Electrical wiring is an important yet least discussed component in every home. Since they aren’t visible from the walls, most homeowners can’t tell if their electrical systems are working or in good condition until there’s an issue. Even if your household appliances and lighting are in good working condition, your home’s electrical system isn’t perfect.
Interestingly, electrical problems and resulting damages account for a third of insurance claims filed by homeowners. Typically, homeowners’ insurance policies cover electrical wiring issues, including electrical repairs and resulting damage.
However, like other insurance policies, insurance costs largely depend on the age of your home and other factors. For instance, insurance costs for modern homes with advanced electrical wiring systems and protective measures, such as electrical fuses, cost less than old homes with outdated wiring systems.
Insuring Old Homes with Outdated Electrical Wiring
If you are planning to buy a new home, ensure to include an electrical wiring inspection by a licensed electrician in your home inspection. Homes with updated wiring and electrical components can guarantee better rates from homeowners insurance companies. Outdated wiring is a recipe for high premiums because of various associated risks.
Below are indications that your home may have an outdated electrical wiring system:
- If the house is more than 40 years old
- Reports of frequently blowing fuses or tripping circuit breakers
- Electrical outlets emit sparks, or there is a shock when plugging and unplugging electrical cables
- Lights flicker or sometimes dim
- Dishwashers and other large household appliances strain the electrical system
If you recently updated your home’s electrical wiring, contact your homeowners’ insurance company for new wiring credit and price modifications.
Does Homeowners Insurance Cover Electrical Panel Replacement?
Your homeowners’ insurance policy can include electrical panel replacement. However, this depends on the cause of panel malfunction and the age of your home. Your homeowners’ insurance policy will compensate for panel malfunction and risks only if your electrical wiring and panels are updated.
Outdated electrical panels in older homes are serious hazards and can trigger fires. In such cases, homeowners’ insurance will cover the cost of replacing or repairing the panel only if it meets specific requirements. Most insurance companies exclude the Federal Pacific Electric Company circuit breaker in their covers. This specific panel is attributed to high rates of house fires.
Does Homeowners’ Insurance Cover Electrical Problems?
Homeowners’ insurance policies cover most electrical problems in your home’s wiring except for knob and tube and aluminum wiring. Old electrical wiring systems are more likely to malfunction. As such, insurance providers often require homeowners to take a special knob and tube policy or aluminum wiring policy in their electrical coverage. Some providers can deny coverage until homeowners upgrade their wiring to systems that meet modern safety standards.
Does Homeowners Insurance Cover Electrical Faults?
Unfortunately, most policies don’t cover electrical system faults. Electrical faults are typically electrical equipment malfunctions involving generators and transformers that cause short circuits and faulty currents in your electrical wiring. Few insurance companies have specialized coverage for electrical faults.
Taking insurance cover is essential for new homeowners. However, you should read the fine print to understand the details of your cover. Most insurance companies won’t insure your home’s outdated wiring because of fire risks. Inspect your electrical wiring and upgrade where necessary to benefit from insurance policies.