refrigerators, furnaces, and electrical systems.

In many cases, this coverage is significantly broader than what home warranties cover and is only a fraction of the cost. It is not unusual to see home warranties cover specific equipment or systems in a home while other parts of homes that utilize electricity can only be covered for an additional cost (or in some cases not at all).

Our agency has seen many claims covered by Equipment Breakdown coverage over the years, many of which are associated with HVAC units as well as intricate home theater systems. Power surges can wreak havoc on these types of systems and the repair bills easily run into thousands of dollars.

One thing that needs to be understood, however, is that Equipment Breakdown insurance does not cover wear and tear or deterioration due to regular use. To be covered, the loss needs to be sudden and accidental rather than gradual. This type of coverage is just like other property insurance coverage and is not for maintenance purposes.


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