Does Homeowners Insurance Cover HVAC?

HVAC, or heating, ventilation, and air conditioning systems are a major part of a home. 52% of American homes use natural gas for heat and 48% for water heating. If these systems fail, it could not only be a major inconvenience for the homeowner, but it can also wreak major havoc on your home.

Replacing your HVAC system can average between $5,000-$12,000, and homeowners insurance may not cover it. But how do you know what situations coverage will apply? I have been educating consumers about insurance for over 20 years and will break it all down for you. Keep reading to learn more.

A standard home insurance policy will provide coverage for the structure of your home, including anything attached, on an open peril basis. Open peril means that you are covered for any event that can happen to your home unless it’s specifically excluded in the contract. Some of the more common exclusions include wear and tear, floods, and intentional damage.

Since major heating and central AC systems are attached to your home, if your HVAC system fails, there is coverage available under a standard home insurance policy, assuming what caused the breakdown is not excluded. But if you have AC window units that aren’t permanently attached, those would be considered part of your personal property. So how would those be handled?

Most standard policies cover your personal property on a named peril basis, which means there are 16 specific events it will cover. Some of these perils include fire, theft, hail, and windstorm. If your window unit is stolen, for example, coverage would apply.

When Does Homeowners Insurance Cover HVAC?

Standard home insurance policies provide coverage for your HVAC system in most situations unless it’s excluded. But there are some scenarios that you can almost guarantee coverage will be available.

Fire

The National Fire Protection Association (NFPA) reports that 2,800 house fires occur each year due to air conditioner units, and 13% of all home fires reported between 2016 and 2020 were the result of heating equipment. Fortunately, almost all home policies will cover a fire event, both for the structure of the home and personal property. If a fire damages your HVAC system, your home insurer is likely to cover this loss.

Weather

Most weather events, such as windstorms, hail, and lightning, are covered under a standard home insurance policy, including a tree falling onto your unit. In the case of these events damaging your HVAC, your home insurer should cover the repair or replacement of the system.

While many weather-related losses are covered events under your home insurance policy, it’s important to note that some aren’t. Specifically, floods and earthquakes. Both of these require a separate policy.

Theft

While it may be slightly harder to steal an entire HVAC system, your AC window units can be stolen. Since window units can be removed and aren’t permanently attached to your home, they would be considered part of your personal property.

Personal property is not covered as broadly as your dwelling is, but theft is a covered event. So if you have AC window units and they are stolen, your home insurer will cover the cost to replace them.

Water

Depending on the source of the water, home insurers may provide some coverage for your HVAC. Flooding and sump pump overflow are excluded, although coverage can be purchased from either another policy or an endorsement. Burst pipes that cause water damage to your HVAC would generally be considered a covered event.

When Doesn’t Homeowners Insurance Cover HVAC?

As mentioned previously, there are certain coverage exclusions to any homeowners’ insurance policy. Some of the more common exclusions are noted below.

Wear & Tear

Home insurance is meant to cover unexpected events. Wear and tear of any major system is inevitable and therefore, not covered. If your HVAC breaks down due to its age and not as a result of a covered peril, your home insurer will not pay for the repair or replacement.

Flood

According to the National Association of Insurance Commissioners, 90% of all-natural disasters involve flooding. Unfortunately, flooding is excluded from home insurance policies and needs to be purchased under a separate policy. Homeowners who are concerned with HVAC damage from flooding events should purchase a flood policy through the National Flood Insurance Program (NFIP).

Neglect

All major systems within your home require routine maintenance and upkeep to ensure they work properly. In a recent survey conducted by Duraplas, a provider of plastics for the Agriculture, Industrial, Energy, and Greenhouse industries, it was found that only 30% of homeowners conduct preventative maintenance on their HVAC.

This failure to maintain can potentially cost homeowners coverage for any loss that occurs on their heating or air conditioning.

How To File An HVAC Claim

Filing a claim for your HVAC is similar to filing any other home insurance claim. Once you notice damage to either your heating or air conditioning, you should follow the steps below.

• Protect the systems from further damage- If you are able, protect the systems from further damage. For example, shut off the electricity to the heater or AC.
• Determine the extent of the damage- Remember that your deductible will apply to any loss. If the damage to your HVAC system is minimal, there is a chance the repairs will be under your deductible and not covered.

• Take photos of the visible damage- Document the notable damage as your insurance company may need it for their records.
• Contact your insurance company- Call your insurer to report the incident and start the claim process. Provide as many details as possible. They will be able to determine whether coverage is applicable.
• Meet with an adjuster- An adjuster will typically visit your home to assess the damage and confirm coverage.
• Keep receipts or contracts-  Once coverage is confirmed and repairs have started, hold onto any receipts or contracts. You will need to submit these to your insurer for reimbursement.
• Submit proof of work- When the work is completed, send these receipts and contracts to your insurer as proof of repairs. They should then be able to cut you a check, minus any applicable deductible.

Home Warranty Coverage

Homeowners may also choose to purchase a home warranty for major home appliances and HVAC systems. Unlike home insurance, a warranty provides coverage for age-related failures or wear and tear. Carrying both home insurance and a home warranty guarantees that coverage is available for most of the events that could damage your HVAC.

*Requires another policy or endorsement

Additional Coverage Types For AC Units

Customers who want to maximize their coverage for AC units can look into the following options.

Flood

Flood policies can be purchased either through the NFIP or through a private insurer. These policies provide coverage for flooding that standard policies typically exclude. The cost of a flood policy can vary, depending on where you live, but the average is about $700 per year.

Equipment Breakdown Coverage

Equipment breakdown is an optional coverage that can be added to your home insurance policy to cover the mechanical or electrical breakdown of your HVAC system and other appliances. There is a coverage limit and a deductible associated, and it can differ from the limits and deductibles for your dwelling. The average cost of this endorsement is typically between $25-$50 per year.

Earthquake

While some carriers may offer earthquake coverage as an endorsement to their home policy, many do not. Customers who wish to be covered for this may be forced to buy a separate policy. Because the cost of earthquake insurance is dependent on where you live and your risk of earthquake, prices can vary from $800 to $5,000 per year.

Water Backup Coverage

Customers can add a water backup endorsement to buy back coverage for these losses, which are typically excluded from their policy. With this endorsement, homeowners are protected from water damage for the backup of their sewer, drains, and sump pumps. The cost of this coverage can range between $50 to $250 per year, and I always recommend purchasing.

Types of Air Conditioners and Their Coverage

It’s important to distinguish between different types of air conditioning units because this will influence how they are covered under your home insurance policy.

Ducted & Central Air Conditioning

Ducted air conditioning units and central air systems are typically considered a permanent fixture of your home and are covered under the buildings insurance portion of your home insurance policy.

This means that if the unit is damaged due to a covered peril, such as a fire, storm, or vandalism, your policy would generally cover the cost of repairs or replacement. However, similar to other built-in systems, insurance would not usually cover damage due to routine physical deterioration or malfunctioning ducted air conditioner.

For additional protection against mechanical issues, you might consider adding equipment breakdown cover to your policy. This can provide coverage for internal failures that standard home insurance would not typically address.

Split-System Air Conditioners

Split-system air conditioners are covered under the buildings insurance portion of a home insurance policy because they are permanently installed as part of the home’s infrastructure.

This coverage typically includes damage caused by perils such as fire, storms, or vandalism, ensuring that both the indoor and outdoor units are protected.

However, if your split system experiences a malfunction due to wear and tear or mechanical failure not caused by an external event, this type of issue is generally not covered by standard home insurance.

For such cases, adding equipment breakdown coverage could be beneficial, as it would cover repairs or replacements for these kinds of internal malfunctions.

Window Air Conditioning Units

Unlike central and split systems, window units are considered personal property and fall under the contents insurance portion of your policy. While they are covered, the coverage might not be as extensive as for built-in systems.

This is because window units are portable and not permanently affixed to the property, hence treated as personal items.

The coverage generally includes damage caused by specific perils such as fire, theft, or vandalism, but may not cover issues like equipment malfunction or age-related wear.

Portable Air Conditioners

Portable air conditioners, like window units, are also classified as personal property and covered under contents insurance. Because they are not permanently installed, they are treated similarly to other personal belongings.

Coverage typically extends to damages resulting from covered events, such as theft or fire, but does not include routine maintenance issues or breakdowns caused by age or use.