The latest home insurance product for brokers to figure out

With equipment breakdown and other new coverages available from homeowners’ insurance carriers, brokers need to make sure their clients or prospective clients are aware of their options, a Regina-based broker warns.

“There are so many new products” available in homeowner lines, Dave Pettigrew, president and CEO of Harvard Western Insurance, said in an interview. He cited overland flood, personal cyber, and home equipment breakdown as examples. While flood and cyber have been stealing all the headlines, equipment breakdown in homeowner lines has been quietly making its presence known.

Home equipment breakdown is intended to cover some unforeseen breakdowns in equipment, such as kitchen and laundry appliances, heating and cooling systems, and computers.

Insurers offering home equipment breakdown include CAA South Central Ontario. Among other things, CAA-SCO’s home equipment breakdown coverage “includes physical loss or damage originating within boilers, fired or unfired pressures vessels.” Extra coverage could include replacing perishable goods that are spoiled, expediting repairs and pollution clean-up, subject to sub-limits.

CAA’s policy is subject to several exclusions, such as physical damage arising from vandalism, fire, and leakage from fire extinguishing equipment. It also excludes several categories of water piping.

Chubb Canada notes that home equipment breakdown is intended for “out of the blue” breakdowns rather than wear and tear. Here’s an example: a compressor on an air conditioner seizes, the part is no longer available, and therefore the home owner needs to spend more than $10,000 on a brand new air conditioner.

Other equipment that could be covered by home equipment breakdown includes water heaters, swimming pool equipment, elevators, and permanently-installed home automation and security systems, Chubb Canada reports.

CAA-SCO posits several scenarios giving rise to home equipment breakdown coverage. For example, a home may experience a power outage during a storm; when the power is restored, a voltage spike causes damage beyond repair to televisions.

Brokers could face exposure to errors and omissions claims if they fail to brief current or prospective clients on new coverages available, said Pettigrew, who is also vice chair of the Insurance Brokers Association of Saskatchewan.

As for cyber protection, several Canadian insurers offer coverage to home insurance clients for losses arising from identity theft. In essence, if a criminal obtains credit card information in your client’s name and spends money, your client is a victim of identity theft and can get a bad credit rating as a result.

Among the carriers covering cyber risk for home insurance clients is Wawanesa, which announced its personal cyber protection product this past December. Among other things, Wawanesa offers to cover consumers for financial loss arising from “criminal deception,” identity theft, and unauthorized use of credit cards or bank accounts.