Does Homeowners Insurance Cover Furnace Replacement?

Popular Questions

Is furnace replacement covered under standard homeowners insurance policies?
When and how does homeowners insurance cover furnace replacement?
How much do I have to pay if homeowners insurance does cover furnace replacement?
If homeowners insurance doesn’t cover furnace replacement, what will?
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Is furnace replacement covered under standard homeowners insurance policies?

As a new homeowner, I’m curious about what all is covered under my insurance. The furnace makes me nervous because if something goes wrong it could cause a lot of damage and also be really expensive to replace. Is furnace replacement covered under standard homeowners insurance policies?

That’s a tricky subject. In some cases it COULD be, but there’s a pretty big “but.” Some insurance companies are trying to make newer homeowners policies more competitive by building in coverage for the breakdown of bigger equipment in the home, but not always. Sometimes this coverage is included, but sometimes it’s extra. Bottom line is, don’t expect it to be covered.

When and how does homeowners insurance cover furnace replacement?

Be sure to review your specific policy first to make sure it covers furnace replacement at all, but if it does, there are a couple of common scenarios when it would be covered. We’ll break them down for a better understanding.

Standard homeowners insurance might cover furnace replacement in the following scenarios:

• The furnace needs to be replaced due to explosion. Explosion is a covered peril under standard homeowners policies.
• The furnace was destroyed due to a covered natural disaster.

Natural disasters commonly covered by homeowners insurance include:

• Windstorms
• Hail
• Fires
• Blizzards

Natural disasters typically NOT covered by homeowners insurance include:

• Floods
• Earthquakes
• Mudslides

Again, coverage will vary depending on your specific policy. If you’re lacking coverage for furnace replacement or any other component you’d like to see under your homeowners policy, work with your independent insurance agent to purchase the additional coverage you’re looking for.

How much do I have to pay if homeowners insurance does cover furnace replacement?

You might first want to be familiar with scenarios in which a standard homeowners insurance policy definitely won’t provide coverage for furnace replacement. Once you’ve nailed down an understanding of the specific situations your policy provides coverage for, you’ll be better equipped for deciding whether you should purchase additional coverage.

Standard homeowners policies will NOT cover furnace replacement in the following scenarios:

• The furnace needs to be replaced due to your misuse of it.
• The furnace needs to be replaced due to improper installation.
• The furnace needs to be replaced due to failure to keep up with routine maintenance. General wear and tear is not covered under standard homeowners policies.
• The furnace needs to be replaced due to damage from a natural disaster that’s not covered.

Now we’ll assume you do have coverage for furnace replacement. In the event of an explosion, you’ll be responsible for paying your policy’s deductible and any leftover amount remaining above the limit in that category of coverage. Coverage limits will vary depending on your specific homeowners insurance policy. You may also choose to purchase more coverage to increase these limits, if you wish.

If you’re worried about your furnace exploding, you may want to purchase an extra policy known as umbrella insurance to fund the remainder of the damage beyond what your homeowners policy will cover. If your home explodes, it’s not unlikely that it will cause one or both of your neighbors’ homes, and potentially even the home across the street, to explode along with it, or at least suffer some damage.

Standard homeowners policies come with $300,000 limits on liability coverage, typically. If your home explodes and causes damage to a neighbor’s home, you’ll be held responsible and are likely to be sued. Umbrella coverage would probably be necessary to cover legal fees that surpass your homeowners policy’s liability limit.

If homeowners insurance doesn’t cover furnace replacement, what will?

If your specific homeowners policy doesn’t provide coverage for furnace replacement, you might want to purchase equipment breakdown coverage. This type of insurance policy provides coverage for appliances and machinery that break down due to a number of different perils, and would be likely to offer coverage limits beyond what’s included in your homeowners policy.

However, not even equipment breakdown coverage would provide reimbursement for furnaces that need to be replaced due to wear and tear. The homeowner is considered responsible for the routine maintenance and upkeep of appliances in the home. Be sure to keep your furnace in excellent working condition to avoid a mishap in which you aren’t covered under any form of insurance.