diff --git a/homeassistant/components/daikin/__init__.py b/homeassistant/components/daikin/__init__.py
index 5ad21f5954f..2df831eb6db 100644
--- a/homeassistant/components/daikin/__init__.py
+++ b/homeassistant/components/daikin/__init__.py
@@ -2,13 +2,13 @@
 import asyncio
 from datetime import timedelta
 import logging
-from socket import timeout
 
-import async_timeout
+from aiohttp import ClientConnectionError
+from async_timeout import timeout
 import voluptuous as vol
 
 from homeassistant.config_entries import SOURCE_IMPORT, ConfigEntry
-from homeassistant.const import CONF_HOSTS, CONF_HOST
+from homeassistant.const import CONF_HOST, CONF_HOSTS
 import homeassistant.helpers.config_validation as cv
 from homeassistant.helpers.device_registry import CONNECTION_NETWORK_MAC
 from homeassistant.helpers.typing import HomeAssistantType
@@ -16,7 +16,7 @@ from homeassistant.util import Throttle
 
 from . import config_flow  # noqa  pylint_disable=unused-import
 
-REQUIREMENTS = ['pydaikin==1.3.1']
+REQUIREMENTS = ['pydaikin==1.4.0']
 
 _LOGGER = logging.getLogger(__name__)
 
@@ -88,11 +88,14 @@ async def daikin_api_setup(hass, host):
     from pydaikin.appliance import Appliance
     session = hass.helpers.aiohttp_client.async_get_clientsession()
     try:
-        with async_timeout.timeout(10):
+        with timeout(10, loop=hass.loop):
             device = Appliance(host, session)
             await device.init()
     except asyncio.TimeoutError:
-        _LOGGER.error("Connection to Daikin could not be established")
+        _LOGGER.error("Connection to Daikin timeout")
+        return None
+    except ClientConnectionError:
+        _LOGGER.error("ServerDisconected")
         return None
     except Exception:  # pylint: disable=broad-except
         _LOGGER.error("Unexpected error creating device")
@@ -119,7 +122,7 @@ class DaikinApi:
         try:
             await self.device.update_status()
             self._available = True
-        except timeout:
+        except ClientConnectionError:
             _LOGGER.warning(
                 "Connection failed for %s", self.ip_address
             )
diff --git a/homeassistant/components/daikin/config_flow.py b/homeassistant/components/daikin/config_flow.py
index 3c5daac4653..7c214e77050 100644
--- a/homeassistant/components/daikin/config_flow.py
+++ b/homeassistant/components/daikin/config_flow.py
@@ -2,7 +2,8 @@
 import asyncio
 import logging
 
-import async_timeout
+from aiohttp import ClientError
+from async_timeout import timeout
 import voluptuous as vol
 
 from homeassistant import config_entries
@@ -42,10 +43,13 @@ class FlowHandler(config_entries.ConfigFlow):
                 host,
                 self.hass.helpers.aiohttp_client.async_get_clientsession(),
             )
-            with async_timeout.timeout(10):
+            with timeout(10):
                 await device.init()
         except asyncio.TimeoutError:
             return self.async_abort(reason='device_timeout')
+        except ClientError:
+            _LOGGER.exception("ClientError")
+            return self.async_abort(reason='device_fail')
         except Exception:  # pylint: disable=broad-except
             _LOGGER.exception("Unexpected error creating device")
             return self.async_abort(reason='device_fail')
diff --git a/homeassistant/components/daikin/manifest.json b/homeassistant/components/daikin/manifest.json
index 28314bdf084..ab842950e24 100644
--- a/homeassistant/components/daikin/manifest.json
+++ b/homeassistant/components/daikin/manifest.json
@@ -3,7 +3,7 @@
   "name": "Daikin",
   "documentation": "https://www.home-assistant.io/components/daikin",
   "requirements": [
-    "pydaikin==1.3.1"
+    "pydaikin==1.4.0"
   ],
   "dependencies": [],
   "codeowners": [
diff --git a/requirements_all.txt b/requirements_all.txt
index 9709d7c87ef..e46f9dd4019 100644
--- a/requirements_all.txt
+++ b/requirements_all.txt
@@ -985,7 +985,7 @@ pycsspeechtts==1.0.2
 # pycups==1.9.73
 
 # homeassistant.components.daikin
-pydaikin==1.3.1
+pydaikin==1.4.0
 
 # homeassistant.components.danfoss_air
 pydanfossair==0.0.7