Does Home Insurance Cover Electrical Problems?
Yes, home insurance will cover electrical problems, depending on what caused the problem and how updated your electrical system is.
Flickering lights, hot outlets, frayed wiring, and total malfunctions caused suddenly by covered perils like fires or thunderstorms will typically qualify for replacement. However, homeowners insurance will not cover damaged home or electric components resulting from poor maintenance or general neglect.
Even following a qualified covered peril, insurers may still deny coverage to people in homes 40 years or older with outdated electrical systems. Before the advent of modern wiring techniques in the late 1970s, homes used easily worn and fire-prone materials, making them high-risk assets in the eyes of most insurance providers.
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The Importance of Understanding Your Electrical Coverage
Considering ever-changing safety standards and scientific advances, basic knowledge of your home’s electrical system could save money and time and prevent disaster. Even if your lights appear functional, issues may still silently exist behind your walls.
Frequently tripping circuit breakers, warm-to-the-touch electric panels, strange humming, or just knowing you have outdated wiring or a fused-based electrical panel are all ample reasons to inspect and upgrade your home system.
Homeowners should also take time to understand the range and limits of their coverage. While all home insurance policies reimburse accidental damage to electrical panels resulting from covered perils, older homes may not qualify due to higher risks of short-circuiting, degraded wiring, and electrical fires. Replacing antiquated electrical components will expand your coverage options and qualify you for lower premium rates.
How Does Homeowners Insurance Cover Electrical Problems?
Homeowners insurance includes many coverages applicable to electrical problems:
Type of Coverage | What It Covers | Example |
|---|---|---|
Dwelling coverage | Reimburses damages to the physical structure of your house resulting from covered perils such as falling trees, fires, and hailstorms. | If lightning fries your electrical panel, dwelling coverage would pay to replace it |
Other structures coverage | Also known as Coverage B, other structures coverage repairs eligible damages to “other structures” on your property, such as sheds, fences, and treehouses. | Coverage B would pay for new wiring and circuitry if a storm caused a small electrical fire in your garage. |
Personal property coverage | Covers lost or damaged belongings stored anywhere on your property. Electrical appliances damaged by power surges would also see reimbursement. | Personal property coverage will pay for a refrigerator damaged by a power surge. |
Liability coverage | Pays the legal and medical bills incurred by guests injured on your property. | If a friend’s child got electrocuted in your home, your liability coverage would help protect you from financial recourse. |
Types of Electrical Issues Covered by Homeowners Insurance
Regardless of your selected coverages, only some electrical issues will qualify for reimbursement:
- Covered Perils: These include disasters that your company has agreed to protect against, such as electrical issues from fires, lightning strikes, windstorms, and much more.
- Accidental damage: Some policies expand their listed perils to include accidental damages, such as falling trees or vehicles crashing into electrical panels.
- Faulty Appliances: Malfunctioning air conditioners, refrigerators, and other appliances can cause surge damage and electrical fires. If you can prove you properly maintained and installed each item, most companies will help repair them and any resulting damage to your home system.
- Power surge: Lightning strikes and power company operations can cause sudden energy spikes, instantly destroying nearby electrical appliances and home systems. Many insurers will cover damages from power surges caused by unforeseeable out-of-home circumstances.
- Electrical fire: Most home insurance will cover electrical fires caused by covered perils, given your home has an up-to-date, professionally installed, and frequently maintained electrical system.
Notably, how your insurer reimburses you depends on the type of electrical components damaged.
Electric Panel Coverage
Many home insurance policies will pay to replace a whole electric panel damaged by a covered peril. As long as the panel and the attached wiring prove well-maintained and up-to-code, your insurance company will pay to replace it if it begins exhibiting issues that could pose a significant threat to your life and home.
The only currently in-use electrical panel deemed uninsurable by all providers is the Federal Pacific Electric circuit breaker installed in American homes between 1950 and 1960. While these breakers have yet to get recalled, they routinely fail to trip in high-power situations and cause about 2,000 yearly fires. Homeowners must professionally replace an FPE panel with a modern equivalent to qualify for insurance coverage.
Electric Wiring Coverage
Home insurance coverage for electric issues also depends on the age of your home and the type of wiring within its walls. Many insurance companies will not offer coverage or require high premiums to cover houses using outdated wiring.
Modern Wiring
Modern non-metallic, or NM, cabling typically consists of one or more pure copper hot wires, neutral wires, and ground wires wrapped inside a protective plastic sheathing. Because it has proven safer and cheaper for dry environments than other alternatives, almost all of today’s home outlets and light fixtures get power from NM cables.
The heavy insulation and grounding in modern electrical wiring make it less prone to deterioration, greatly lessening the risk of electrical fires. Therefore, insurance companies provide cheaper homeowners coverage for properties with updated electrical systems. Likewise, they will require less investigation and more quickly approve insurance claims.
Knob and Tube Wiring
This system, present in most pre-1950s homes, consists of one hot copper wire and one neutral copper wire running through porcelain tubes that insulate the metal from fraying or directly touching walls. Porcelain knobs then anchor the wire against structural home components like wooden beams.
Today, we use ground wires to deaden excess electrical power back into the earth. The absence of this failsafe in knob and tube systems creates a high risk of electric fires. Likewise, its thinner insulation wears quicker, exposing bare wires.
Many insurance companies will charge significantly higher premiums to protect old homes with knob and tube wiring or withhold coverage until you can modernize your electrical system.
Cloth Wiring
Rubberized cloth wiring became the standard in homes from the 1920s to the early 1960s, primarily due to its cheap manufacturing costs. Cloth has proven prone to brittleness, more susceptible to rodent damage, and incapable of containing the heat generated by contemporary electrical needs, making it potentially the most hazardous of all existing wiring types.
Because so many homes still have cloth wiring, many insurers will cover them, albeit for higher premiums. Professionally replacing a cloth wiring system with modern materials will lower your insurance rates, significantly raise your home’s resale value, and ensure your family’s safety against sudden electrical fires.
Aluminum Wiring
Aluminum wiring became common between 1962 and 1973 when copper prices skyrocketed beyond the budget of most contractors and consumers. Unfortunately, aluminum is a much weaker conductor than copper and is more prone to oxidation and deterioration. Furthermore, few contemporary manufacturers designed electrical outlets, switches, fans, and other devices with aluminum compatibility in mind, leading to countless issues and housefires.
Though most manufacturers have stopped producing solid-strand aluminum conductors, they still exist in many homes. As with knob and tube wiring, most insurance companies will deny coverage or significantly raise homeowners premiums for houses still using aluminum wiring.
What’s Not Covered
Only homeowners with modernized and well-maintained electrical systems can expect affordable dwelling coverage through their insurance company. Antiquated wiring materials have a greater likelihood of malfunctioning and causing electrical fires, making them a high claims risk.
Therefore, homes built before 1990 with knob and tube or aluminum wiring often get denied homeowners coverage. Applicable residents must have their electrical systems replaced professionally to regain insurance eligibility. Notably, even modern wiring materials occasionally lose coverage eligibility if you fail to maintain them properly.
How to File a Home Insurance Claim for Electrical Problems
Follow these steps to file an insurance claim for electrical fault:
- Determine the cause of the problem. Home insurance will typically only reimburse damages incurred by covered perils, not a lack of maintenance or general neglect.
- Contact your insurance company. Promptly notify your insurer of all necessary structural repairs, damaged appliances, and liability concerns to initiate recovery.
- Document damage and make any urgent repairs. Take pictures and videos, and compile a thorough list of losses. If any seriously threatening problems persist, inform your insurance agent of your intention to hire a professional to fix them immediately.
- Await reimbursement. An insurance appraiser will view your home and determine your settlement. If you believe you deserve more money, you can file for an appeal.
Tips for Preventing Electrical Problems
Adhere to these practices to avoid home electric issues:
- Hire a licensed electrician: DIY work can prove extremely dangerous, increase your risk of property damage, and unnecessarily cost you time and money.
- Regular electrical inspections: Home inspectors can assess the condition of your electric panel before problems arise.
- Overloading outlets: Evenly map power across your home to prevent sparks and buzzing.
- Proper use of extension cords: Overburdened extension cords can overheat and start fires.
- Be mindful of water and electricity: Water conducts electricity extremely effectively, causing fatal shocks and gigantic sparks.
- Use surge protectors: These shield your expensive electronics from voltage spikes.
- Unplug unused appliances: This can extend their lifespan and lighten the load on your electric panel.
Putting It Together
Most homeowners insurance companies will help repair and replace not-at-fault damages to modernized electric systems. However, suppose you have a historically problematic electric panel, antiquated wiring components, or long-ignored problems quickly resolved through routine maintenance. In any of these situations, your insurer will deny coverage or impose higher premiums.
Professionally updating an outdated electrical system guarantees cheaper home insurance rates, increases property resale value, and protects your family and precious belongings from harm. Contact a home inspector and trusted insurance agent to assess the quality of your electrical system, determine your coverage options, and take the necessary measures to fortify your home.