Is Electrical Damage Covered by Home Insurance?

When we talk about “electrical damage,” we’re usually referring to either power surges or electrical fires. Home insurance coverage addresses each differently:

If a power surge causes damage to an electronic device in your home and it’s included as a peril in the personal property or contents coverage of your homeowners insurance policy, you’ll most likely receive compensation to repair or replace the item. Make sure the replacement value is worth initiating a claim, as the particulars of your policy may change after you make one.

Electrical fires can be a bit more complicated. While they should be included in your fire coverage, you may find yourself uninsured if the fire was triggered by shoddy electrical work or outdated wiring.

With the average loss per electrical fire around $73,000 in Ontario, that’s not a risk worth taking.

What to look out for when insuring for electrical fires

Will it cover electrical problems?

The Insurance Bureau of Canada considers both “fire” and “electrical currents” to be commonly insured perils, so it’s likely that damages caused to your home and personal property will be covered by homeowners insurance. However, this shouldn’t be taken for granted. The Financial Services Regulatory Authority recommends you carefully read your policy, as similar terms like “electrical surge” and “electrical current” can be defined differently between providers.

What’s excluded?

Different home insurance covers electrical differently. Some may have limitations based on the electrical appliance that caused the fire. An appliance over 10 years old may not be included in your coverage, and heavily used appliances can be excluded after a few years. Additionally, more common issues stemming from electrical failures like broken bulbs or damaged light fixtures are unlikely to be covered.

How old is your electrical panel?

If you live in an older home, it’s important to check how many amps your electrical service panel serves. In the 1960s, the standard service size increased from 60 amps to 100 amps as the number of electrical devices in the average household increased. If your house is using more than 60 amps of electricity on an older panel, you’ll trip the main circuit breaker, which could start a fire. Older electrical panels also pose a number of fire hazards, including:

• Deterioration of wires
• Build-up of debris on the panel
• Loose electrical connections
• Breaks in the grounding wire
• Old circuit breakers

Due to this risk, insurance companies may require you to upgrade your panel before they provide coverage.

Home insurance and electrical wiring

Your panel isn’t the only thing that could be out of date. While copper wiring is now the standard when building new houses, two main types of wiring can cause issues in older homes:

Knob-and-tube wiring

Knob-and-tube wiring was the most prominent type of wiring from 1890 to 1910. It used a series of knobs and tubes to separate the insulated wires. As the lifespan for insulation is around 25 years, knob-and-tube wiring now presents a fire hazard.

The other issue is, unlike modern copper wiring, the knob-and-tube system didn’t have a ground wire. This makes them particularly dangerous in areas of the house that are exposed to water, like a kitchen.

Aluminium wiring

Aluminium wiring, used between the ’60s and ’70s when copper was considered too expensive, is prone to overheating and is considered 60 times more likely to be a fire hazard than copper.

If you have outdated wiring in your home, many insurance companies won’t provide coverage until you either update your wiring or have an inspection done by Ontario’s Electrical Safety Authority.

How does electrical work affect home insurance?

Doing electrical work isn’t a problem as long as it’s done properly with the necessary permits. As of 2006, the only people who can legally do electrical work on a home in Ontario are the homeowners named on the title of their own home or Licensed Electrical Contractors.

The new rules ensure any professional you hire will follow the Ontario Electrical Safety Code and file the correct permits. If you choose to perform your own electrical work, you must also follow the Ontario Electrical Safety Code. If you don’t do the work properly, you’re risking injury, damage to your home and loss of insurance coverage.

By filing for a permit and passing an electrical review, you’ll receive a Certificate of Acceptance, which is used by insurance companies to confirm the electrical work was done properly. With few exceptions, such as changing a simple two-wire light switch or fixture, you need a permit for almost all electrical work.