Equipment Breakdown from Prepared Insurance Homeowners

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1 Equipment Breakdown from Prepared Insurance Homeowners Exposures Clothes Washers and Dryers Prepared Insurance is pleased to offer an alternative to home warranty plans. Equipment Breakdown coverage is now available through your Homeowners Insurance Policy. Whether you are a renter or a high-value homeowner, we have your equipment breakdown exposures covered. If it uses electric power, it is most likely subject to equipment breakdown. Often this equipment requires sophisticated diagnostic tools and skilled technicians to oversee a potential repair. Equipment Breakdown coverage protects you against unexpected repair or replacement costs due to an electrical, mechanical, or pressure systems breakdown. Best of all, this additional coverage follows the terms and conditions of your insurance policy. Off-premises coverage is now included. Coverage was previously limited to Residence Premise and now we ve extended coverage for property that is away from the described premises. Computer Equipment Dishwashers Freezer Units Garbage Disposals Heat Pumps High Efficiency Home Heating and Central A/C Systems Home Security Systems Kitchen Refrigerators Lighting and Home Environment Typical Losses During a family vacation, a storm caused a power outage. A laptop computer and cell phone were charging when the outage occurred. When power was restored, a voltage spike damaged the items beyond repair and required their replacement. With the Off-Premises Coverage the homeowner would now be covered! Cost of Repairs: $3,750 A personal computer (PC) used to control multiple systems (HVAC, lighting and irrigation) within the home sustained electrical damage from a power surge. Replacement of the computer and the unique programming was required. Property Damage: $2,975 Monitoring Microwaves Ovens Sump Pumps Surround Sound Systems Swimming Pool Equipment Televisions (Plasma, LCD, etc) Water Heaters Well Water Pumps

2 Homeowners Equipment Breakdown Coverage Frequently Asked Questions Q: What does equipment breakdown cover? A: It covers the perils of mechanical, electrical and pressure systems breakdown, which are excluded or limited perils in the homeowner s policy. Q: What are some examples of covered property? A: Examples of covered property are items in a home that can break mechanically or electrically; for example, wine cooling unit, heat pumps, swimming pool equipment, air conditioning systems, electrical panels, televisions and media equipment, as well as other household appliances. Q: What are some examples of real losses? A: An insured s property was hit with an artificially generated power surge. The boiler and water heater controls, security system and media equipment were damaged. Amount of loss: $18,341 During a family vacation, a storm caused a power outage. A laptop computer and cell phone were charging when the outage occurred. When power was restored, a voltage spike damaged the items beyond repair and required their replacement. With the Off-Premises Coverage the homeowner would now be covered! Amount of loss: $1,495 An insured s air conditioning system experienced an electrical short causing loss of cooling to the home. The air conditioning compressor needed to be replaced. Amount of loss: $3,295 The circuit board in a subzero freezer arced. Due to the age and availability of a circuit card, the whole unit had to be replaced. The cost to replace the unit was $9,259. The endorsement also extended additional coverage for food spoilage. Amount of loss: $11,345

3 Homeowners Frequently Asked Questions Q: Are other structures (i.e. pool house, garage, shed) covered property? A: Yes. The equipment breakdown form follows covered property as defined in the homeowner s policy. Q: What is the benefit of adding Equipment Breakdown coverage to my homeowner s policy? A: There are specific exclusions for mechanical and pressure systems breakdown in the homeowner s policy. Typically, electrical breakdown coverage is limited in the homeowner s policy. By adding the equipment breakdown enhancement endorsement, loss caused by, resulting from, or consisting of an electrical, mechanical or pressure systems breakdown will be covered. Q: How does this coverage differ from a home warranty? A: A home warranty is expensive. It may also restrict certain equipment or include it at an additional cost. By adding the equipment breakdown enhancement endorsement to your homeowner s policy, coverage applies to all real and personal property in your home. Q: What happens if multiple pieces of (real and personal) property breakdown at the same time? A: These items can be combined together to form one submitted loss if the cause of loss is the same occurrence for all pieces of property. Q: Can damaged equipment be replaced with more efficient equipment? A: Yes, the equipment breakdown endorsement will pay up to 150% for replacement of equipment that is more efficient and better for the environment. Q: Is there coverage for personal property away from the insured s described premises (i.e., laptop at college, GPS, etc.)? A: Yes, Off-Premises Coverage is now included. Coverage was previously limited to Residence Premise and now we ve extended coverage for property that is away from the described premises. Q: What is the difference between wear and tear and mechanical breakdown? A: A mechanical breakdown usually occurs suddenly. Wear and tear usually occurs over time. In instances where wear and tear occurs, performance of the equipment slowly declines and its capacity diminishes; however, the equipment continues to operate but does not perform as expected. Therefore, because coverage for wear and tear is excluded in the homeowner s policy and no equipment breakdown has occurred, there would also be no coverage provided by the equipment breakdown endorsement.

4 Equipment Breakdown from Prepared Insurance Luxury Homeowners Exposures Media Room/Theater System Prepared Insurance is pleased to offer an alternative to home warranty plans. Equipment Breakdown coverage is now available through your Homeowners Insurance Policy. As a high-value homeowner, we have your real and personal property equipment breakdown exposures covered. Often expensive equipment requires sophisticated diagnostic tools and skilled technicians to oversee a potential repair. Equipment Breakdown coverage protects you against unexpected repair or replacement costs due to an electrical, mechanical, or pressure systems breakdown. In addition to coverage, loss prevention information and loss adjustment services are customized at a fraction of the cost of limiting home warranty products. Best of all, this additional coverage follows the terms and conditions of your insurance policy. Spa Bathrooms Viking Sub Zero Refrigerator and Freezer High Efficiency Home Heating and Central A/C Systems High Energy Electrical Service Panels Home Security Systems And Typical Losses A power surge caused by a bad neutral from the local utility caused extensive damage to several electrical and electronic components within the insured s smart home. The damaged property included their a/c system, security system, home theater sound system, televisions, computers, pool and spa controls and motors. Cost of Repairs: $25,000 The insured s residence has three air conditioning chiller units. It was discovered the compressor on chiller unit #2 would not start. The compressor motor was found drawing locked rotor amps and mechanically seized. This chiller unit was repairable by replacing the compressor. The insured stayed at a hotel until the repairs were completed. Cost of Repairs: $11,500 Loss of Use: $680 Surveillance Monitors Lighting and Home Environment Monitoring Chef Kitchen Equipment - Microwaves and Ovens Sump Pumps Surround Sound Systems Swimming Pool Equipment Elevators Wine Cellar Equipment Well Water Pumps

5 HOMEOWNERS EQUIPMENT BREAKDOWN INSURANCE. Complete and affordable protection against costly home equipment repairs. It covers what most homeowners insurance excludes. Most homeowners policies don t cover the cost of repairing or replacing essential equipment in your home when it breaks down. Extended warranties? They re often expensive, hard to manage and usually cover just one piece of equipment. But Homeowners Equipment Breakdown Insurance offers a simple, comprehensive and affordable solution that covers what most homeowners policies exclude. All your personal property and important systems are protected, even if you are away from your home. Our Homeowners Equipment Breakdown Insurance covers all of your important home systems and property due to loss by mechanical or electrical breakdown. That includes appliances, heating and cooling systems, swimming pool equipment, water heaters, well pumps, garden tractors, home security systems, electrical systems, personal computers, home electronics and more. Off-Premise Coverage is also included if a loss occurs to covered property while away from a covered location. You re protected if your home becomes uninhabitable. Homeowners Equipment Breakdown Insurance even covers you if your home becomes uninhabitable due to equipment breakdown. That s another benefit most warranties and service contracts don t offer. Peace of mind when you need it most. The following examples of actual claims show just how valuable Homeowners Equipment Breakdown Insurance can be. A gas fired boiler was leaking water. It was determined that the boiler s low water fuel cut-off failed, causing the boiler to overheat. The boiler could not be repaired due to its age, so replacement was necessary. After the deductible, their Homeowners Equipment Breakdown Insurance paid them $5,200 to replace the boiler. A 200 amp electrical panel overheated, causing an overload condition which damaged its six circuits. It was determined that the electrical panel needed to be replaced. After the deductible, their Homeowners Equipment Breakdown Insurance paid them $1,625 to replace the panel. Talk to your representative. Your insurance representative can tell you more about all the advantages of Homeowners Equipment Breakdown Insurance including how affordable it is. Remember, sooner or later an important piece of equipment in your home is going to break down. Don t leave yourself unprotected. Call your insurance representative today. No frustrating fine print. Unlike limited and confusing warranties, Homeowners Equipment Breakdown Insurance is simple and straightforward. There are no hidden exclusions and no confusing fine print. Submitting claims is simple too, so you can get your equipment repaired or replaced quickly. of the reinsurance relationship between Mutual Boiler Re and its Partner Companies. This information does not change or supplement policy or treaty

6 What losses are not covered? An explanation of wear and tear. All machines have life expectancy. Life expectancy is affected by many factors, including the quality of installation, the level of maintenance, moisture/humidity, vibration, heat and cold, or intensity of use. Wear and tear is the natural deterioration of a machine s ability to perform its intended function. Some machines have a short life expectancy and experience a rapid decline in performance due to intensive use. As a machine ages while in use, wear and tear often accelerates. The life expectancy of machinery is usually dictated by the manufacturer and is expressed in cycles, or the number of repeated tasks that can be performed over a specific period of time until it is no longer able to perform its intended function. Wear and tear is the primary reason machines depreciate in value. To best illustrate wear and tear, consider the example of a car tire. As a car tire is used the tire tread is deposited on the road surface reducing the tread on the tire. Factors such as heat, weight, speed, road conditions, manufacturing quality, inflation pressure, scheduled rotation, and driver habits affect the ability of the tire to continue to perform the same as when it was new. As the tread on the tire wears down, the tire will decline in performance as will the car s ability to properly handle and brake. In this instance, the car is still functional, as is the tire, but the tire is not performing as the manufacturer intended and is at the end of its life expectancy. Tire replacement is necessary to restore the car and its tire to its original function. Your home contains many pieces of equipment subject to equipment breakdown. Most of this equipment is also subject to wear and tear. The table below shows examples of equipment that have experienced wear and tear, as well as the results of the wear and tear. Equipment components affected by Wear and Tear; Conditions not classified as Equipment Breakdown Equipment Component Affected Condition Result Swimming pool pump Pump seal Leaking seal Excessive use of water Air conditioning unit Condensor coil Pinhole leaks in coil Loss of refrigerant Electrical panel Circuit breaker Worn contacts Loss of electricity to electrical outlets Dishwasher Pump Worn pump seal Leaking water Emergency generator Radiator Leaking radiator Engine overheated and shut off Water heater Storage tank Excessive corrosion/rust Leaking water Washer Holding tank Dried out seal Leaking water Cast-iron boiler Burner assembly Worn electrode in burner Lack of comfort heat Dryer Drum Worn belt Drum will not rotate Oven Temperature sensor Faulty sensor Oven will not heat to temperature Television Tube Green images Worn picture tube Garbage disposal Grinding teeth Worn teeth Clogged drain

7 Is an Equipment Breakdown in your Budget? Electrical Panel, Breakers, Outlets, and Switches Dishwasher, Range, Oven, Stove, Trash Compactor, Built-in Microwave Oven, and Hood Vent Average Repair and Replacement Costs Repairs $125 - $275 Replacement $700 - $1,400 Repairs $150 - $425 Replacement $350 - $1,400 Refrigerator Repairs $150 - $475 Replacement $600 - $2,200 Garbage Disposal Repairs $50 - $135 Replacement $199 - $399 Heating or Boiler System Repairs $150 - $550 Replacement $2,250 - $10,000 Air Conditioning or Air Conditioner Compressor Washing Machine and/or Dryer Repairs $150 - $425 Replacement $1,500 - $8,500 Repair $125 - $450 Replacement $375 - $1,400 Security Systems Repairs $150 - $1,500 Hot Tub, Spa and/or Pool Repairs $225 - $2,200

8 Did You Know? Maintaining a budget to keep equipment operating until the end of its life expectancy will cost you an average of 1% to 3% of your home s sales price per year. And, the estimated cost to maintain your home equipment does not include the unexpected cost of repairs or replacement if your equipment experiences an unexpected breakdown before the end of its life expectancy. Average Years Life Expectancy of Maintained Equipment Homeowner s Equipment Breakdown Coverage can protect your family s budget from unexpected equipment breakdown. Below is a general life expectancy guideline for your appliances. Homeowner s equipment breakdown coverage can cover the repair or replacement cost if Equipment Breakdown is experienced. Appliances: Dishwashers Washers Dryer Water Heaters Electric Water Heater Microwave Refrigerators Gas Stoves Electric Stove Heating and Air Conditioning: Warm Air Furnace Heat Pumps Water/Steam Boiler Cast Iron Central Air Conditioning 5 to 12 years 5 to 15 years 10 to 25 years 5 to 15 years 10 to 15 years 11 to 20 years 15 to 20 years 15 to 20 years 15 to 20 years 10 to 25 years 10 to 15 years 30 to 50 years 10 to 15 years