Are wires & cables part of an electrical system?

Coverage Q&A: Does coverage for equipment breakdown include the wires that run throughout an electrical system?

It would seem counterintuitive for the policy to cover electrical equipment that runs a building but exclude the wire that connects the various pieces of electrical equipment, writes a Michigan subscriber. (Credit: Bacho/Shutterstock.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: Sometimes a loss will involve more than one coverage form and we often see this in large commercial losses. For example, a large fire that destroys a building will likely involve both a commercial property form and an equipment breakdown policy, and possibly an inland marine form as well.

Determining which property should be covered under which form is not always easy for adjusters to figure out, particularly when a loss affects the building’s heating, cooling and electrical systems and all of their component parts and connections.

Question: The insured condo building is covered for equipment breakdown form EB 00 20 01 13. There was an electrical event that damaged the building’s electrical systems. In addition to direct damage to the distribution equipment, some of the wiring in the building was damaged as well. The policy identifies what is “covered equipment” and what is not. The policy states under what is not included in section (10) is “felt, wire, screen, die . . . nonelectrical cable . . . or any other part or tool subject to periodic replacement.” My question is, does this exclude coverage for the damaged wiring in the building?

This particular section (10) seems to be addressing only parts and tools that are subject to periodic replacement. Also, since this provision also specifically includes “nonelectrical cable” does that mean “electrical cables” are covered? Many larger electrical “wires” are referred to as “cables.” Given the above, is the intent of this language to exclude all wiring in a building, or just wires that are in a “part or tool” and subject to periodic replacement? It would seem counterintuitive for the policy to cover electrical equipment that runs a building but exclude the wire that connects the various pieces of electrical equipment. Please give me your opinion.

On a related topic. The ordinance and law coverage in this same policy appears to cover the wire, if it must be replaced due to code. Please let me know if you agree.

— Michigan subscriber

Answer: Since the electrical cable (wire) is connected to the electrical system that is used in the transmission or utilization of energy, it would be covered equipment. The fact that large electrical wires are called “cables” does not affect coverage for them; there are likely several wires within the cables.

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