When lightning strikes
Lightning can be interesting to watch from afar, but it can be costly and dangerous when it strikes close to home. Lightning cost almost $1 billion in insured losses nationwide in 2012, according to figures recently released by the Insurance Information Institute (III).
The III looked at its own homeowners insurance statistics and those provided by State Farm and found there were 151,000 insurer-paid lightning claims last year. While substantial, that's a 19 percent drop from 2011. The III says the average paid claim in 2012 was about $6,400 -- a 25 percent increase from the previous year.
"Taken together, these two factors resulted in $969 million in total paid lightning claims, up 1.7 percent from 2011," according to the III.
On a better note, the 2012 lightning claims number continues a multi-year downward trend.Paid claims have declined an average of about 7.5 percent each year -- that amounts to a 46 percent drop over the eight-year period through 2012, according to the III analysis. What's causing the fall? More homeowners are protecting their property with lightning protection systems.
Despite the decline, the average cost for claims climbed by 142 percent during the eight-year period. The III contrasts that with the consumer price index, which rose by 21.5 percent during this time.
"The average cost per claim continues to rise, in part because of the huge increase in the number and value of consumer electronics in homes," Loretta Worters, spokeswoman for III, said in a statement.
Insurance coverage for lightning damage
The III says that damage caused by a lightning strike (fire is common) is covered by standard homeowners and business insurance policies. Further, some home and business coverage protects you for power surges that can come when lightning touches ground. The III also notes that consumers can protect their cars from lightning damage by buying optional comprehensive coverage.
The institute also suggests installing a lightning protection system, which is "designed to protect a structure and provide a specified path to harness and safely ground the super-charged current of the lightning bolt." These systems, the III further explains, "receive the strike and route it harmlessly into the earth, thus discharging the dangerous electrical event."
If you opt for the safeguard, the III and the Insurance Institute for Business & Home Safety advises that:
- The system is designed and installed based on industry standards and meets National Fire Protection Association, Lightning Protection Institute and UL requirements.
- The protection includes electrical, telephone, cable or satellite TV lines entering the structure.
- All equipment is UL-listed and properly labeled.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.