Cooling Meltdown - Why Air Conditioning and Refrigeration are the Number 1 Source of Breakdowns

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1 August 2014 | In the Press

Cooling Meltdown

Hotter, intermittent summer temperatures, mixed with equipment complexity and inadequate maintenance, make cooling systems the number one source of equipment breakdown claims.

By David Pivato, vice president underwriting and professional engineer, The Boiler Inspection and Insurance Company of Canada. Published in Canadian Underwriter August 2014.

Download article (PDF, 170 KB)


Climate change and geography influence air conditioner failures


Canadian summers have been getting hotter. Two years ago, the country experienced the warmest summer on record, followed by the eighth hottest in 2013. And there appears to be little relief on the way, with heat alerts becoming more frequent. The City of Toronto, for example, saw a 66% increase in the number of heat alerts declared in the last three years compared to the three years prior. This puts added strain on cooling systems, increasing chances of failure. Consequently, the economic costs to homes and businesses without equipment breakdown insurance are rising along with the temperatures. From 2008 to 2013, total breakdown claims for cooling equipment increased 82%, while the average claim size more than doubled. Although traditional insurance policies cover certain weather perils, only equipment breakdown insurance covers accidental electrical and mechanical equipment failures. The average cost per claim in 2013 for a cooling system failure was $5,600.


Factors fueling breakdowns


Over-frequent on/off cycling

It should come as no surprise that, as illustrated by claim data from HSB BI&I, home air-conditioning units in Canada have a higher likelihood of failure during the summer months. This is partly because of constant on/off cycling, which is expected to happen frequently this summer. Environment Canada has predicted a 2014 summer of “warm weather with cool breaks.” While cool breaks provide welcome relief, they can also wreak havoc on air-conditioning systems. Over-frequent on/off cycling shortens the life o­f the insulation surrounding the motor windings, causing motors to burn out prematurely. Also causing frequent on/off cycling is the notion that “bigger is better.” Many air-conditioning systems are far too large for their applications. And an air-conditioning motor or compressor that is too big will bring down temperatures far too quickly, adding more on/off cycles and further straining the system.


Changes in voltage and brown-outs

As with all electrical equipment, any sudden change in voltage will cause motor strain and increase the risk of breakdown. A utility’s maximum current is generally finite, and if everybody suddenly switches on their air conditioners at the same time, a brown-out will occur, in which the voltage reaching cooling systems drops. Low voltage puts more strain on motors, which must then run harder to generate the same power.


Systems sitting idle

Most failures occur when equipment is started after sitting idle through a long winter, or when it cycles on and off frequently during hot weather. Equipment idleness is likely here to stay because of the nature of the Canadian climate, although one way to reduce its effects is regular maintenance. Drivers would never dream of keeping cars on the road without adequate maintenance, but air conditioners are much like an automobile in stop-and-go traffic during a rush-hour commute — intermittent hotter days cause the equipment to work in the same way as a car driving uphill in heavy traffic. It really takes a toll on equipment.


Maintenance and smaller systems

Oftentimes, owners of very large air-conditioning systems, like those found in office buildings, are more conscientious about scheduled maintenance, perhaps because tenants expect it. But it is the smaller systems, such as those found in homes and smaller businesses, that may not be serviced as often as recommended, resulting in more frequent breakdowns, especially in the early summer. It is recommended that pre-season check-ups be done, applying the same diligence to cooling systems as applied to heating. Typically, maintenance should check thermostat settings, electrical connections and currents, lubrication of mechanical parts, air coils and refrigerant.


Complexity of systems

Breakdown rates are also linked to system complexity. Air-conditioning systems do more than just remove heat; they control humidity and air quality, and distribute conditioned air throughout a building. Many different types of components — from pressure vessels and piping to mechanical compressors, electrical wiring and electronic control systems — need to work together to create a comfortable indoor climate. If one component of the system fails, the whole system may break down. Consider a recent home air-conditioning claim in which a cracked pipe caused refrigerant to leak. As a result, the whole system broke down and was replaced at a cost of $4,526. In another instance, condenser tubing in a central air-conditioning system cracked due to thermal stresses. The tubes were not accessible for repair and had to be replaced, costing $3,100.


Inadequate maintenance a big issue

HSB BI&I has found that about 35% of equipment breakdowns can be attributed to the human factor. Examples include inadequate or improper maintenance, as well as the failure to replace or calibrate controls, such as thermostats. A room thermostat that informs an air-conditioning system that it is too hot when, in fact, it is not, causes excessive wear and tear that can lead to a system breakdown. A loss was recently paid where, as a result of a thermostat failure, a home air conditioner operated in an overheated condition for an extended period of time. The whole system had to be replaced, costing $5,101. That thermostat could have been purchased for $70 from most local hardware stores.


Losses can extend beyond direct damage

A small business, such as a restaurant or retail store, has a lot to lose if its air-conditioning system suddenly fails. Customers may go elsewhere and the business may be forced to shut down, which can lead to business interruption losses. Business interruption or extra expense losses are seen in around 30% of air-conditioning breakdown claims. In addition, direct damage losses can be hefty — refrigerant replacement can cost thousands of dollars. If a system is located on the business’s rooftop, a crane would be required to remove or replace the unit. If a business could not afford to shut down, portable refrigeration units would need to be rented, adding extra expense. Recently, there was an incident in a restaurant where workers found smoke pouring through the dining room. The investigation found extensive control wiring damage to the rooftop air-conditioning unit because a transformer failure sent high voltage surging through the circuits. The repair cost alone was $49,516, but the total loss included business interruption expenses of $6,463.


Simple homeowner tips to stay cool

A number of conditions can ultimately lead to equipment breakdown. Consider the following:

  • Outdoor units blocked with debris and vegetation: Not only do blocked coils and vents increase the risk of equipment damage, they can significantly reduce air-conditioning operating efficiency. Clean the condenser unit at least twice during the cooling season, remove all leaves, seedlings and weeds with a light brush or shop vac, and cut back all plants at least three feet in all directions from the exterior of the condenser unit.
  • Filter replacement: An indoor filter should be replaced every two months during the cooling season. A dusty air filter, which causes the house temperature to rise well above the thermostat setting and the unit to run longer to produce the same cooling effect, is the most common and easily fixed problem. It is a good idea to keep a stock of replacement filters.
  • If cooled air does not come within five minutes of a unit being turned on, the air conditioner may have lost its refrigerant charge, or the compressor, condenser or air circulation fan may have failed. Seek a diagnosis from a qualified professional. In most cases, fan failure is the issue.
  • Annual service by a qualified professional will keep air-conditioning units operating at the lowest cost, and reduce chances of service interruption.


With that in mind, HSB BI&I engineers suggest consideration of the following:

  • replacing older equipment can save as much as 80% in energy costs;
  • installing a programmable thermostat and operating air conditioning only when the house is occupied or soon-to-be-occupied;
  • locating (or relocating) the thermostat to the area most frequently occupied to minimize over-cooling of less-used spaces;
  • using the “fan only” option when temperatures permit; and
  • always disconnect power before performing any maintenance activity.


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