home equipment protection

[frank]

my state farm agent called and said state farm is now offering a new equipment protection endorsement. it covers ac/furnace, well pumps, water heaters, etc. I was curious if there are any other state farm customers here and if any have been approached with this endorsement, what it cost, and what are your thoughts on the product. to me it looks to good to be true. this is for repair or replacement. they are quoting me 50 dollars per year, 500 deductible, 50,000 max each occurence, but I looked online and have seen various prices. thanks

frank

 

[MichaelB]

We have State Farm but haven’t seen this. What does it cover against? $50 is pretty inexpensive for comprehensive coverage.

 

[Bamaman]

But the $500 deductible means few claims are expected.
Everyone needs to save for home maintenance items like this anyway. You'd come out ahead holding the funds yourself.

 

[jimbee]

But the $500 deductible means few claims are expected.
Everyone needs to save for home maintenance items like this anyway. You'd come out ahead holding the funds yourself.

+1, if it was advantageous for the customer on average, it wouldn't be cost effective for the insurance company and they couldn't afford to sell it.

 

[RunningBum]

I'd make sure you can use the repair person of your choice, rather than some semi-competent hack who agrees to their rates. $50 is pretty cheap but I'd want to know the details.

The $500 deductible will probably keep you from filing claims in almost all cases, but if you live somewhere with "bad" electricity (sorry, can't come up with a better term) that causes a lot of problems for your appliances, maybe it's worth it to you. I'm not sure I've ever had an appliance repair over $500. You may also find that old clunker refrigerator you'd love an excuse to replace has to be repaired under their terms instead.

 

[MichaelB]

I agree that these protection plans are usually not a good deal for consumers. I see utilities offering protection against lightning strike damage for $10-$15 per month, and if this covers things like flood and lightning damage, it might be worth considering. $50 a year for 10 years doesn’t cover the cost of buying a good whole hole surge protector / lightning arrestor and having it installed.

Is this only available to customers with homeowners insurance from State Farm? What does the homeowners policy cover? Is this a rider or an independent policy?

 

[6miths]

Insurance is a business and so this is a for profit product. New product warranties are generally not cost effective. Five hundred dollar deductible is quite a bit on something like a water heater. Most other things are pretty reliable and if they fail it is usually early. A claim against any insurance policy is still a claim and can affect future rates and insurability - sometimes quite dramatically. Finally, I have heard that one insures against the catastrophic - any of these things failing shouldn't be in that category (hopefully).

 

[Big_Hitter]

But the $500 deductible means few claims are expected.
Everyone needs to save for home maintenance items like this anyway. You'd come out ahead holding the funds yourself.

i had a a/c unit completely replaced under a home warranty this year, dishwasher the year before, etc

i'm way ahead of where i'd be if I self insured that risk

 

[Which Roger]

That kind of coverage might be good for someone who lives paycheck-to-paycheck and couldn't otherwise cover the cost of an unexpected repair, but I don't see it as a good fit for most of us on this forum.

 

[Big_Hitter]

That kind of coverage might be good for someone who lives paycheck-to-paycheck and couldn't otherwise cover the cost of an unexpected repair, but I don't see it as a good fit for most of us on this forum.

people who live paycheck to paycheck would choke on the deductible

 

[frank]

We have State Farm but haven’t seen this. What does it cover against? $50 is pretty inexpensive for comprehensive coverage.

protects against furnace, boiler, heat pumps, central air, electrical service panels and wiring, conventional and solar water heaters, well pumps, sump pumps pool and spa pumps, heating and filtration equipment, permanent emergency generators permanently installed home security monitoring and control device, renewable energy systems(solar, wind,geothermal) water purification and filtration systems, radiant floor heating, chair lifts and elevators.

does not cover kitchen and laundry appliances unless permanently installed domestic and waste water piping, computers, and electronics.

 

[frank]

I am not a fan of this kind of insurance or extended warranty, but when it said well pump it had me looking.Any time you have to pull a well pump around here it costs about a thousand dollars and mine is getting old. it also says it covers the cost of expedited repairs if the problem makes the home untenable.

 

[RAE]

AAA offers a very similar plan - I got an offer in the mail today for theirs (also a $500 deductible). As others have said, it is usually better to just self-insure for these kinds of things. The insurance co. will almost always come out ahead with stuff like this, or they wouldn't offer it.

 

[Richard4444]

In Florida, I am a customer of FPL (Florida Power & Light) the electric company. I purchased insurance from them for $10 / month, of course a bad bet. However, when electricity fried my computer, they paid in full promptly for a replacement.

Still a bad bet - after all, it is insurance.

Rich

 

[ncbill]

Cheaper than "home warranty" plans (those usually start around $50 per month, not year)

I'd buy it if my home insurer (not State Farm) offered similar.

 

[Spock]

Make sure to check what is excluded... most home warranties sold by realtors will cover a furnace, but not the heat exchanger... or cover an A/C, but not the compressor.

 

[frank]

if it covers a furnace how can it not cover the heat exchanger? that is the main part of the furnace.

 

[Spock]

if it covers a furnace how can it not cover the heat exchanger? that is the main part of the furnace.

Exactly. The home warranties typically repair something and not replace. A heat exchanger typically requires replacement. Or if they do replace, they cap at something like 2K.



When we bought our first house we found out that the home warranty explicitly excluded well pumps. When we bought our 2nd house with a 30yr Chrysler furnace we found out the policy excluded the heat exchanger.


Maybe times (and policies) have changed. But with appliances being built to have 10 year life spans be disposable, the warranties still have to be profitable to the insurer.

 

[frank]

the two things that made me look hard at this endorsement, were that they did cover the well pump and the furnace/air setup. If unrepairable, like a burned out pump or cracked heat exchanger, they will replace.

 

[nativenewenglander]

You could add a whole house surge protector for $100 plus installation by an electrician. We did it after our well pump got hit by lighting. The insurance covered part of it through Safeco, but we were looking at all the electronics in all our appliances that didn't fry this time. The well pump was $1200, but if we lost all the appliances it would be many times that amount.

 

[flintnational]

I came up with 3 possible scenarios. Maybe there are more.

1) State Farm's actuaries have calculated the loss ratio and deemed they will make money on this product and, on average, an individual purchaser will lose money. (For this reason, generally speaking, insurance should only be purchased for potential losses you cannot reasonably self insure.)

2) The product is a discounted marketing product for existing customers. Not likely. Car and home warranties appear to be growth areas for all sorts of companies due to the high profit margins.

3) Number 1 is true, but the OP has a special situation that will allow him to arbitrage the State Farm pricing. (Insurance companies are aware of this issue and generally factor it into their underwriting, rates, renewal pricing and or terms.)

 

[Mr._Graybeard]

I am not a fan of this kind of insurance or extended warranty, but when it said well pump it had me looking.Any time you have to pull a well pump around here it costs about a thousand dollars and mine is getting old. it also says it covers the cost of expedited repairs if the problem makes the home untenable.

I replaced a submersible well pump about 15 years ago, but only because the pipe had rotted out. The pump was still OK -- of course, if you're replacing the pipe, you might as well install a new pump.

Under the terms of the warranty as you describe them, I'm not sure the pump would have been covered. It was the piping that failed, not the pump.

 

[bingybear]

I would assume you would need to document that you are doing all the required maintenance.

 

[frank]

I questioned my state farm agent yesterday on the equipment endorsement when she called me to upsell some other endorsements. I found out there are some stipulations, I told her to send me the information on the endorsemt and 'she told me she could only send out the one I already had. but in questioning her I found out that there is some kind of stipulation about it has to be accidental and sudden. I don't know what that means and evidently neither did she. As it turns out if you have a 20 year old furnace and it breaks down and parts are available they will fix it, but if it is just normal wear and tear they won't replace it if that is what is necessary. as has been said on this site before "if it sounds to good to be true, it probably is".

 

[Big_Hitter]

As it turns out if you have a 20 year old furnace and it breaks down and parts are available they will fix it, but if it is just normal wear and tear they won't replace it if that is what is necessary. as has been said on this site before "if it sounds to good to be true, it probably is".

ugh - my home warranty replaces the furnace if it fails, period.