Air Conditioner: House Insurance Coverage?

Whether your air conditioning unit is covered by your home insurance depends on the type of unit and the cause of damage. Central AC units are generally considered part of your home's structure and are covered under the dwelling coverage of your home insurance policy. Window AC units, on the other hand, are considered personal property and are covered under the personal property coverage of your policy. Regardless of the type of unit, home insurance typically covers damage caused by specific events listed in your policy, such as fires, lightning, vandalism, or storms. However, normal wear and tear, lack of maintenance, and mechanical breakdowns are usually not covered.

What types of damage are covered by insurance?

Whether your air conditioning unit is covered by your home insurance depends on the type of unit and the cause of the damage. Central AC units are considered part of your home's structure and are covered under dwelling coverage. Window AC units are considered personal property and are covered under personal property coverage.

Home insurance covers damage to AC units only if it is caused by a covered peril or hazard listed in your policy. Standard policies cover damage from fires, lightning, power surges, windstorms, hail, theft, and vandalism. Some policies also cover damage from falling objects, such as trees or branches.

Home insurance does not cover normal wear and tear, maintenance issues, mechanical breakdowns, or accidents. It also typically excludes damage caused by flooding, earthquakes, or power failures.

Covered types of damage:

• Fire and smoke damage: If a fire destroys your AC unit or smoke causes damage to its components, your home insurance policy will typically cover the repair or replacement costs.
• Lightning strikes: If lightning strikes your AC unit and damages its electrical components, your policy will usually pay for the necessary repairs or replacement.
• Power surges: If a power surge damages your AC unit, home insurance may cover the cost of repairs or replacement.
• Weather-related damage: Your AC unit may be covered if it is damaged by hail, high winds, or lightning. This includes damage caused by falling trees or branches.
• Vandalism and theft: If your AC unit is vandalised or stolen, the damage or loss may be covered by your home insurance policy. However, you will typically need to file a police report before filing a claim.

Not covered types of damage:

• Normal wear and tear: Home insurance does not cover repairs or replacement due to general wear and tear or the natural ageing of the unit.
• Maintenance issues: Home insurance does not cover repairs or replacement if the AC unit malfunctions due to lack of maintenance or improper installation.
• Mechanical breakdowns: If your AC unit breaks down due to a mechanical failure, such as a frozen evaporator coil, home insurance will not cover the repair or replacement costs.
• Accidents: If your AC unit is accidentally damaged, for example, during a backyard game, home insurance will not cover the repairs.
• Flooding: Standard home insurance policies typically exclude damage caused by flooding or sewer backup.
• Earthquakes: Damage caused by earthquakes is usually excluded from coverage, but some insurance companies offer separate coverage for this peril.
• Power failures: If your AC unit is damaged due to a power outage or surge, it is unlikely to be covered by your home insurance policy.

What types of damage are not covered by insurance?

Home insurance covers a broad range of possible damages, including damage to the structure of your home, your personal belongings, and liability protection. However, there are certain types of damage that are typically not covered by home insurance policies. Here are some examples:

• Natural disasters: While home insurance covers a range of natural disasters, such as lightning, thunderstorms, hurricanes, and hail, it usually excludes coverage for earthquakes, landslides, and floods. For these types of disasters, separate insurance policies or endorsements may be required.
• Wear and tear: Home insurance generally does not cover damage caused by gradual wear and tear, neglect, or lack of maintenance. This includes issues like water leaks caused by worn shingles or pipes that leak over time due to neglect.
• Infestations: Damage caused by pests, such as termites, rodents, or bed bugs, is typically excluded from home insurance coverage. Insurers consider pest control and maintenance to be the responsibility of the homeowner.
• Certain dog breeds: Some insurance companies may exclude coverage for certain aggressive dog breeds or dogs with a history of biting. This could impact your liability coverage if your dog bites someone on your property.
• Power-related issues: Power-related issues, such as power surges or failures caused by your utility company, are generally not covered by home insurance. However, if the power issue occurs on your property, such as a short circuit that causes a fire, it may be covered.
• Government action: Home insurance does not cover damage or loss caused by governmental or public authority actions, such as confiscation of belongings or condemnation of your home.
• Nuclear hazards: Damage caused by nuclear accidents or radiation is typically excluded from home insurance coverage.
• War: Damage caused by war, including declared and undeclared war, civil war, or nuclear war, is generally not covered by home insurance policies.
• Certain high-value items: Home insurance policies usually have coverage limits for theft of specific high-priced items like jewelry, artwork, or collectibles. You may need to purchase additional coverage to fully protect these valuable items.
• Home-based business liability: Home insurance typically does not extend liability coverage to home-based businesses. If you operate a business from your home, you may need separate insurance to cover any liabilities or damages.
• Mold damage: Coverage for mold damage depends on the root cause. Home insurance typically covers mold damage if it is caused by a sudden, accidental event, such as a burst pipe or appliance malfunction. However, mold damage resulting from long-term leaks, poor maintenance, or natural flooding is usually not covered.

What is the difference between dwelling coverage and personal property coverage?

Whether your air conditioning unit is covered by your home insurance depends on the type of unit you have. Central air conditioning systems are typically covered under the dwelling coverage portion of your home insurance policy because they are attached to the home. On the other hand, window AC units are considered personal possessions and are covered under the personal property coverage component of your policy.

Now, let's delve into the differences between dwelling coverage and personal property coverage.

Dwelling Coverage

Dwelling coverage is a foundational aspect of a home insurance policy, safeguarding the physical structure of your home, including attached fixtures and appliances. It covers the costs of repairing or rebuilding your home's structure in the event of damage caused by a covered peril, such as fire, smoke, windstorm, hail, lightning, or vandalism. The coverage limit is typically set to match the cost of rebuilding your home with similar materials, and it's essential to periodically review and adjust this coverage to account for changing construction costs.

Dwelling coverage does not include the contents of your home or the land it sits on. It focuses solely on the structure and any attached features, such as garages, decks, or porches. Additionally, it's important to note that dwelling coverage does not extend to structures that are not connected to your home, such as detached garages, fences, or sheds. These would fall under the "`Other structures coverage'" portion of your homeowners insurance policy.

Personal Property Coverage

Personal property coverage, on the other hand, focuses on protecting your belongings and possessions. It provides financial protection for your personal items, including furniture, electronics, clothing, jewellery, and sports equipment, in the event of damage or loss caused by a covered peril. This coverage applies not only to items within your home but also to belongings kept in your yard, shed, car, garage, and even hotels when you travel.

The level of personal property coverage can vary, typically ranging from 50% to 70% of your dwelling insurance. However, it's important to assess your needs based on the value of your belongings and make adjustments accordingly. Personal property coverage is usually based on a "named perils" policy, meaning it covers specific events listed in your insurance policy. These can include riots, vandalism, weight of ice or snow, accidental water damage, and electrical issues, among others.

In summary, dwelling coverage focuses on the physical structure of your home and attached features, while personal property coverage safeguards your personal belongings from covered perils.

What is a home warranty and how does it differ from insurance?

A home warranty is a contract between a homeowner and a third-party warranty company that provides coverage for certain items within the home. This policy protects the homeowner’s investment in the event that if a covered item breaks or fails, the warranty company will cover most of the repair bill.

Home warranties cover major appliances and systems that fail due to everyday use. There are typically three types of home warranties available: appliance policies, system policies, and combination policies. Appliance policies cover items like refrigerators, built-in microwaves, stoves, ovens, dishwashers, washers, and dryers, while system policies cover items such as electrical systems, plumbing systems, and HVAC systems. Combination policies act as both appliance and system policies.

Home warranties are designed to protect your home's appliances and systems from breakdowns caused by normal wear and tear. They are optional and are not required by lenders. Home warranties generally cost an average of $600 each year.

Home insurance, on the other hand, is an agreement between a homeowner and a third-party insurer that protects the homeowner’s investment against accidents, building failures, and natural disasters. It also provides some degree of general liability insurance against injuries incurred by other people while on the property. Any home paid for with a mortgage will be required to carry home insurance by the lien holder.

Home insurance covers much more than a home warranty. There are four types of coverages: dwelling, other structures, personal property, and liability. Dwelling coverage helps to pay for repairs or losses due to covered events such as fires, storm damage, or fallen trees. Other structures coverage is similar but is designed for detached garages, sheds, and guest houses. Personal property coverage helps homeowners recover financial losses to items within the home or other structures that are damaged by covered events. Liability insurance protects the homeowner against financial losses due to someone getting hurt on the property.

Home insurance covers damage and loss of property, while home warranties cover the failure of mechanical systems and appliances. Home insurance provides the homeowner with general liability insurance, whereas home warranties do not. Home insurance typically has much higher limits than home warranties.

To summarise, the key differences between home warranties and home insurance are:

• Home insurance covers damage and loss of property, while home warranties cover the failure of mechanical systems and appliances.
• Home insurance provides the homeowner with general liability insurance, whereas home warranties do not.
• Home warranties are optional, while home insurance is required by all mortgage lenders.
• Home insurance typically has much higher limits than home warranties.
• Homeowners' financial responsibility is typically much lower with warranty claims than with insurance claims.

How do I file a claim?

If your air conditioning unit is damaged, you may be able to file a claim with your insurance company. However, this depends on the type of damage and the type of unit you have.

Firstly, check your insurance policy to see if the damage is covered. If it is, take photos of the damage, and write down the unit's serial and model number. If the damage was caused by vandalism, file a police report and request a copy.

Next, get a repair estimate and weigh the cost against your insurance deductible. If the cost to repair or replace your unit is only slightly higher than your deductible, you may be better off paying out of pocket, as filing a claim could raise your premiums.

If you decide to file a claim, call your insurance agent or company to begin the claims process. They will ask how the unit was damaged and check that the damage is covered by your policy. An adjuster will then visit your home to survey the damage and estimate the cost of repairing or replacing the unit. Meet with the adjuster to ensure nothing is overlooked.

The adjuster will quote the cost of repairs or replacement. If your policy covers the replacement cost value, you will be paid the value of the unit when it was purchased, plus inflation. If your policy covers the actual cash value, you will only receive the value of the unit at the time it was damaged.

Once the claim is approved, your insurance company will provide you with a portion of the repair or replacement cost, usually half, and then give you the rest once the work has been completed.

Frequently asked questions