Powerful Questions About Electrical Problems and Home Insurance

Modern American homes are filled with electrical wiring, appliances, connections, and devices. This makes electricity a large part of the home's safe operation and a potential risk to its safety. So, how does insurance cover all this? What is likely covered, why, and with what limitations? Here are some answers to your questions about homeowners insurance and electricity issues. 

Is Damage to the Electrical System Covered?

The good news is that the wiring in the walls of your home is covered against the same events as the structure of the home. Each insurance policy will list qualifying events according to its particular terms. These are usually sudden and unexpected emergencies. 

However, some types of electrical systems are unlikely to be included in insurance policies regardless of the reason for damage. This commonly includes both knob & tube systems and aluminum wiring. Both methods have a higher chance of failure and fire, meaning their use was discontinued decades ago. Older homes which have not yet been updated may not have their electrical systems covered.

Check your policy to learn more about its exclusions and inclusions. Remember that policies differ. If something you own is not covered, you may be able to shop around to find a policy which includes it. 

What Events Can or Can't Be Covered?

Homeowners insurance doesn't cover damage caused by normal aging, wear and tear on the house, or negligence. So old wiring that has never been updated is unlikely to be covered if it fails. Similarly, if you DIY your electrical repairs and the fixes aren't up to professional standards, you may have a hard time covering problems that arise. The insurer may argue that not using qualified technicians is negligent. 

As with medical insurance, homeowners insurance also generally excludes pre-existing conditions. This means problems and damage that already existed before the start date of your insurance policy. If you buy a home knowing it has—or not checking for—a damaged electrical panel, your insurer is unlikely to pay for a replacement.



So, what is covered? In general, these are events known as sudden perils. These include natural disasters of most varieties, unforeseen accidents, intentional damage by others, theft, civil unrest or mob activity, and other things beyond your control. 

Are Damaged Devices Covered?

In general, if the reason for electrical damage is a covered event, resulting damage to your personal property is also covered. Homeowners insurance policies cover both the structure of the real property—the house and other buildings on your land—and personal property inside these.

So if lightning strikes the home and damages appliances, televisions, and computers which were plugged in, these would all be covered under personal property clauses. Personal property damage has separate maximum dollar limits, which are usually a percentage of the total coverage for the house. In addition, certain categories of personal property may have their own individual limitations. 

What About Damage from Fires?

Fire is the biggest risk when talking about electrical problems. So, what can you expect if the electrical system causes a house fire? Again, this depends on what caused the initial event.

If the system is simply old and outdated, a short is unlikely to be covered by your insurer. If that short then started a fire in the kitchen, damage from the entire fire may not be covered. However, if the short was a faulty electrical connection made during recent repairs, it's more likely to be covered since you did not act negligently in any way. In this case, the kitchen fire and damage to materials would be covered too. 

What Must You Do to Maintain Coverage?

Along with carrying the right kind and level of insurance, what else can you do to make sure your electrical problems are covered by your policy? The number one thing is to perform regular maintenance and repairs. Ignoring maintenance or a problem after learning about it is a significant red flag to your insurance company as they investigate a claim, and they may use it as an excuse not to pay for any resulting damage. 

If you own an older home, it may also be time to make sure you have a covered electrical system. Homes which were built more than about four decades ago could have uninsurable wiring systems. This is an investment, of course. However, keep in mind that updating to a covered wiring system doesn't just mean that system is covered—it also covers everything else which could be damaged in a fire. 

Have more questions about the coverage of your house's electrical systems? Get more answers by meeting with the team at Illinois Insurance Center Inc. We've assisted Illinois homeowners, renters, and businesses with all their insurance needs since 1973. Call to make an appointment or learn more about your particular property and risk factors.