Are Power Surges Covered by Insurance?

A power surge represents a sudden, temporary increase in electrical voltage or current that can damage electronic devices and appliances. Determining whether damage from such an event is covered by insurance is not a straightforward matter. Coverage depends on several factors, including the specific cause of the surge and the terms of an individual’s insurance policy. Understanding these nuances is important for policyholders.

How Insurance Policies Address Power Surges

Standard homeowner’s insurance policies, such as an HO-3 form, provide coverage for dwelling and other structures on an “open perils” basis, covering damage unless specifically excluded. Personal property, however, is covered on a “named perils” basis, covering only explicitly listed perils. For renters (HO-4) and condominium owners (HO-6), coverage is on a “named perils” basis for personal belongings and improvements. Electrical current is often listed as a named peril in these policies, with specific conditions.

Policies differentiate between lightning and other artificially generated electrical current. Damage to personal property, like computers or televisions, from a covered electrical surge falls under personal property coverage. Damage to home wiring or built-in appliances, such as an oven, is covered under dwelling or other structures.

Covered Causes of Power Surge Damage

Insurance policies cover power surge damage when it results from a sudden and accidental event as a covered peril. A direct lightning strike is covered by standard homeowner’s insurance policies. If lightning causes a power surge damaging electronics or the home’s electrical system, the resulting loss is covered. This includes damage to both the structure and personal property.

Damage caused by fluctuations in the utility grid, such as transformer explosions, downed power lines, or sudden voltage changes, is also covered. These external events are considered sudden, accidental damage from artificially generated electrical current. The surge must originate from an external, unforeseen event, not an issue within the home’s electrical system or appliances. If a tree falls on a power line causing a surge, the damage is covered.

Policy Exclusions and Limitations

While many external power surge events are covered, insurance policies contain specific exclusions and limitations. Wear and tear, gradual deterioration, or inherent vice damage is not covered. If an appliance malfunctions internally due to age or a manufacturing defect, causing a power surge, the damage may not be covered if the origin was not a sudden, external peril. Damage caused by inadequate home wiring or a lack of proper surge protection may also fall under these exclusions.

Deductibles play a role in determining the payout for a covered loss. Policyholders pay their deductible before coverage begins. Some policies may also have specific sub-limits for electronics or electrical damage, a maximum amount the insurer will pay for these items, even if total damage exceeds this limit. It is important to review policy documents to understand these limitations.

Steps to Take After Power Surge Damage

After experiencing power surge damage, documenting the loss is a first step. This includes photographs and videos of damaged items and affected property areas. Creating a detailed inventory of damaged items, including make, model, and age, assists in the claims process. Obtaining repair estimates for damaged electronics or property provides a basis for the claim.

Take steps to prevent further damage, like unplugging affected devices or turning off power. Once stable and documented, contact the insurance company promptly to report damage and initiate a claim. The insurer assigns a claims adjuster to assess damage and determine coverage based on policy terms. Cooperation with the adjuster, providing all requested documentation, facilitates a smoother claims resolution.