Trusted place

February 10, 2020

Dear ***:

This is in response to your January 30, 2020 letter concerning the above-captioned matter. The complainant replaced his furnace and wants this Company to reimburse him for the replacement cost. This customer advised us that his 1987 furnace was not working. The repair firm engaged by this customer advised us that the secondary heat exchanger and collector box had gradually rotted out, causing water to run into the circuit board.

The contract in place with this customer, the Home Systems Protection Plan, states, in part (emphasis added):

Home Systems Protection Plan Coverages

1. Property Damage

We will pay to repair or replace Covered Home Equipment damaged by a Home System Breakdown. Any replacement will be of a like, kind and quality with comparable features and functionality to the damaged Covered Home Equipment. Our payment for this coverage shall not exceed the Home Systems Protection Plan Limit indicated in the Summary of Benefits.

Definitions 2. Covered Home Equipment a. Covered Home Equipment means: (1) Contents Equipment if indicated as Included in the Summary of Benefits.

(2) Dwelling Equipment if indicated as Included in the Summary of Benefits; b. None of the following is Covered Home Equipment: (1) Waste piping or water piping, except for water piping that is part of a heating or air conditioning system.

(2) Fuel storage tank, septic tank or any buried tank or vessel. (3) Buried or encased wiring or piping, except for interior radiant heating and air conditioning piping.

(4) Software or electronic data. (5) Property or equipment used solely with your business or employment. (6) Vehicle, whether or not designed for travel on public roads. This includes, but is not limited to, a car, truck, motor home, motorcycle, ATV, moped, snowmobile, trailer, watercraft, aircraft, drone, tractor or riding mower. (7) Equipment owned by a utility provider, whether or not such equipment is located on or used to supply your Residence Premises. 4. Home System Breakdown means operational failure resulting from normal wear and tear or defects in material or workmanship of the Covered Home Equipment, consisting of: a. Mechanical breakdown;b. Electrical breakdown; c. Bursting, cracking or splitting; or d. Electronics failure of Covered Home Equipment that requires repair or replacement of all or part of the Covered Home Equipment. Exclusions We do not cover loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. 5. Gradual Loss Gradual Loss means: a. Rust, corrosion, erosion or gradual loss of efficiency or functionality; or b. Leakage or seepage at or from any connection, valve, fitting, shaft or seal. 16. Water or Other Liquid Damage Water or Other Liquid Damage means any damage caused by water or other liquid, including water or other liquid that results from a Home System Breakdown

The contract with the insured excludes coverage for damage caused by gradual loss and by water. As the loss to the customer's furnace was caused by gradual deterioration since the furnace's manufacture in 1987 and by water, both of which are excluded causes of loss in the customer's contract, there is no coverage for the customer's furnace under this contract.

If you have any questions or need anything further, please do not hesitate to contact me at telephone *** or via e-mail at ***@hsb.com.

Respectfully yours,

Faye N.

Vice President - Regulatory Compliance