Does Home Insurance Cover AC Unit Replacement? Everything You Need To Know

As a homeowner, making sure you have adequate coverage for your valuables is crucial. Few things can disrupt your home life like a broken air conditioner on a hot summer day. If your AC unit stops working due to normal wear and tear, you’ll likely need to cover the repair or replacement costs out of pocket. But what if your AC unit fails because of a covered peril like a lightning strike or windstorm? Will your homeowners insurance pay for a new AC system?

Below we’ll explore when homeowners insurance covers AC unit replacement, what perils trigger coverage, how much you can expect to pay if you need to file an AC replacement claim, and tips for getting the best payout.

When Homeowners Insurance Will Pay for a New AC Unit

Homeowners insurance provides reimbursement if your AC unit is damaged or destroyed due to a covered peril listed in your policy, Covered losses that could warrant AC replacement include

• Fire
• Smoke damage
• Windstorm or hurricane
• Hail
• Lightning strikes
• Falling objects like trees
• Weight of ice and snow
• Theft
• Vandalism
• Riot or civil commotion
• Damage from vehicles or aircraft
• Volcanic eruption

So if your AC unit is crushed by a falling tree during a storm, burned in a fire, or stolen from your property, your insurance would pay to replace it, less any applicable deductible.

Does Home Insurance Cover AC Repairs?

In addition to replacement costs homeowners insurance also pays for any repairs needed due to a covered loss. For example if your AC unit is damaged by a lightning strike but is still functioning, your insurance would pay for any wiring or motor repairs needed to get the system working properly again.

The caveat is that the underlying cause must be a covered peril for the repairs to be reimbursable Your insurer won’t pay for repairs due to mechanical failure, lack of maintenance, wear and tear, or electrical surges not caused by lightning

How Much Does Homeowners Insurance Pay for AC Replacement?

If you need to file an AC replacement claim with your home insurance company, how much you’ll be reimbursed depends on a few factors:

• Your coverage limits: Your policy will pay up to your coverage limits minus your deductible. For the dwelling, this is typically equal to the rebuilding cost of your home. For personal property, limits range from 50% to 70% of your dwelling limit.

• Age of the AC unit: If your AC unit was brand new, you’d likely get reimbursed for the full cost of the same or similar new model. For older units, you may only get actual cash value, factoring in depreciation.

• Other damage: If the incident that destroyed your AC also caused damage to other parts of your home, the claim payout will depend on the total loss amount and your remaining coverage after those repairs.

• Policy limits for refrigerators: Some policies lump AC units in with the limit for refrigerators or electronics. If so, you’d be limited to that cap, often around $500-$1,000.

Given variability in policy limits, talking to your agent can provide the most accurate estimate of what to expect if you have to file an AC replacement claim.

Will Insurance Pay for a Hotel if My AC is Out?

Having your home AC system fail during hot summer months can make your house uncomfortable or even uninhabitable. But will your homeowners insurance cover hotel costs if you need to vacate your home while your AC is being repaired or replaced?

Unfortunately, the answer is generally no. The additional living expense (ALE) portion of a home insurance policy only covers hotel costs and other expenses like restaurant meals if you can’t live at home because of damage from a covered peril. There is no ALE coverage for preventative relocations due to lack of utilities.

Tips for Getting the Best AC Replacement Payout

If you experience an AC unit failure due to theft, fire, or other covered loss, make sure you take steps to get the full replacement cost amount owed by your insurer:

• Have a recent appraisal: Getting an appraisal of your AC system every 3-5 years provides solid proof of the unit’s value if damaged. This prevents disagreements with your insurer over what a new comparable model would cost.

• Get multiple repair estimates: Your insurance company may try to low ball you on claim payouts. Having estimates from multiple HVAC companies strengthens your case if the insurer’s initial offer seems too low.

• Review your coverage limits: Make sure you know exactly how much coverage you have for the dwelling itself, other structures like a detached garage, and personal property. This allows you to accurately gauge what reimbursement to expect.

• Take detailed photos: Photograph the damaged AC unit along with any other property damage. Photos help document the extent of the loss.

• Keep the damaged AC: Don’t throw away or dispose of the AC unit before the claims adjuster surveys the damage, as they’ll likely want to inspect it.

Should I Get Extended AC Coverage?

Homeowners insurance covers sudden AC damage but not gradual wear and tear or mechanical issues. You have two options if you want extra protection:

• Home warranty: Home warranties cover repairs and replacement costs for AC units and appliances that break down due to normal use. Premiums run $300 to $600 per year.

• Equipment breakdown insurance: This optional coverage pays for mechanical or electrical failure of home systems. It costs about $50 annually through your home insurer.

Equipment breakdown insurance tends to provide more robust coverage, extending your homeowners policy to cover AC repairs that would otherwise be excluded. But either of these policies can provide peace of mind that you’ll be covered for AC issues beyond catastrophic damage.

Filing an AC Replacement Claim

If your AC unit is destroyed by a homeowners policy peril like theft or fire, you’ll need to file a claim to recoup the replacement cost. Here are the steps:

1. Take detailed photos of the damaged AC system and other impacted areas of the home.

2. Call your insurance company or agent’s office to start the claims process.

3. Provide information on what happened and the extent of property damage and loss.

4. Allow the claims adjuster to inspect your home and evaluate the damage.

5. Submit any repair estimates you obtained to your insurer.

6. Negotiate a settlement if the initial claim offer seems too low.

7. Receive your claim payment after agreeing to a reimbursement amount.

8. Repair or replace your AC unit and any other damaged parts of your home.

Having an understanding of what homeowners insurance does and does not cover for AC units allows you to be prepared in the event you need to file a claim. With a quality policy and proper documentation, you can get your AC unit repaired or replaced with minimal hassle and financial hardship if it’s damaged by a covered event.