Will Homeowners Insurance cover your Power Wheel Chair?

A recent call from an insured questioned whether their insurance would cover a power wheel chair. Was their question related to Health or Homeowners Insurance? Was it relating to the purchase of the unit, or insuring it against loss once they had it?

The coverage offered by private health insurance companies such as Blue Cross and United Health will vary by the plans you have for your health insurance. Generally when your doctor prescribes support equipment such as a wheel chair for patients with mobility issues, the health insurance carrier will pay for it subject to the plan and its deductibles.

For those of you covered under Medicare, your Medicare Part B is your resource for supporting equipment such as a wheelchair. Doctors will prescribe a regular wheelchair for their patients with the use of their arms and hands. However, when a patient has physical limitations which prevent or substantially impair a person’s ability to utilize their arms and hands, a power wheelchair is usually prescribed.

Once you have that power wheelchair will your home owner’s insurance policy cover it? I passed this question on to the underwriters for 3 separate insurance companies; I basically got three separate answers. Then, I talked with the claims staff of those companies; they indicated “usually yes”. That was my cue to pull out a standard home owner policy; 24 pages of very small font tightly spaced and loaded with legalese. The verbiage on one line says you do have coverage. But in a subpart below, it explains under what conditions it would not be covered. Since most insurance companies utilize a standard policy format, (the 2010 version of the ISO Homeowners policy), I prepared myself by sitting down with a large cup of strong black coffee.  

Like a novel that is slow to grab your attention, I trudged along reading the first 2 sections. The answer I needed was spread between pages 3 and 4.  My attention perked as I read Part C dealing with Personal Property coverage. It describes how your personal property would be covered:  “We cover personal property owned or used by an insured while it is anywhere in the world”. That translates to mean that if your digital camera is stolen during your trip to Italy or…, it would be covered in the same way if it were stole from your home. Part of me felt I had my answer:  the power wheel chair would be personal property so it should be covered anywhere in the world. Not so fast!!!

Four sections later is a list of “Property Not Covered”. It includes motor vehicles, equipment and related parts. The power wheel chair is considered motorized equipment. So now it seems it’s not covered.

Reading on a few lines later, it states the motor vehicle exclusion does not apply to motor vehicles designed to assist the handicapped. Now I found my answer. A power wheel chair is personal property used to assist the handicapped; coverage applies.

But what kinds of losses will it be covered for? The standard homeowner policy covers perils that include wind, hail, riot, explosion, lightning, fire, damage by another vehicle or aircraft, vandalism, volcanic action, smoke, falling objects, collapse, or damage from the weight of ice, snow, or sleet.  Some companies offer additional coverages such as theft, damage from electrical current, rust/corrosion, and dry rot (tires). A broader homeowner policy will offer “open perils” coverage. Open Perils coverage simply means that unless the peril is specifically excluded, you have coverage for it.

The insured that raised this question already has an ‘open perils’ policy. If vandals damage her wheel chair, she has coverage. If it is stolen off her front porch while vacationing a month or so in Florida, she’s covered.  She has coverage for most things that can damage her power wheel chair.

While she may have coverage, there are two more issues that will affect how much she will be paid. After a loss how much of a deductible does she have and will the loss be paid on a “replacement cost”  (RC) or “actual cash value” (ACV) basis.

When you have a loss under most property related coverages, the policy includes a provision for sharing losses between you and the insurance company; you become responsible for a specific portion of each loss referred to as your deductible. Most homeowner policies today have deductibles of $500, $1,000, or $2,500.

The next consideration is how the property will be valued after a loss. Commonly the personal property component of a homeowner policy, agrees to repair or replace the covered property to its pre-loss condition with no deduction for the age of the property; this is known as “Replacement Cost” coverage. Another method of valuing an item is based on its “Actual Cash Value” . To calculate the ACV, the cost to repair or replace the damaged property must be determined. The adjuster then determines the depreciated value of your property with that value becoming the basis of your loss.

This is much easier to understand by example. Assume the Wheelchair is stolen and not recovered.  The power wheel chair would cost $1,800 to replace. With Replacement Cost coverage, the insured would receive the $1800 less their $1,000 deductible; or $800. If the coverage instead was ACV, the adjuster would first determine the average life of a power wheel chair (10 years). Then depreciate the unit based on its age. A two year old wheel chair would be valued at 80% of its replacement cost or approximately $1,440; after reducing for their $1,000 deductible, their recovery is only $440. If the insured decided to utilize a $500 deductible, their recovery would have been $1300 (RC) or $940 (ACV). The first insult is the theft of the wheel chair with a second when you learn how little you would recover if you had the ACV policy with a $1,000 deductible. When does the premium savings associated with a higher deductible become worth it? If you have an agent he or she can give you guidence but that’s personal choice