Does homeowners insurance cover AC or furnace replacement?

Insurance looks at the cause. Your AC and furnace are part of the house, so they are generally covered against the same events as the rest of the structure. The Insurance Information Institute lists the perils in standard policies, including fire or lightning, windstorm or hail, explosion, vandalism, theft and falling objects.

The same source is clear about the other side. Maintaining your home is your responsibility, and policies will not cover damage due to lack of maintenance. Flood damage is excluded under standard homeowners policies, and earthquake needs separate coverage.

• Hail or wind damage to the outdoor unit. Hail can flatten the fins on the coil, and wind can drop a tree limb on the unit.
• Fire or lightning. A lightning strike can destroy the compressor and control boards.
• Theft or vandalism. Outdoor units are sometimes stolen or stripped for copper.
• Freezing and sudden failure of a heating system. The Insurance Information Institute lists freezing of a heating or air conditioning system, and sudden cracking, burning or bulging of a steam or hot water heating system, among covered perils.

Coverage in each case still depends on your policy wording and your deductible.

• The unit wore out. A compressor or heat exchanger that fails from years of use is a maintenance and replacement cost, and it falls on the owner.
• Neglect. Damage traced to skipped maintenance is excluded.
• Flood. An outdoor unit or basement furnace ruined by floodwater needs flood insurance.
• Earthquake. This needs a separate policy or endorsement.

Some insurers sell an optional add-on for mechanical or electrical breakdown of home systems. Ask your agent whether your policy has one. For breakdowns from normal use, a home warranty is the product aimed at that risk. See whether a home warranty covers HVAC.

1. Take dated photos of the damage and of whatever caused it, such as hail on the ground or the fallen limb.
2. Prevent further damage if you can do it safely, and keep receipts.
3. Call your insurer or agent and ask whether the cause is a covered peril under your policy.
4. Get a written report from a licensed HVAC contractor that states the cause of the damage, the failed parts and whether repair is possible.
5. Get a written repair or replacement quote to give the adjuster.

The contractor's report matters. An adjuster needs to see that a covered event caused the failure. You cannot establish that yourself.

Your deductible comes off first. If the repair costs less than the deductible, a claim pays nothing. Ask how your policy values the equipment. Some policies pay the cost of a new equivalent unit, and others subtract for age, which leaves a much smaller check for an older system.

If the insurer pays for a repair and you would prefer to replace, you can usually put the payment toward a new system and cover the rest yourself. The repair or replace calculator helps you judge whether that is worth doing.