Important: Pre-recorded webinars do not qualify for CE credit.
Understanding commonly claimed residential HVAC system types and components and why it’s so important to obtain an accurate cause of loss every time can help prevent claims leakage. Jay Dykstra, Alpine Intel Technical Education Manager, presents this and more in the webinar HVAC Systems 101 for Adjusters.
From this webinar, you’ll learn:
Why residential HVAC claims matter to carriers
Basic design and operation of HVAC systems
Differences in common residential systems components
How federal regulations may impact the settlement of an HVAC claim
Watch our HVAC Systems 101 for Adjusters Webinar recording by filling out the form provided.
Important: Pre-recorded webinars do not qualify for CE credit.
HVAC systems have complicated components that are susceptible to damages from many perils. A policyholder who isn’t familiar with this equipment may mistake the actual cause of a loss for another when filing a claim. The policyholder may confuse damage resulting from typically non-covered perils like wear and tear for something else, like smoke and fire or wind damage. Adjusters risk unnecessary settlements by not confirming cause of loss for each item included in claims. You can learn more about this common occurrence in our Decoding HVAC Claims – Actual vs. Reported Cause of Loss Webinar.
In this webinar, you’ll gain more in-depth knowledge about:
Recategorizing HVAC perils in claims
How commonly claimed HVAC systems and components operate
Real-life claims where the actual cause of loss differed from the reported cause of loss
Watch our Decoding HVAC Claims – Actual vs. Reported Cause of Loss webinar recording by filling out the form provided.
The following article on “HVAC efficiency rule changes for equipment made or imported to the U.S. in 2023″, written by Jay Dykstra of HVAC Investigators, originally appeared on Property Casualty 360.
Manufacturers will have a new set of guidelines to follow beginning Jan. 1.
The updated efficiency rules affect new residential HVAC equipment manufactured in or imported into the United States on or after Jan. 1, 2023. (Photo: David Spates/Shutterstock)
A new year often brings new regulations for many industries, and beginning Jan. 1, 2023, HVAC manufacturers will have an updated set of efficiency guidelines to follow for residential HVAC system equipment imported to or made in the United States.
Much like the phase-out of the refrigerant R-22, these regulation updates could cause misunderstandings that affect claim settlements. Here’s what insurance professionals should know about the upcoming efficiency rules before they take effect.
Why It matters for claims
Before going into the particulars of what the changes are, it is critical to understand why it matters to insurance carriers. It’s up to manufacturers to ensure their equipment meets required standards, but residential policyholders may receive conflicting information about the rules that could affect claims.
Equipment currently in a policyholder’s home that is still functioning as designed does not require more efficient models. If an insured has a condensing unit or heat pump that doesn’t meet minimum standards but can be repaired, replacement equipment is also not mandatory. Adjusters should always rule out repairability before settling a claim with HVAC systems. Air conditioning system.
Residential policyholders’ condensing units can be repaired even if they don’t meet 2023 standards. (Photo: Shutterstock)
Insurance professionals should also know that if a replacement is necessary, the higher efficiency equipment may not be compatible with a system’s older components. A new condensing unit installed on a split system with an older furnace, for example, may lead to a mismatch that could actually lower the overall system’s efficiency. The extra strain could cause systems to work harder and lower their lifespan. A full-system replacement may be required, but an HVAC expert should verify that first.
Unlike other regulations that ban continued sales of non-compliant products after a rule change, the U.S. Department of Energy (DOE) is allowing manufacturers to sell out of previously manufactured or imported inventory after Jan. 1, 2023, in certain parts of the country.
Adjusters can alleviate unnecessary replacement costs by verifying the scope of the damage, compatibility, and equipment availability.
Know what to look for
The current HVAC system efficiency regulations went into effect in 2015, though HVAC efficiency was already regulated. The DOE sets minimum standards for the Seasonal Energy Efficiency Ratio (SEER), Energy Efficiency Ratio (EER), and Heating Seasonal Performance Factor (HSPF).
These rankings are based on standardized testing and formulas that determine how much energy heating and cooling equipment uses under certain conditions. For example, SEER is the ratio of total heat removed from a conditioned space during the annual cooling season divided by the total energy an HVAC system consumed during that time. A condensing unit with a higher SEER rating uses less energy.
Because the United States has different temperatures throughout, the DOE divided the country into three regions that are based on the population-weighted number of heating degree days during the 2015 efficiency update. The Northern region has HVAC efficiency requirements reflecting typically cooler conditions, while the DOE further divided the Southern region as Southeast and Southwest to account for humidity patterns.
Where HVAC equipment is located impacts which SEER or EER requirement must be met.
U.S. map showing how regulations differ by location.The United States is broken into three regions based on temperatures and humidity. (Image: HVACi)
The difference between current and upcoming regulations The 2023 rules state that newly manufactured or imported residential systems in the Northern region can’t have a SEER less than 14. In the southern states, split systems smaller than 3.75 tons can’t have a SEER below 15 and larger systems must have 14.5 SEER. Currently, split system cooling equipment must have a 13 SEER in northern states and 14 SEER in southern states, regardless of size.
Heat pump standards will increase from 8.2 HSPF to 8.8 HSPF nationally.
The 2023 updates also add new testing processes to make them more like a traditional ducted system in a real-world application. SEER2, EER2 and HSPF2 reflect these new standards. These numbers are different from their original counterparts. For example, HVAC systems must have a 13.4 SEER2 rating in the North, which is equivalent to the 14 SEER rating.
This chart shows how efficiency standards are changing. (Chart compiled by HVACi)
In the Northern region, contractors can continue to sell equipment with non-compliant SEER standards if it was manufactured prior to Jan. 1, 2023. On the other hand, in southern states, the installation date determines compliance – anything installed on Jan. 1 or after must meet the requirements.
It may be difficult for insurance professionals to keep up with the changing policies while trying to settle claims as accurately as possible. However, it’s critical to at least be familiar with the rules and ensure that any of the third-party vendors evaluating HVAC equipment understand what they are and what they mean.
Jay Dykstra is the technical education manager for HVACi and StrikeCheck. He is responsible for the development, presentation, and curation of technical education content for adjusters and insurance claims professionals.
See how equipment efficiency mattered in this claim.
An HVAC system sustained a reported mechanical breakdown. The policyholder had a contractor come who noted that animals caused the damage. The adjuster handling the claim described in this case study requested that HVACi take photographs and verify cause of loss before the carrier settled the claim.
Fill out the form to receive your animal infestation claim case study that illustrates:
How HVACi’s process for handling onsite assessments worked for this claim
The facts and data that the HVACi team collected to make cause of loss and repair and replacement determinations for the adjuster to use during the decision-making process
What adjusters should expect from every claim they assign to HVACi
If you’ve attended an HVACi or StrikeCheck webinar over the last few years, you’ve probably heard our Technical Education Manager Jay Dykstra unpack complex topics such as efficiency regulations, less common HVAC system types, and the impacts of different causes of loss to frequently claimed equipment. Now you may get some of those technical questions answered outside of the webinar setting with “Q&A With Jay.”
Adjusters and insurance professionals can submit questions to be considered for Q&A With Jay by emailing firstname.lastname@example.org or connecting with Jay Dykstra on LinkedIn. Questions can be about specific causes of loss or residential and commercial HVAC systems and Refrigeration equipment. Dykstra will choose some questions and respond to them in an understandable way through videos uploaded to the CCG IQ YouTube page and posted on our social media pages. Make sure to like or follow these sites so you don’t miss one.
Dykstra has handled the development, presentation, and curation of technical education content and live and virtual continuing education for HVACi and StrikeCheck for several years. Previously, he was the Senior Property Learning Facilitator for Travelers Insurance and has also served as an Outside Property Claim Representative for both personal and commercial lines and catastrophe claims.
To register for one of Dykstra’s upcoming continuing education opportunities, go to HVACi’s webinars page.
Carriers rely on HVACi to deliver objective, accurate solutions for settling HVAC and Refrigeration claims. Our methods are based on proven practices that focus on keeping the claim moving through the assessment process, providing superior customer service, and meeting adjusters’ needs.
When water leaks from the ceiling, many people stick a bucket underneath. Each little droplet may be barely visible, but if the leak isn’t repaired, the bucket will eventually overflow. Claims leakage can be a lot like this.
As an adjuster, you may have unintentionally settled claims for $1,000 more than they should have been. That claims leakage doesn’t seem like much, and for a while it won’t affect the carrier. But $1,000 over every claim from every adjuster could eventually have larger consequences for the carrier.
Let’s return to the water example. What if the leak is in the attic and no one knows about it? With no one noticing and nothing being repaired, the water could ultimately cause catastrophic damages. This is the same as carriers not realizing how much claims leakage is occurring through inferior processes until an audit finds it – and by then it could have affected not only the carrier but the policyholders as well. Premiums may have increased to make up for the losses, and policyholder satisfaction may have decreased.
Mitigating claims leakage is possible with a few simple changes.
Verify cause of loss on every claim. Last year, HVACi assessed hundreds of thousands of HVAC and Refrigeration systems. Of the perils that were originally reported by policyholders, 43% of them were recategorized following HVACi’s comprehensive, objective assessment, according to the CCG IQ annual report. Confirming the cause of loss guarantees that an adjuster is only settling for equipment that is malfunctioning and that it was damaged by a covered peril.
Evaluate if repairs are a better solution than replacements. Last year, the experts at HVACi completed assessments and concluded that 11% of residential systems were non-damaged, but more importantly, that 62% of equipment could be repaired. In dollars, the average residential claimed amount was $7,837, and the average recommended settlement amount was $4,026 – resulting in nearly $4,000 in average claim accuracy.
Seek expert support. Underlying causes of claims leakage could be human error, insufficient training, and guesswork – often at no fault of the adjuster. The indemnity leakage data mentioned above only applies to HVAC and Refrigeration claims. Evaluating claim results for other types of equipment would likely yield similar conclusions. Adjusters don’t have to be experts on every claimed item that crosses their desks. However, getting specialist assistance will decrease claims leakage potential. Subject matter experts can provide a definitive cause of loss and scope of damage to ensure more accurate claim settlements.
Research Market Value Prices. Adjusters may have confirmed the loss is a covered peril and could still settle for more than is necessary if they don’t review market value pricing for Like Kind and Quality systems. Equipment and labor pricing fluctuates based on brand, features, and the policyholder’s location. Not considering these could cause an adjuster to settle for more or less than is necessary.
HVACi is an all-in-one claims solution. We apply our knowledge and experience to thoroughly evaluate claimed HVAC and Refrigeration equipment throughout the United States. Our professionals complete testing based on engineering best practices to verify cause of loss and determine scope of damage. Then we deliver objective, comprehensive reports that include repair and replacement recommendations, settlement suggestions, and market value pricing for necessary equipment. Adjusters have all the tools they need to settle the claim with minimal overage.
Submit a claim to HVACi to settle HVAC and Refrigeration claims more confidently and accurately. That will result in fewer drops being added to the claim leakage bucket.
HVAC and Refrigeration claims include complex equipment that requires expert support to ensure accurate settlements, but some claims need less outside help than others. Compare the uses and benefits of obtaining either an onsite assessment or a desktop review with our one-page guide.
Fill out the form to know what every comprehensive report includes and what else we guarantee with each of our HVACi services. Then refer to the guide when handling your next HVAC or Refrigeration claim to select which solution is most appropriate.
Settling a claim with HVAC equipment shouldn’t feel like you need to read a manufacturer’s manual or have another lesson in thermodynamics. Understanding 6 key terms related to these complex systems can help adjusters settle claims related to them more confidently and accurately.
Technical jargon for any industry can turn into alphabet soup. Though most frequently referred to as HVAC, it stands for Heating, Ventilation, and Air Conditioning. This describes what the equipment does to deliver preferred temperatures and air quality to a space.
It’s often not clear that air conditioning is the process of cooling air through the transfer of heat and humidity from warmer air to something colder. To make air feel cooler and more comfortable, water is removed from the air.
2. Split System (vs. Package Unit)
The difference between a split system, shown here, and a package unit is whether the HVAC components are separate or all together.
Traditional HVAC equipment has multiple important system types – most notably, the condensing unit and air handler or furnace. Condensing units remove heat from air, while furnaces and air handlers have heat sources to warm the air. This critical equipment is connected by copper linesets. After the air reaches its preferred temperature, it’s circulated through ductwork.
In a split system, which is the most common type of residential HVAC system, the condensing unit is outside while the air handler or furnace is inside. Package units, more frequently used in commercial applications, have the main components housed in one box kept outside.
3. Refrigerant – R-410A or R-22
Refrigerant regulations have been changing, including the phaseout of virgin R-22.
Refrigerant, which absorbs heat when the system is in cooling mode, is constantly moving and changing from gas to a liquid and back through closed loops.
R-22 was the most widely used refrigerant until the Montreal Protocol on Substances that Deplete the Ozone Layer international agreement impacted the use of R-22 and other ozone-depleting substances. As of Jan. 1, 2020, virgin R-22 can no longer be manufactured or imported into the United States, though reclaimed R-22 can be used to maintain and repair existing HVAC systems.
The main refrigerant used by manufacturers is R-410A. This refrigerant also has some effects linked with global warming, but an alternative has not yet been chosen.
R-22 and R-410A are not interchangeable. If the condensing unit used R-22, the policyholder would need to change the condensing unit and evaporator coil and flush the lineset to make it compatible with a furnace. A full replacement would be required if the split system had a heat pump.
4. Condenser Coils
Traditional condenser coils have thin aluminum fins surrounding copper or aluminum tubing.
Condenser coils are wrapped around the outside of a condensing unit in a split system and one or two package unit sides. After absorbing heat from the indoor unit, refrigerant being pumped by the compressor travels through the condenser coil tubes as a hot, high-pressure vapor. Heat is transferred to the surrounding air through the coils, and the refrigerant becomes a warm, high-pressure liquid to restart the heat absorption cycle.
In traditional coils, copper or aluminum tubes carry refrigerant and are surrounded by thin aluminum fins that can easily be bent, dented, or flattened. Package units may use microchannel coils, which have rigid aluminum ribbons in between horizontal channels that carry the refrigerant and are more difficult to damage.
5. SeasonalEnergy Efficiency Ratio (SEER)
The U.S. Department of Energy has set minimum Seasonal Energy Efficiency Ratio standards based on location.
In 2015, the U.S. Department of Energy analyzed HVAC system efficiency and set minimum standards based on climates throughout the country. The Seasonal Energy Efficiency Ratio (SEER) is the total cooling output during the cooling season over the total electric energy input during the cooling season. More efficient systems have a higher SEER rating.
Policyholders may have to replace the condensing unit and evaporator coil if the outdoor equipment isn’t compatible with indoor components, particularly if parts of an outdated system no longer meet minimum federal requirements. Other components can be added to make the systems compatible and ensure system efficiency.
6. Heat Pump vs. Furnace
Furnaces are forced-air systems that are a residential property’s primary heating source. Air is warmed by a heat source, including burning natural gas, propane, or oil, and then that warm air is sent through the ductwork and supply registers.
Heat pumps are condensing units that can operate in heating and cooling modes through a reversing valve. Unlike a furnace, heat pumps don’t generate heat but transfer it like in the cooling process. Heat is absorbed from the ambient air and returned to warm up the air in a space. Heat pumps are used in conjunction with air handlers, which have electric heat strips to supplement additional heat when necessary.
The HVACi team is full of experts who are ready to help carriers settle claims with HVAC and Refrigeration equipment. Use just the facts to determine cause of loss, scope of damage, and best repairs and replacement processes to return your policyholders’ equipment to pre-loss condition. To obtain your comprehensive, data-driven assessment report, submit a claim.