Does Homeowners Insurance Cover HVAC Damage?
Your homeowners insurance likely covers your HVAC or AC unit if the damage resulted from specific circumstances. For example, if damage to your AC unit occurred due to a peril (cause of loss) stated within your homeowners insurance policy, such as a fire, it may be covered. It won’t cover damage from normal wear-and-tear or defective manufacturing.
This may come as a relief for your wallet. After all, $14 billion is spent on HVAC services or repairs every year, with three million units replaced altogether.
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Keep Cool Under the Stress of a Broken HVAC System — Managing HVAC Damage
An HVAC system stands for heating, ventilation, and air conditioning. Although called a “system,” your heating, ventilation, and cooling may work independently as stand-alone parts of the overall HVAC system.
These parts and systems can be expensive to repair or replace. If damage occurs to any aspect of your home’s heating, cooling, or ventilation, you may quickly find your house uncomfortable or uninhabitable. That’s why it’s good to know whether your homeowners insurance policy might help to repair or replace a unit before any problems arise.
When Does Homeowners Insurance Cover HVAC?
“Dwelling coverage” of your homeowners insurance covers damage to your house’s central heating or cooling (AC) units. Common perils may damage or destroy your HVAC, allowing you to make a claim against your homeowners insurance policy.
Typically homeowners insurance covers sudden and unexpected damage—not a failure due to a unit’s age, homeowner-caused damage, or slow degradation. Here are common ways your homeowners insurance might cover your AC or HVAC.
Fire coverage is one of the most basic forms of insurance required by most lenders and may even be sold as a standalone policy. This policy covers costs associated with fire and smoke damage, as long as the fire wasn’t set intentionally. It may even cover fire-related costs if an earthquake or other natural disaster initially caused the fire.
If you suffer a loss due to a lightning strike, your homeowners insurance policy will likely cover the damage. For example, lightning could cause a power surge in your home, damaging or destroying your HVAC unit. Lightning claims are higher in some states than others—specifically Florida, Texas, Georgia, and California.
Most policies will include falling objects, which includes fallen trees. This covers damage to your home and its contents from trees and branches, and may pay for tree removal. It will cover costs associated with a fallen tree, whether on your property or a tree fallen from your neighbor’s property. If a tree fell on your home and managed to also damage your HVAC, insurance likely covers costs associated with repair and replacement.
Vandalism and Theft
HVAC systems may contain valuable materials that thieves can steal and sell, including copper. Component theft can lead to further HVAC damage requiring you to fix or even replace your unit. Whether theft or vandalism, this is often covered by homeowners insurance. It’s critical to file and obtain a police report to give to your insurance company.
Water Damage From Burst or Leaking Pipes
Many homeowners’ policies will cover sudden and accidental discharge or overflow of water or steam from a heating or air conditioning system. This helps cover repairs to flooring or other water damage. In addition, if a plumbing system’s water line bursts and ruins your HVAC unit, you might be covered.
Frozen water line pipes can burst and leak during extremely cold temperatures. If your water lines freeze and burst, and water damages your heating or AC unit, your homeowners insurance policy may pay for repairs or replacement. Freezing of a heating or air conditioning system may also be covered.
When Does Homeowners Insurance Not Cover HVAC?
A homeowner insurance policy likely won’t cover HVAC destruction or damage from the following risks:
- Homeowner-caused damage
- Improper maintenance
However, it may be possible to get an additional type of policy that does help pay to repair HVAC damage in certain cases.
Depending on where you live, your insurance policy likely won’t cover damaged AC units and other HVAC parts due to a natural disaster—unless you have an add-on or rider policy for that specific disaster. For example, flood insurance and earthquake insurance are often sold separately. You may also qualify for a FEMA assistance program to repair HVAC damage, in some cases.
If you damage any part of your HVAC system through negligence or on purpose, you won’t be able to get repair or replacement costs covered.
Wear-and-Tear or Improper Maintenance
If you don’t take care of your HVAC system or it breaks down after years of use, you probably can’t get repair or replacement costs covered. Perils are typically sudden and unexpected events—not those that occur over time, as expected. However, you may be able to buy a mechanical breakdown policy or home warranty for some qualifying issues.
Window AC Units
A window AC unit draws air in from outdoors and cools the air in your house. Damage to this smaller or portable type of AC system may be covered by your insurance policy’s personal property coverage. A window AC unit functions more like a personal possession versus part of the home because you could take it with you if you move.
The Cost of Repairing an HVAC Unit
AC units and HVAC units don’t often fail altogether, but typically have parts that must be replaced or repaired to keep functioning. However, one or more parts may fail at once, causing expenses to add up.
For example, repairing a furnace can range from $100-$1,500 depending on the broken part. If you also need to replace a gas valve, that could be anywhere from $200-$1,000. An air conditioning system’s parts could be inexpensive—$90 for a capacitor replacement—to up to around $2,300 to replace your air compressor.
Replacement costs depend on several factors:
- Your location
- The cost of services
- The furnace manufacturer
In general, air conditioning units cost more than HVAC units, and a combined HVAC/AC unit takes more out of your wallet than either, separately. Prices range from around $3,500 for an electric furnace to $25,000 or more for a geothermal heat pump.
How To File an HVAC Claim With Your Insurance Company
If the cost to repair or replace your HVAC unit is more than your deductible (your portion of costs, chosen when buying the policy), you’ll probably want to file a claim. Here’s how to do it.
1. Photograph damage
As soon as it’s safe to do so, take photos of the damage to your HVAC unit from multiple angles. If it might help, include the context, too. For example, photograph the tree that fell on your home from the exterior, or where the fire started. Do not throw anything away until the claim has been settled.
2. Contact the police
If your HVAC or AC unit was stolen or vandalized by intruders, damaged when a car crashed into your home, or ruined due to another potentially criminal act—inform law enforcement as soon as possible. The police report helps support your claim to the insurance company. In addition, you may want to gather the names of any police officer you speak with.
3. File claim online or call insurer
Call your insurer as soon as possible. Follow the insurer’s direction on next steps for filing a claim. Ask whether your deductible is likely lower or higher than the damage sustained, and how long the process might take.
If you’re without heat on a day experiencing unsafe cold temperatures, ask if you can stay in a hotel, as covered under your homeowners’ insurance additional living expenses (ALE).
4. Confirm form of reimbursement
You may be reimbursed in two ways if your HVAC or AC unit claim is covered:
Replacement value: Pays you the amount needed to replace the item. For example, an AC unit you purchased 10 years ago for $500 might only be worth $100 today. But purchasing an equivalent unit is $700. Under replacement value, your new $700 AC unit is covered if you show proof of replacing the item.
Actual cash value (ACV): Pays the amount needed to replace the item minus any loss in value due to depreciation. For example, an AC unit you purchased 10 years ago for $500 might only be worth $100 today. Your insurer will reimburse you for $100.
In general, insurance reimburses personal property (such as a window AC unit) based on actual cash value at first. If you replace the unit, you can file a claim for replacement value—which is likely higher than actual cash value.
5. Repair or Replace Unit
It’s important to first assess whether it’s worth repairing a broken HVAC, or better to just replace it. Multiply the unit’s age by repair cost. If this amount is more than $5,000, replacing your HVAC might be wise. Another rule of thumb is to consider is whether you’re spending more than 50% of replacement costs on repairs.
You can also consider:
- How often you currently need to repair the unit
- Whether the unit poses any safety hazards
- If the A/C is older than 10 years or HVAC older than 15 years
Of course, if a covered peril destroys the unit, you’ll need to replace it. If you have insurance that covers replacement value (or extended replacement value) you may be able to get a more efficient, modern HVAC system.
6. Submit receipts to insurer for reimbursement
Follow your insurer’s instructions on how to submit receipts—many accept electronic submissions via an app. Homeowners insurance claims often lead to multiple checks from your insurer. For example, you might need to pay for tree removal, a new HVAC unit, and labor for installation. You’ll submit receipts to your insurer for reimbursement at each step along the way, and receive reimbursement as long as you’ve already paid your deductible.
What Else You Should Know
If your homeowners insurance or natural disaster policy doesn’t cover a broken HVAC or AC unit, you could have other options. However, in all cases, you’ll need to have policies before the damage occurs. So, it’s worthwhile to know your options before anything happens.
Mechanical Breakdown Coverage
Mechanical breakdown coverage, also known as equipment breakdown coverage, covers mechanical and electrical malfunctions of heating systems, AC systems, boilers, and other devices and appliances. An example of this would be if a power surge damages your AC system.
This is a type of add-on homeowners insurance or endorsement you can purchase, typically for around $25-$50 per year. Mechanical breakdown still doesn’t cover the cost of wear-and-tear or homeowner damage—and you’ll pay your deductible before your coverage kicks in.
Perhaps insurance doesn’t cover the damage—or you don’t want to file a claim with your insurance company. There is an alternative if you have a home warranty. A home warranty is a type of service contract covering a system or appliance’s sudden and unexpected malfunction.
Home warranties vary considerably. With most, you pay an annual fee, plus an additional service fee for a professional to inspect the unit, assess repairs, and perform the repairs. Only some types of HVAC units or items inside units may be covered, and you plan might have coverage limits.
A home warranty won’t cover damage typically covered by homeowners insurance or an add-on policy, such as fire, flood, or fallen trees. It may not cover damage caused by improper use, or contain other exclusions. Generally, it will cover wear-and-tear.
Read the fine print before signing up for a home warranty that covers your HVAC or AC system—particularly if coverage costs are higher than your insurer’s mechanical breakdown coverage.
|Cause of Damage||Home Warranty Coverage||Homeowners Insurance Coverage|
|Vandalism and Theft||No||Yes|
*May be covered if additional coverage is purchased for policy
Manufacturer and Seller Warranty
If you recently purchased your HVAC unit, the unit’s parts may still be covered by the manufacturer’s warranty, which may last up to 5-10 years. This usually requires a system registry and filing paperwork during or shortly after purchase.
Depending on the manufacturer, the warranty likely covers the failure of parts or wear-and-tear damage. It likely won’t cover risks covered by insurance (like fire) or any damage you intentionally cause. You may also be able to purchase an extended labor warranty from the retailer selling your HVAC unit.
What This Means For You
If your HVAC unit or AC unit broke down and you suspect repairs or replacement might be covered by your homeowners insurance, contact your insurance representative. Your agent can help you decide the right course of action, depending on the type of damage sustained and the circumstances involved.
Investigate the alternatives, too—for example, a manufacturer’s warranty, FEMA reimbursement, or a home warranty may provide better coverage for your situation.