Does Homeowners Insurance Cover Furnaces?

As an integral piece of your home’s heating, ventilation and air conditioning (HVAC) system, a furnace is built into your home. Therefore, it can receive coverage under the dwelling portion of your homeowners insurance policy if it was damaged or destroyed by a covered peril.

But even though your furnace may be covered due to some instances of damage or destruction, there are other times when you could be stuck bearing the brunt of the repair or replacement costs. Let’s take a look at both sides of the story.

Homeowners insurance does cover a furnace when it’s damaged or destroyed due to a covered peril, such as water damage or a burst pipe leading to the unit. If your insurer deems the incident is covered, it will likely pay to repair or replace your furnace, pipes leading to it and other parts of the unit that were damaged or destroyed.

But your policy won’t cover every instance of damage to your furnace. It never covers damage caused by general wear and tear, mechanical errors, your unit simply breaking down because it’s been in use for a long time or incidents caused by lack of maintenance and upkeep. It also won’t cover damage caused by a flood or earthquake.

Your furnace is likely covered under the dwelling portion of your homeowners insurance policy. This portion is designed to protect your home’s structure and things built into your home against covered perils. Since your furnace is likely considered to be built into your home, it enjoys coverage under this portion.

If your home is heated by an external source, such as a space heater or wood-burning stove, those will receive separate coverages under your policy. They are also considered to be riskier methods of heating and, therefore, may not be covered under every homeowners policy.

If your furnace was damaged due to a covered peril, such as an internal fire caused by a power surge from something like a lightning strike, your homeowners insurance will likely pay to repair your furnace to its original state. But your insurance will only repair your furnace if it was damaged by a peril deemed to be covered by your policy. It will never cover general wear and tear or mechanical issues.

If a covered peril has damaged your furnace beyond the point of repair, or has completely destroyed it, your homeowners insurance will likely pay to replace your furnace altogether. But the damage must have been directly related to a covered peril because mechanical issues or lack of upkeep are never covered.

No, your homeowners insurance never covers furnace cleanings because your policy is designed to protect your home against sudden and unexpected damages. It’s up to you, the policyholder, to maintain your home, which includes regular furnace cleanings.

If your furnace suddenly catches fire, damages a part of your home and is later determined that the fire was caused by lack of upkeep on your part, your insurer may even deny your home fire claim due to negligence on your behalf.

Like the aforementioned scenarios of damage or destruction to your furnace, your policy only pays to cover those caused by perils deemed to be covered by your insurer. Under an HO-3 policy, the following 16 perils are named and covered:

So things like power surges due to surges in your home’s electrical wiring will likely be covered. But power surges due to faulty or outdated electrical wiring will not be covered. Other sudden and accidental damage like frozen pipes that cause your furnace to explode may be covered if you properly insulated your home. But if you failed to insulate your home properly and your pipes burst, you likely wouldn’t be covered.

Damage to your furnace won’t be covered if that damage was caused by general wear and tear, lack of maintenance or negligence on your behalf. It also won’t cover damage caused by floods or earth movements, like earthquakes or sinkholes.

Your insurer also won’t cover damage to your furnace that was caused by pests, such as mice or termites that tear through the floor underneath it. The easiest way to find out exactly which instances are covered and which aren’t is to contact your insurance provider. Your coverages are determined by which type of homeowners insurance policy you’ve enrolled in.

If your insurer agrees to cover damage to your furnace because it was due to a covered peril, they will likely pay to repair your furnace. If your furnace is beyond repair, they will likely cover the cost of a new furnace, as well as labor costs to install it.