Homeowner Insurance for Major Appliances?

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  #1  
Old 01-05-10, 06:58 PM
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Join Date: May 2007
Location: Colorado
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Homeowner Insurance for Major Appliances?

I have gotten information about a Systems Protect Home service plan with Citimortgage that says that it will replace everything from furnaces, water heaters, ceiling fans and major appliances.

I've asked my homeowner insurance company about this and they've heard about it, too, but don't offer it with their company.

Is this a legit thing to look into?


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  #2  
Old 01-05-10, 07:24 PM
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Join Date: Dec 2007
Location: Kentucky
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Yeah, these are "mechanical breakdown" policies. All of them are different, but generally they cover the unusual breakdown of your household equipment, but do not cover normal wear and tear. I good example would be your air conditioner. If you have a rubber gasket that wears out and fries the system, the rubber gasket would not be covered (normal wear and tear) but the fried system would be.

In my opinion, the only folks that need policies like this are industry and entities with lots of mechanical systems. For individual homeowners, you are really just trading money with the insurance company, or gambling that you are going to have a big breakdown. I mean, how often do you really have something breakdown? Most home equipment is replaced not because it breaks down but because it is obsolete.

Anyway, to answer you question.. yes they are legit, but if I were you I'd save your money.

Additionally, more and more homeowners policies are starting to include mech. breakdown coverage in their policies for a small amount or for free. If you are still interested in the coverage, you can keep your eye out for the coverage at possibly a cheaper price than what Citi can. Generally, banks aren't good at insurance (just compare mortgage life insurance to standard term).
 
  #3  
Old 01-20-10, 10:05 AM
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Another thing to consider about these "insurance" policies on home appliances is that they may require all repairs to be made through their approved vendors, rather than repair folks who are qualified to work on your particular brands. The insurance companies may OK the use of off brand or used parts to repair an appliance. Or they may "patch" an old appliance, when conventional wisdom would deem it wiser to replace a worn out appliance rather than repair it.

They're in business to make money, so they aren't going to invest any more money in your ailing appliances than necessary. It would be far wiser to perform routine maintenance on your appliances by the servicer of your choice, and bank the insurance premiums for that eventual breakdown or replacement.
 
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