Downed trees and damaged appliances

Coverage Q&A: What is covered by artificially generated electrical current perils in personal policies?

This week’s question explores if a standard homeowners policy will cover appliances that were damaged by an electrical surge from downed power lines. (Credit: ungvar/stock.adobe.com)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: On the standard homeowners policy, personal property is on a named perils basis. One of those named perils is artificially generated electrical current, which is power created by humans such as the electricity running the computer you’re using, and not lightning created by Mother Nature. However, that named peril is specific and excludes damage to tubes, transistors and other electronic components. This leaves the big question, what exactly is covered by this peril?

Question: My question is regarding an insured with an AAIS policy Form-3 (2.0). A tree fell on power lines and the insured is claiming it shorted out some of their appliances. Would the following exclusion under Coverage C apply?

“17. Sudden and Accidental Damage from Artificially Generated Electrical Currents — However, ‘we’ do not pay for loss to tubes, transistors, and similar electronic components.”

There is another area in the policy that states under exclusions that apply to property coverages:

“h. Power disruption: ‘We’ do not pay for loss which results from the disruption of power or other utility service, whether or not it is caused by a peril insured against, if the cause of the disruption is not on the ‘insured premises.’

“‘We’ do pay for direct loss that is otherwise covered by this policy which occurs on the ‘insured premises’ as a result of the disruption of power.”

— Pennsylvania Subscriber

Answer: You need to remember that Coverage C is named perils. So first you have to identify a named peril for coverage to apply. The only peril that could apply is sudden and accidental damage from artificially generated electrical current, which is electricity from a utility, but that coverage is limited. That peril excludes damage to tubes, transistors and electric components. To dig deeper into the answer to this week’s coverage Q&A and a universe of other insurance coverage topics, please log into your FC&S Expert Coverage Interpretation account.

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