Is HVAC Repair & Replacement Covered by Homeowners Insurance?
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Homeowners insurance will pay to repair or replace your heating, ventilation and air conditioning (HVAC) system if it is damaged suddenly by a peril that is covered by your policy like fire or vandalism. However, a standard home insurance policy won’t cover gradual and preventable sources of damage or anything expressly excluded by the policy.
Read below to find out when homeowners insurance does cover HVAC systems and what options are available outside of home insurance for more extensive coverage.
When Does Homeowners Insurance Cover HVAC?
In general, homeowners insurance covers damage to your HVAC system caused by sudden and unexpected perils. The coverage type that applies and the scope of coverage may depend on whether you have a central air conditioning unit or a portable one.
Central AC units and other HVAC systems that are built into your house are insured by your dwelling coverage. A standard homeowners policy insures these systems on an open peril basis, meaning your insurance company will cover damage from any cause as long as your policy doesn’t explicitly exclude it.
Conversely, window AC units and similar systems that can be detached from your home will likely be covered by your personal property coverage. These kinds of HVAC systems are usually insured against damage caused by the following 16 named perils.
Fire or lightning
Vandalism or malicious mischief
Windstorm or hail
Riot or civil commotion
Damage by aircraft
Weight of ice, sleet or snow
Damage by vehicles
Freezing of home systems
Sudden/accidental power surges
Sudden/accidental tearing, cracking, burning or bulging of home systems
Water/steam discharge from home systems and appliances
Does Homeowners Insurance Cover HVAC Replacement?
Your homeowners insurance company should pay to replace your HVAC system after it is destroyed by a covered peril as long as the replacement cost doesn’t exceed your coverage limits. You will generally want to maintain enough dwelling coverage to rebuild your home if necessary and your personal property coverage limit will commonly be between 50% and 70% of your dwelling coverage limit.
For example, if you have $300,000 worth of dwelling coverage, your policy will often include between $150,000 and $210,000 worth of personal property coverage. It costs around $7,500 on average to install a new HVAC system, which means an HVAC replacement should comfortably fall under your coverage limits barring other claims.
Keep in mind that your insurance provider will subtract the deductible from your payout. Your deductible is the amount of money you agree to pay up front toward all covered losses. For example, if you have a $1,000 deductible, your insurance company might pay you $6,500 toward replacing a $7,500 HVAC system.
How Does Home Insurance Cover HVAC Replacement and Repairs?
Depending on the details of your policy, your insurance company may reimburse you after a covered loss at your HVAC system’s actual cash value (ACV) or replacement cost value (RCV). The ACV of an item is its value when considering depreciation factors like age or wear and tear, while its RCV is the amount of money it would take to replace it with a comparable item.
For example, if you bought a $10,000 HVAC system that was expected to last 20 years, it might depreciate in value by $500 every year and have an ACV of $5,000 after 10 years. As a result, if the HVAC system was destroyed in a fire after 10 years, an ACV policy might pay out $4,000 after you pay a $1,000 deductible.
Similarly, an RCV policy could provide an initial $4,000 payment for the same claim. However, after purchasing a new HVAC system for $10,000, you could submit the receipt to your insurance company and receive an additional $5,000 recoverable depreciation payment.
When Won’t Home Insurance Cover My HVAC Unit?
Your home insurance company won’t pay to repair or replace your HVAC system if it is damaged by something that your policy lists as an exclusion. Common exclusions include pests and infestations, mold, floods and earthquakes.
If your furnace is ruined due to wear and tear or poor maintenance, you will have to pay out of pocket to replace it since you could have reasonably prevented the damage. Your homeowners insurance company also likely won’t pay to fix cosmetic damages as long as your HVAC system still functions properly.
How To Get More Comprehensive HVAC Coverage
Even if a certain peril is excluded by your homeowners insurance policy, you may be able to purchase extra coverage to account for those losses. For example, you can buy flood insurance or earthquake insurance to be reimbursed for damage to your HVAC components after these natural disasters.
Meanwhile, you can purchase a home warranty to receive some coverage for gradual damage to your home systems and appliances. While a home warranty still likely won’t cover poor maintenance or neglect, it may cover damage that occurs due to regular wear and tear during your coverage period.
Finally, you may be able to add equipment breakdown coverage to your homeowners policy to cover sudden losses that aren’t covered by your personal property insurance. This can include damage from causes like short circuits and mechanical failures.
How To File an HVAC Insurance Claim
You should take the following steps to file a homeowners insurance claim any time your HVAC system experiences damage that is covered by your home insurance policy:
- Call 911 and get the responding officers to fill out a police report if your claim is the result of a crime like theft or vandalism.
- Notify your home insurance company that you intend to file a claim.
- Document how the damage occurred, take pictures of the damaged components and record the model, brand and serial number of each damaged component.
- Make emergency repairs if necessary to prevent further damage from occurring.
- Inform your mortgage lender that you are in the process of filing a claim.
- Schedule a visit with your insurance adjuster and collect evidence to support your claim like police reports, photographs and estimates from local repair companies.
- Submit all relevant documents to your insurer and track your claim so you can take care of any issues that arise.