Lightning, Power Surges and Damaged Electronics

A storm passes, the power flickers, and afterward the television will not turn on, the router is dead and the refrigerator is making a new noise. Whether that is a covered claim depends on a distinction most policyholders have never had reason to learn: what actually caused the surge.

Lightning is a named peril

Fire and lightning sit at the top of the covered perils list on essentially every homeowners form, including the HO-3. Damage caused by lightning is covered for both the structure and personal property, subject to your deductible.

That covers the obvious version: a strike to the house, a chimney, a tree that then falls, or a strike that starts a fire. It also covers the less obvious one, where lightning strikes nearby, enters through wiring, cable, phone or plumbing, and destroys equipment throughout the house without leaving a mark on the building.

Lightning damage is often distributed and invisible. A single strike can take out an HVAC control board, a well pump, a garage door opener, a security system, an oven control panel and every device on the network, none of which look damaged. Check everything before you close the claim.

Artificially generated electrical current is a separate peril

The other relevant named peril is usually worded as sudden and accidental damage from artificially generated electrical current. That is the peril covering surges that do not come from lightning: a utility fault, a transformer failure, work on the local grid.

Here is the part that surprises people. That peril commonly carries an exclusion carved into it, removing damage to tubes, transistors, electronic components and similar parts of appliances and electronic equipment.

Read plainly, that means the artificially-generated-current peril often excludes the component that a surge actually destroys. The wiring in the wall may be covered; the circuit board in the dishwasher may not be. Lightning-caused damage is generally not subject to that carve-out, which is why the cause of the surge matters so much.

What tends not to be covered at all

Several common surge sources fall outside both perils:

• Faulty or outdated wiring in the home. This is a maintenance condition, and the general treatment of gradual and maintenance losses is described in water damage: what a home policy covers.
• Overloaded circuits caused by how the home is used.
• Mechanical or electrical breakdown of an appliance that simply failed. That is a breakdown, not a peril, and it is the distinction drawn in home warranty vs home insurance.
• Wear and tear, which is excluded on every form.
• Power outage away from the premises, which many forms exclude, so food spoilage from a neighborhood outage is often not covered without an endorsement.

Equipment breakdown coverage is the usual fix

Most insurers offer an equipment breakdown endorsement, and it is the direct answer to the gap above. It typically covers:

• Mechanical and electrical breakdown of appliances and systems
• Power surges not caused by lightning, including the electronic components the base peril carves out
• Short circuits and arcing
• Motor burnout in HVAC equipment, well pumps and similar systems
• In many versions, the electronics themselves rather than only the appliance around them

It often comes with a lower deductible than the main policy and without the per-item limits that apply to personal property. It sits alongside the other gap-filling endorsements described in home policy endorsements worth knowing about.

For genuinely high-value individual items, scheduling is the other route, and it broadens the covered causes as well as raising the limit. See scheduling valuables and floaters.

How the claim is valued

Two settlement questions decide what you actually receive.

Replacement cost or actual cash value. Personal property is settled on one basis or the other, and electronics depreciate quickly. Under actual cash value, a five-year-old television pays a fraction of what a new one costs. Under replacement cost, you generally recover the depreciation after replacing the item. The mechanics are in actual cash value vs replacement cost.

Many policies settle personal property at actual cash value by default, with replacement cost available as an endorsement. Check which one you have before you need it.

Deductible against claim size. Surge claims are frequently modest, and a household deductible can absorb much of one. Weigh that before filing, using the framework in will filing a claim raise my rate.

Documenting a surge claim

Surge damage is harder to prove than fire damage, because there is often nothing to photograph. Build the record deliberately.

1. Note the time and the event. Storm, outage, utility work, or unknown. Say unknown if you do not know rather than guessing at a cause.
2. List everything affected, including items that partly work. Intermittent faults count.
3. Photograph the items, their model and serial numbers, and any visible scorching at outlets or on boards.
4. Keep the damaged items. Do not discard them before the adjuster has seen them. This is a routine reason claims stall.
5. Get a technician's written assessment where the failure is not obvious. A repair shop stating that a board shows surge damage is worth more than your description of it.
6. Ask the utility whether an event was recorded on your line. If a utility fault caused it, that may also be a claim against the utility, and your insurer may pursue it through subrogation.
7. Check the whole house, including things you rarely use: the garage opener, the irrigation controller, the doorbell, the thermostat, the well pump.

Reducing the exposure

• Point-of-use surge protectors on electronics, replaced periodically, since they degrade after absorbing surges.
• A whole-house surge protective device at the panel, installed by a licensed electrician, which addresses what enters through the service.
• Unplugging sensitive equipment during a severe storm, which remains the most effective single step.
• Protecting every path in, including cable, satellite and phone lines, not only the power line.
• Addressing old wiring. Wiring conditions are also an underwriting issue in their own right, as described in what home underwriters look for.

Which perils a policy names, how the artificially generated current exclusion is worded, whether equipment breakdown coverage is available, how personal property is valued and what sublimits apply all vary by insurer, by policy and by state, and the policy documents control. For your own situation, speak with a licensed agent or your state's Department of Insurance. You can also request home insurance quotes and get connected with licensed providers in your area.