The failure of power, communication, water or other utility service supplied to the described premises, however caused, if the failure:

(1) Originates away from the described premises; or

(2) Originates at the described premises, but only if such failure involves equipment used to supply the utility service to the described premises from a source away from the described premises.

Failure of any utility service includes lack of sufficient capacity and reduction in supply.

Loss or damage caused by a surge of power is also excluded, if the surge would not have occurred but for an event causing a failure of power.

But if the failure or surge of power, or the failure of communication, water or other utility service, results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.

Communication services include but are not limited to service relating to Internet access or access to any electronic, cellular or satellite network.

For discussion's sake, this is the proposed fact set:

A power pole, located off of the insured's described premises, has a pole-mounted transformer. The transformer was struck by lightning, causing the transformer to be destroyed. This, in turn, caused a power surge through the power lines running to the insured's described premises. The power was knocked out to the insured's property, but the event also causes a large power surge to the property, as a result of the lightning strike, immediately prior to the failure of power.

Based on this policy language only, do you believe the policy excludes loss to the insured's damaged property since the lightning strike and subsequent power surge and power failure, originated away from the described premises?

Nebraska Subscriber

Yes, it is our opinion that any loss or damage caused by the surge and power outage as you describe it would be excluded by the utility services exclusion. The exclusion applies to direct or indirect damage, regardless of any other concurrent cause. While the lightning was the cause of the surge and power outage, those excluded events caused the damage to the property and would be excluded.