Are Furnaces Protected under Dwelling Coverage?

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There’s no ideal time for your HVAC system to break … but if your furnace breaks in the winter (and you live in a cold climate), it could render your home uninhabitable.
If your furnace were to break, do you know what coverage it falls under? And, most importantly, in what scenarios will a standard homeowners policy payout for furnace repair or replacement?

Do furnaces fall under dwelling coverage?

Yes, your furnace falls under the dwelling coverage or “structures coverage” in a standard homeowners insurance policy. Dwelling coverage protects your home’s built-in appliances and structures. Some of the items typically protected under this coverage include furnaces, air conditioning units, countertops, sump pumps, and hot water heaters. Your furnace is connected to pipes and ductwork, which would make it harder to remove than, say, a fridge that could simply be unplugged from an outlet.
Personal property coverage, on the other hand, protects items that can be carried away from your house with relative ease, like major appliances.

When home insurance will cover furnace repair or replacement

Although furnaces are protected under the dwelling coverage in your home insurance policy, that doesn’t mean you will automatically receive coverage for furnace repairs or replacement. Whether or not you are covered depends on how the furnace was damaged or broken.
Your homeowners policy includes a list of covered perils. If your furnace is damaged by a covered peril, your dwelling coverage will protect your furnace.
The payout you receive depends on your deductible and coverage limits and whether or not you have additional equipment breakdown coverage.

When home insurance won’t cover furnace repair or replacement

It’s important to remember that the covered perils in most standard homeowners policies are limited to unexpected and unavoidable occurrences; namely, fires, natural disasters, falling objects, and criminal activity. That being said, your insurance provider will not pay for the repair or replacement of your furnace if it breaks due to normal wear, old age, or neglect. Therefore, if your furnace suddenly stops working because it’s old and tired, odds are, you will need to pay the repair or replacement cost out of pocket.
It’s also important to note the perils that are commonly not covered by insurance companies. For instance, floods, although unexpected and unavoidable, are not commonly included in the covered perils of a standard home insurance policy. Therefore, if you want to be covered for flood damage, you will need additional insurance.