Category: Codes and Regulations

4 Things Adjusters Should Know About the HFC Phasedown

National initiatives for more environmentally friendly alternatives to certain gases used in HVAC refrigerants are in motion and will continue to progress in the coming years. Hydrofluorocarbons (HFCs), which are in the popular refrigerant R-410A, are slated to be phased down next to reduce their negative impacts. Changes as plans proceed will likely affect policyholders.

R-410A is a refrigerant made from Hydrofluorocarbons, which are under global and national scrutiny to reduce consumption and negative environmental impacts.

1. The UN Established Efforts to Reduce Certain Gases

The United Nations (UN) established global initiatives to decrease the use of certain substances through The Montreal Protocol on Substances that Deplete the Ozone Layer. It’s a multilateral environmental agreement regulating the production and consumption of nearly 100 manmade chemicals known to negatively impact the ozone layer.

R-22, better known as Freon, was among the Hydrochlorofluorocarbons (HCFCs) that went through their own phase down because of the Montreal Protocol. The overall ban on the production and importation of virgin R-22 took effect in 2020. Now only recovered, recycled, or reclaimed R-22 supplies are available.

Another initiative is the Kigali Amendment to the Montreal Protocol, which aims to now phase down HFCs by also cutting their production and consumption. HFCs are in aerosols, fire suppression, foam blowing sectors, and refrigeration and air conditioning refrigerants such as R-410A. HFCs aren’t linked to ozone layer depletion, but they are greenhouse gases affecting global warming. More than 130 countries have already formally ratified the Kigali Amendment to promote the reduction in use.

Gases that negatively impact the ozone layer or the greenhouse effect are among those the Montreal Protocol and its amendments are phasing out.

2. The United States Has Supported These Initiatives

Several U.S. projects bolstered support for the UN’s efforts to be more mindful of climate impacts.

The U.S. Senate approved the Kigali Amendment with bipartisan support in September 2022. The following month, President Joe Biden signed an international agreement to limit the use of HFCs, joining the other countries.

In 2020, the American Innovation and Manufacturing Act gave the U.S. Environmental Protection Agency (EPA) the authority to address HFCs by phasing down production and consumption of listed HFCs, managing them and their substitutes, and facilitating the transition to next-generation technologies. The U.S. goal is to have an 85% reduction in HFC production and consumption by 2036.

3. Reductions Have Already Started

The EPA previously approved HFC allowance allocations for 2022 and 2023, which set up production and consumption baseline levels and the methodology for allocating HFCs. For example, the companies and U.S. agencies that use HFCs for semiconductors and mission-critical military applications have a designated number of application-specific allowances.

In October 2022, the EPA submitted a proposed rule regarding allowance allocation methodology for 2024 and later years to enhance those efforts to meet the reduction goal. It’s slated for approval in 2023.

4. Policyholders Don’t Have to Do Anything Right Now

The HFC phase down is like the R-22 phase out. Contractors should not be recommending that policyholders replace HVAC systems that use R-410A now because of the changes. Regulations will determine what manufacturers must do going forward.

For now, policyholders should repair and replace their HVAC equipment when necessary and not because of changing refrigerant regulations.

In the meantime, adjusters may begin to see other refrigerants used in newer HVAC equipment. It’s critical that policyholders have internal and external HVAC components that use the same kind of refrigerant. Transitioning equipment from one to another doesn’t always require a full system replacement, though other components may be necessary.

Adjusters handling claims with HVAC systems should ensure that HVAC equipment is compatible, and that contractor-suggested repairs and replacements are necessary and in line with regulations. HVACi can help by providing objective damage assessments. Insurance professionals receive comprehensive reports that include cause of loss verification, scope of damage determinations, and recommended repairs and replacements.

Have a specific question about refrigerant in a policyholder’s HVAC system? Submit a claim to HVACi for accurate, fast claim solutions.

5 Things to Know About How SEER Regulation Changes Will Impact Residential HVAC Systems

Though changes aren’t scheduled to take effect until January 1, 2023, your residential policyholders will likely be hearing from their contractors much sooner about what replacements they think insureds will need to comply with the upcoming HVAC system energy efficiency standards.

Adjusters should be prepared to field questions and claims related to the changes.

1. Efficiency Ratings Are Aimed to Benefit Consumers

The U.S. Department of Energy (DOE) applies a variety of energy conservation standards for appliances and other equipment to save consumers money on utility costs and implement the use of more environmentally friendly products. The Seasonal Energy Efficiency Ratio (SEER), Energy Efficiency Ratio (EER), and the Heating Seasonal Performance Factor (HSPF) were established to score HVAC systems’ efficiency. The DOE set minimum standards that manufacturers and policyholders must follow.

• SEER: the ratio of the total heat removed from a conditioned space during the annual cooling season divided by the total energy an HVAC system consumed during that time. The higher the SEER rating, the less electrical energy is used to cool a property.
• EER: the ratio of the cooling capacity divided by the watts per hour of electrical consumption when tested in 95 degrees Fahrenheit. It measures efficiency in areas that have hotter or dryer climates, like those in the Southwestern part of the United States, where HVAC systems work harder to cool.
• HSPF: This measurement tracks how much energy is used to heat a space. The higher the HSPF, the less electrical energy is used.

 

2. This Isn’t the First Time SEER Regulations Have Changed

HVAC systems have had energy conservation standards since 1992, with multiple updates since then. The most recent revision went into effect January 1, 2015, which set minimum standards and divided the country into regions based on climate for the first time.

The 2015 regulations developed regions with minimum SEER requirements.

North, Southeast, and Southwest Regions: Dividing the country as North and South was based on the number of population-weighted degree days. Those with 5,000 heating degree days or more are considered the North region. The Southern region was further divided based on the conditions of hot-dry (Southwest) versus hot-humid (Southeast). The Southwest region has the fewest states with California, Nevada, Arizona, and New Mexico.

In addition to identifying the regions, the 2015 regulation update gave minimum SEER requirements for split system HVAC systems, such as 13 SEER for the Northern states and 14 for those in the Southern regions, but it was known that regular efficiency updates would be necessary.

3. Multiple Efficiency Changes Take Effect in 2023

Like the 2015 revisions, the 2023 standards are meant to improve equipment efficiency. Many minimum requirements for SEER standards are slated to increase by at least 1 SEER.

Split system condensing units that are less than 45,000 Btu/hr (3.75 Tons) are expected to require a minimum 14 SEER in the North and 15 SEER for the Southeast and Southwest. Equipment equal to or greater than 45,000 Btu/hr (3.75 Tons) are supposed to be at least 14 SEER in the North and 14.5 SEER in both southern regions. Many times, a 14.5 unit would not be available based on many factors, including brand. At that point, the policyholder would have to round up to a 15 SEER unit.

HVAC systems used in the Southwest region must also meet required EER minimums. The minimums also depend on the size of the system.

Split system heat pumps efficiency minimums also are expected to increase from 14 SEER to 15 SEER in all regions. They must also comply with additional HSPF efficiency rules.

In addition to the new minimums, the DOE is updating its testing procedures. These increase the total external static pressure testing conditions for SEER2 to make the testing conditions more like that of a traditional ducted system in a real-world application. The required SEER2 and EER2 rating standards are lower when using this different testing method. For example, split system HVAC systems are projected to require a 13.4 SEER2 minimum rating in the North instead of 14 SEER.

4. It Could Impact Your Policyholders Who Need Replacement Equipment

All equipment manufactured or imported to the United States on January 1, 2023, or later must follow the new minimum standards. These additional efficiency requirements may cost policyholders more when purchasing new equipment – which could lead to increased settlements.

However, it is important to note that equipment, regardless of compliancy, can still be repaired.

Equipment can still be repaired, even if it isn’t compliant with the new standards.

5. You Don’t Have to Keep Up with Compatibility Alone

Staying up to date with all the different HVAC system types, and which regulations apply to them, can be complicated and time-consuming. HVACi’s experts help insurance professionals figure out the best solution to resolve HVAC-related claims that are in line with regulations and equipment best practices.

Through onsite assessments, we’ll confirm cause of loss and scope of damage to determine if replacements are necessary. Our comprehensive reports also provide a breakdown of repair and replacement recommendations, costs pertaining to each, and a settlement recommendation that considers market labor and equipment pricing. Submit a claim to ensure accuracy and prompt resolutions.

The Future of HVAC Refrigerant – And Why It Isn’t All Clear

It’s been nearly two years since the end of production of the refrigerant R-22. And while R-410A has gained popularity for use in HVAC systems in the United States, it likely won’t become the most prevalent refrigerant as leaders globally look for alternatives with fewer negative environmental impacts.

It may seem difficult to keep track of refrigerant rules when handling HVAC claims, but adjusters should understand what the changes are and why they are taking place, particularly because contractors may be giving policyholders misleading information that could affect settlements.

The Phase Out of R-22

Refrigerant is the chemical compound used in HVAC systems that is continually changing state while the system is engaged and the refrigerant is moving. Refrigerant absorbs heat in the evaporator coil when it is in a low pressure liquid state and releases that heat in the condenser coil during its high pressure gas phase.

Hydrochlorofluorocarbons (HCFCs), including R-22, have been used as refrigerants in HVAC systems for decades. However, the U.S. Clean Air Act and the Montreal Protocol on Substances That Deplete the Ozone Layer have initiated steps to reduce the negative impacts to the ozone layer since the 1980s. The HCFC phase out occurred in incremental decreases until the complete ban on production and importation of virgin R-22 went into effect January 1, 2020. (Find out more with this HVAC Regulations Overview Webinar)

Production of R-22 phased out over several years until the 2020 ban of virgin R-22; however, this equipment can still be serviced and repaired with a reclaimed version.

Regarding this change, it’s important to note that the U.S. Environmental Protection Agency (EPA) agrees that the overall use of R-22 is not illegal, and systems that operate with it don’t have to be replaced. Equipment can continue to be maintained, repaired, and serviced with reclaimed R-22.

However, HVAC systems being built must use R-410A. In 2020, 53% of the systems HVACi assessed used R-22, compared to 33% that used R-410A. This compares to 70% that used R-22 in 2019.

R-22 and R-410A are not interchangeable in HVAC systems. Policyholders who have a split system with a furnace can replace the condensing unit and evaporator coil and flush the lineset to make equipment compatible if they use different refrigerants. Systems with a heat pump that need a new condensing unit would need a full replacement for a refrigerant mismatch.

R-410A Is Not the Final Solution

While its prevalence is increasing, R-410A has been around more than 25 years. However, R-410A is not a long-term solution for manufacturers.

R-410A is a blend of two hydrofluorocarbons. It doesn’t have chlorine and is thought to be more efficient than R-22. However, it has different negative impacts to the environment. Though the ozone depletion potential is lower than R-22, it has a much higher Global Warming Potential (GWP), which is the measure of how much energy the emissions of 1 ton of a gas will absorb over a given period of time, relative to the emissions of 1 ton of carbon dioxide, according to the EPA.

The Kigali Amendment to the Montreal Protocol studied hydrofluorocarbons (HFCs) and other substances with high GWP. Countries who supported the amendment agreed to an 85% phasedown of the production and consumption of HFCs, including R-410A. This must be completed by 2036. The United States signed the agreement, but it had not been ratified as of January 2021.

Like R-22, the use of R-410A is going to be phased down to reduce environmental impacts.

In December 2020, the American Innovation and Manufacturing Act gave the EPA the authority to phase down consumption and production of HFC refrigerants with high GWP, and more specific regulations are expected. However, some states, including California and Washington have already been working on statewide regulations to go into effect sooner for certain types of HVAC systems.

Some Of the Front Runners – And Why It’s Not A Sure Thing

A few types of refrigerants are gaining popularity among manufacturers, but concerns exist that are keeping them from being chosen as the definitive alternative to R-410A.

Some manufacturers have already said they are looking to R-454B, particularly for chillers, heat pumps, and rooftop equipment. Carrier said it would use R-454B to replace R-410A in ducted residential and light commercial package solutions. Honeywell and Johnson Controls have also selected R-454B for ducted residential and commercial unitary products, according to articles by Cooling Post.

Some manufacturers have already said they will use R-454B in certain HVAC equipment, including air-cooled scroll chillers.

Other manufacturers have chosen R-32 for a few applications, including portable air conditioners, Packaged Terminal Air Conditioner units, and window air conditioners, according to an article in Air Conditioning, Heating & Refrigeration News.

R-454B has a lower GWP than R-32, though both are considered similar in performance to R-410A. While these may be better for the environment, safety concerns exist related to these refrigerants. They are mildly flammable, which may impact the claims that adjusters see from equipment that uses them. The worry is if a leak and a spark in an enclosed space could ignite a fire.

The EPA’s Protection of Stratospheric Ozone: Listing of Substitutes Under the Significant Alternatives Policy Program, published in May, lists R-454B and other similar refrigerants as “acceptable, subject to use conditions, for use in residential and light commercial air condition and heat pumps end-use for new equipment.” The same document lists R-32 as “acceptable, subject to use conditions, for use in residential and light commercial air conditioning and heat pumps – equipment other than self-contained room air conditioners for new equipment.” However, building codes may not allow their use in other applications because of their flammability.

Before the phasedown of R-410A, an overarching consensus of which refrigerant to use in most HVAC systems must be made. But for now, adjusters should continue ensuring accurate settlements on HVAC claims and not settle for unnecessary replacements based on misleading information about what regulations require.

Our HVACi team stays up to date with all HVAC efficiency and refrigerant rules, and our experts have the experience and knowledge to evaluate equipment to determine cause of loss, scope of damage, and market value pricing. Submit a claim to HVACi to receive comprehensive damage assessments and repair and replacement recommendations for accurate and quick settlements.

Understanding the Impact of Federal Regulations on HVAC Claims

The following article on “Understanding the impact of federal regulations on HVAC claims,” written by Jay Dykstra of HVACi and StrikeCheck, was originally published on Property Casualty 360. 

Regulations relating to some HVAC system components continue to be evaluated and amended as government agencies implement methods to reduce negative environmental impacts. Adjusters and other insurance professionals should be aware of the regulations, including those regarding refrigerant standards and efficiency ratings, in order to understand how they might affect claims and to avoid being misled by misinformation from contractors or policyholders.

 

Know the facts surrounding R-22

It isn’t a new regulation, but the January 1, 2020, designated date has passed for the complete phaseout of virgin R-22. Yet, the rules and facts continue to be distorted about the substance commonly referred to as Freon and used in air conditioners and refrigeration equipment.

The U.S. Environmental Protection Agency (EPA) regulation was initiated decades ago when the Montreal Protocol on Substances that Deplete the Ozone Layer took place in Canada in 1987. The concern over hydrochlorofluorocarbons (HCFCs) and their effects on the ozone layer led to amendments to the U.S. Clean Air Act in 1990, which included the phaseout of virgin R-22.

The regulation halts the production and import of most HCFCs, but it doesn’t prohibit their overall use in existing HVAC systems. Policyholders filing claims for full system replacements instead of for only necessary repairs simply because their current systems use R-22 are causing insurance carriers unnecessary claims leakage. Systems that use R-22 are still prevalent and can be repaired. Components for R-22 systems can and will continue to be produced for the foreseeable future.

It’s important to note that any R-22 removed from a system, with the intention of not returning it to a system owned by the same person, must be reclaimed by EPA standards and returned to the market. It cannot simply be vented into the atmosphere but must be recovered anytime it’s emptied. While production of virgin R-22 is not allowed, previously produced refrigerant and what’s been properly reclaimed is still legal and available for use.

In the event policyholders need to switch to components that use another type of refrigerant, a full system replacement may not be required. Purchasing a new evaporator coil and condensing unit and flushing the line set may often suffice.

The U.S. Environmental Protection Agency has joined a global effort to reduce negative environmental impacts from certain types of refrigerants, including R-22 and R-410A.

 

R-410A is not the final solution

The R-22 phaseout had contractors and manufacturers looking to a different refrigerant to replace it. R-410A is the current standard for residential and commercial HVAC systems in the United States and has been for a decade. But R-410A is likely not the final answer as a phasedown for this refrigerant has already begun.

The Kigali Amendment to the Montreal Protocol focused on substances that have high Global Warming Potential, including hydrofluorocarbons (HFCs). The United States and 196 other parties who supported the Kigali Amendment now require an 85% phasedown of the production and consumption of HFCs, including R-410A. That must be completed by 2036 for developed nations like the United States and 2046 for developing countries.

Adjusters should stay up to date with potential HVAC system regulation changes as the EPA, equipment manufacturers, and chemical companies determine the next standard refrigerant.

The Department of Energy regulates the minimum Seasonal Energy Efficiency Ratio for residential systems, including air conditioning (AC) and heat pumps (HP), based on location.

 

Location, system type affect residential energy rules

The U.S. Department of Energy (DOE) also has an interest in HVAC systems and how they work. The DOE uses the Seasonal Energy Efficiency Ratio (SEER) to regulate how residential systems operate under common conditions, particularly related to energy consumption. Higher efficiency systems have greater SEER ratings.

The standards have evolved and will continue to do so, though ample notice is given. The DOE first implemented energy conservation standards in 1992. It began with a standard of a 10 SEER rating nationwide for central air conditioners. The current SEER ratings were established in January 2015 and determine minimums based on system type and U.S. location. New split systems in northern states, for example, require a SEER minimum of 13; while for southern and southwestern states, the minimum standard is 14. For split-system heat pumps, package air conditioners, and package heat pumps, the national standard is a SEER rating of 14, according to the DOE.

Like the evolving requirements for refrigerant, the next SEER standards change is already in motion. Starting in 2023, all new residential central air conditioning and heat pump systems must meet new minimum SEER standards, according to the U.S. Energy Information Administration. The northern states will have to follow a SEER rating of 14 for straight cool split systems, and the southern states must raise standards to 15.

Insurance personnel should note that indoor and outdoor components should be compatible to ensure they can properly work together and overall system efficiency standards are met.

 

Efficiency is key for commercial HVAC systems

Commercial HVAC equipment, including air conditioning (AC) and heat pumps (HP), requires different standards depending on heating or cooling equipment.

Commercial systems have had the most recent change in efficiency standards. The current requirements took effect in January 2018 so that new systems are 10% more efficient. Rather than location, these new rules are based on the cooling capacity of the equipment (BTU/hr). Although they still differentiate between split systems and heat pumps, it goes even further by then splitting them between systems with electric resistance heat or no heating and all other types of heating, such as furnaces or boilers.

The Integrated Energy Efficiency Ratio (IEER) is used for commercial cooling equipment and is based on how the system operates under specific temperature conditions. The Coefficient of Performance (COP) measures heat pump efficiency by calculating the amount of heat created using 1 watt of energy, ranging from 1.5-4. The closer to 4, the better.

The second phase to further increase efficiency standards on commercial HVAC equipment is slated to take effect on January 1, 2023.

As regulations relating to HVAC systems and their components continue to change, it’s important adjusters and other insurance professionals stay up to date with them or seek the help of a knowledgeable third party to ensure claims are handled appropriately.

6 Truths You Should Know About the R-22 Phase-Out When Handling HVAC Claims

The federal regulations pertaining to refrigerant are constantly evolving, and there’s a big deadline looming on the horizon. As of January 1, 2020, it’ll be illegal to manufacture any R-22 refrigerant per the EPA’s ruling. As an insurance adjuster, navigating such regulations in terms of HVAC claims can get pretty confusing. So, what does this phase-out mean for your claims?

There are a lot of terms and discussions surrounding the R-22 phase-out, including a lot of myths and misdirections. At HVACi, we want to clear some of these up for insurance adjusters like you. So, here are some statements, myths, and misconceptions about the R-22 phase-out and the truths behind them.

#1. R-22 is illegal: MYTH

You might hear this often, particularly when contractors provide estimates claiming that you must replace the entire HVAC system. The reality is that the production and importation of R-22 are illegal, but the substance itself is legal. It is also important to note that intentionally releasing R-22 into the atmosphere is illegal, so it must be properly reclaimed or recycled. The use of R-22 in HVAC systems already in existence is completely legal. (Pictured: A digital meter reading that R-22 is low)

#2. Recycled and reclaimed R-22 are the same: MYTH

Many confuse recycled refrigerant and reclaimed refrigerant and use the terms interchangeably. In truth, recycled R-22 removes some of the contaminants through separation and filtration, and recycled R-22 can only be used in the same system it was taken from. Reclaiming R-22 is a much more involved process that removes all impurities from the refrigerant, and the EPA requires reclaimed refrigerants to meet the same purity standards as virgin (newly produced) counterparts.

#3. Virgin and reclaimed R-22 are about the same: FACT

Virgin and reclaimed R-22 are indistinguishable from each other. They have the same specifications and efficiency and must meet the same purity standards. In other words, reclaimed R-22 is the perfect replacement for virgin R-22 without having to make any changes or replacing the existing system. Companies will continue making parts and components for R-22-based HVAC systems, so these systems can often be repaired. And again, yes, this is perfectly legal.

#4. R-410a is the primary option for R-22 replacement: FACT

R-410a is the main refrigerant the industry is switching to at the moment. It’s important to note, however, that you can’t drop R-410a into an existing R-22-based system. These refrigerants operate at different pressures and typically use different oils as lubricants, meaning that serious problems will arise if you try this. (Pictured: An analog meter with both R-22 and R-410A gauges)

 

#5. R-410a has no ozone-depleting properties: FACT, BUT…

R-410a has an ozone-depletion potential (ODP) rating of 0, whereas R-22 has an ODP of 0.055 (as stated by the International Organization of Scientific Research). This is great news, as the main reason R-22 is being phased out is its ozone-depleting properties. Unfortunately, that’s not where the story ends. R-22 has a global warming potential (GWP) of 1810, while R-410a’s GWP is higher, reaching 2088 (according to the EPA). That means that while there’s no harm done to the ozone layer, the use of R-410a could potentially contribute more to climate change. For this reason, many companies and countries are looking into other options.

#6. R-410a is the only option for R-22 replacement right now: MYTH, BUT…

There may be other options, but R-410a (Pictured: Canisters for refrigerant) is the only one that is industry standard and accepted nationwide. Any R-22 alternatives are required to have an ODP of 0, but some have higher GWPs than R-410a. There is a list of R-22 substitutes deemed acceptable and unacceptable by the Environmental Protection Agency’s Significant New Alternatives Policy (SNAP). It is also important to keep in mind that many of these alternatives have use conditions.  R-410a is the primary focus right now due to its status as the industry standard, but there is research into new alternatives due to R-410a’s GWP.

Pressure requirements for R-22 and R-410A

What Can You Do When You’re Dealing with R-22?

When an R-22 HVAC system claim comes to your desk, you want to make sure your adjustment of that claim is thorough and accurate, which is why it’s important to know all of your options when handling these claims. If you’re not sure a contractor’s solution is necessary or adheres to the federal guidelines regarding refrigerant, talk to the experts at HVACi. We’ll answer your questions, run a desktop review, or even provide an onsite inspection to offer completely objective advice on the cause of loss, repair costs, replacement costs, and more. Don’t hesitate! Submit a claim today to get started and be more confident in your adjustments.