The settlement language in our policy reads:

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Carpeting, built-in or permanently installed domestic appliances, awnings, outdoor antennas and outdoor equipment, whether or not attached to the buildings, at actual cash value at the time of loss but not exceeding the amount necessary to repair or replace with material of like kind and quality.

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The question concerns what is an appliance. We have always considered appliances to be microwave ovens, ranges, stoves, ovens, dishwashers and subject to ACV policy language. Water heaters, trash compactors have not been considered appliances and have been subject to r/c language.

Should water heaters, trash compactors be considered appliances?

Texas Subscriber

Appliances are always confusing. Merriam Webster defines appliance as: A piece of equipment for adapting a tool or machine to a special purpose, or an instrument or device designed for a particular use or function; a household or office device (such as a stove, fan, or refrigerator) operated by gas or electric current. In Armstrong v. Farmers Ins. Co. of Idaho, 147 Idaho 67, the court reviewed multiple definitions of appliances, and stated that “Household appliance” as used in everyday parlance refers to devices such as toasters, electric can openers, food processors, et cetera. These are all items [***13] that are used to perform a specific active function such as toasting, cutting, and chopping. The common element of the various definitions of “household appliance” offered by the parties and relied upon by the district court is the character of an instrument or device performing a specific function.

We have always considered a hot water heater a necessity, and part of the house. A hot water heater is not optional for a house to be fully functional, similar to electric and plumbing service. Hot water is necessary, and therefore is part of coverage A. Also, the hot water heater is not removed when the homeowner moves out; it stays with the house. The purpose of the original language is said to have been the elimination from replacement cost recovery of items that are routinely replaced in most households, such as washers, dryers, blenders, microwaves, and similar items.

The trash compactor is similar to the washer, dryer, and other appliances. It is not vital to making the home habitable. The hot water heater should be coverage A and replacement cost, the trash compactor should be coverage C and actual cash value.