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Does homeowners insurance kick in when your power is out?

By Posted : 04/21/2016

Additional reporting by Gina Pogolpower out

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Damage or loss from power outages is ordinarily covered under your homeowners policy if the outage occurs on your property and is not general and widespread.

According to the U.S. Department of Energy, the United States has more blackouts than any other developed nation. They occur due to weather, auto collisions, animals, vandalism, human error, system overload, flood, fire and other events.

Power outage insurance claims

Fortunately, most outages are resolved rather quickly -- less than an hour, on average, nationwide. However, outages tend to last longer in some states than others. If you live in a state likely to have outages lasting longer than two hours, make sure you have sufficient home insurance for power outages, or a back-up power source such as a gas generator.

Top 10 States with Longest Average Power Outages

State

Average Duration (Minutes)

Number of Outages (2015)

Wyoming

1,515

4

Virginia

124

106

Georgia

113

51

Kentucky

98

44

Oregon

91

77

Arizona

89

70

Vermont

84

15

Maryland

82

57

South Dakota

82

21

Wisconsin

80

58

Power outage: food spoilage insurance

Americans enjoy the largest refrigerators in the world, with an average of 17.5 cubic feet of storage -- enough to spoil hundreds of dollars' worth of food in a single power outage.

The United States Department of Agriculture (USDA) says meat, poultry, fish and eggs should be discarded after two hours at 40 degrees Fahrenheit, while most other foods should be OK for about four hours.

If you lose a freezer full of pricey steaks when your power is out, will your homeowners insurance cover the cost? Probably. However, insurance coverage for power outage losses can vary among providers. Your reimbursement for food lost in a power outage depends on your actual coverage. Consider these factors:

  • Your loss may not be covered if the outage is widespread and did not originate on your property.food spoilage
  • If your insurer does cover off-premises loss of power, the cause of the outage must be covered under your policy -- for example, you might have coverage if the outage was caused by a wind storm, but not if the cause was a flood.
  • If your insurer excludes damages from an off-premises power loss, you can buy a special endorsement for food spoilage caused by any power outage. It's not commonly purchased, but it's inexpensive, between $15 and $50 per year.
  • Your coverage may be subject to your personal property deductible, typically between $500 and $2,500. This can be lower than your deductible for other types of losses, or even waived altogether. Filing a claim, however, could increase your future premiums.
  • Coverage that's included with your homeowners policy is typically limited to $250 or $500 per occurrence. It often isn't worth filing a claim for relatively small amounts, unless the food spoilage is just part of a larger claim for the same event. Filing more than one homeowners insurance claim within 10 years can cause your premiums to increase or result in your policy being canceled.
  • Other carriers categorize all claims associated with hurricanes or large storms as catastrophic, and may disregard a food spoilage claim when you renew your insurance.
  • You don't have to save the spoiled food as proof of your loss, but it's a good idea to photograph it before throwing it out.
  • For refrigerator malfunctions not caused by a general power outage, a home warranty or your appliances guarantee might cover food spoilage, and filing a claim with them won't increase your homeowners insurance rate.

Because so many variables depend on your individual carrier and policy, don't make any assumptions about your power outage coverage. Read your policy carefully, to see if food spoilage is specifically excluded within your list of exclusions. If you're still uncertain about whether or not you are covered, contact your insurance agent and ask him or her to explain your protections.

food coverageCheck with your power company to determine whether or not it will reimburse your insurance deductible, food spoilage or other damage you can attribute to a power outage. Some may, depending on the reason for the outage.

Power outage insurance: hotel expenses

If you experience an extended power outage and spend a night or two in a hotel, will your homeowners insurance reimburse you? Generally not, unless the cause of the power outage -- for instance, a storm or fire -- makes your home uninhabitable. You don't get a free hotel room because you're bored without television and hate PB and J. If your home is truly unusable, your insurance kicks in to provide temporary housing (this coverage is called additional living expense or ALE) until your residence can be repaired.

Typically, reimbursable out-of-pocket costs include hotel bills, apartment rent and restaurant meals. Normally, ALE covers the extra expenses you incur because you can't live at home. If you usually spend $500 a month for food, and now it's costing $750 a month because you can't cook at home, your insurer may pay $250 for the additional cost of food. For lodging, you won't get reimbursed for better digs than you normally occupy. If your home is a two-bedroom condo in town, you can't rent on the beach-front resort, courtesy of your insurer.

Your maximum coverage depends on the limits set by your insurer. As a general rule, maximum ALE benefits can be up to 20 to 30 percent of the total insurance on your home. So, if your dwelling coverage is $200,000, your ALE coverage would be limited to $40,000. You can increase this coverage by purchasing an additional endorsement. Some insurers sell policies that don't limit the amount of ALE coverage, but they do limit the amount of time you can live elsewhere on their dime.

If you have to move out of your home, file an ALE claim as soon as you can -- many insurers will advance you the money needed to move out. The policy typically continues to cover your expenses for the amount of time that it will "reasonably" take to make your property habitable again, or until your coverage is exhausted.

Home insurance: electronics damaged by power outage

If you don't have surge protectors for all of your expensive electronics, get them now, and unplug your prized electronics during thunderstorms. Whether or not your insurer covers this kind of damage, prevention is still the best strategy. If, despite your best efforts, a power surge destroys your electronic equipment, you might be covered. It depends on the cause of the surge and the extent of your coverage.

Damage to electronics falls under personal property coverage. According to the Insurance Information Institute (III), personal property damage from lightning strikes is covered under basic and broad homeowners insurance policies. Damage from power surges caused by the "sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)" is covered by all except H0-8 and Basic H0-1 home insurance policies.

Most policies limit personal property reimbursement to between 50 to 70 percent of the dwelling coverage amount. While your family's entertainment system should be covered, many policies limit amounts for electronics designed to be used in a vehicle and property used in a business, according to the National Association of Insurance Commissioners. If you have a home office, your computers, monitors, etc., might not be fully covered. If you have expensive business electronics, consider purchasing additional coverage for them.

Homeowners insurance for power outage: burst pipes

What if a power outage shuts down your heating system, and this causes your pipes to burst? The resulting winter homeowner claim and personal property damage should be covered, says the III. "Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance" is included in all but the most basic H0-1 policies and H0-8 policies.

However, if your pipes burst because you neglected to leave the heat on while you took a vacation, or you forgot to pay your power bill, that's your problem. Prevention is the way to go, by insulating pipes, draining your hoses, and setting the thermostat no lower than 55 degrees. Leaving town? Shut off the main water supply and drain the system by opening all faucets and flushing the toilets.

Power outage: generators

If you live in an area prone to extended power outages, it may make sense to get a gas generator for emergencies. But does having one affect your insurance rates or reimbursement amounts?

The first thing you need to understand is that there are two different kinds of generators:

  1. Portable. Portable ones should never be run indoors because of fumes and other hazards (gasoline and motors). These are fine for short periods, perhaps running a few appliances. Having one might make you a little more comfortable during an outage, but won't affect your insurance.
  2. Permanent. For full protection in an outage, you'll want an automatic standby generator. This is a permanent installation, powered by natural gas or propane. In a power outage, it fires up automatically. It's not a cheap system, however. The unit itself costs between $2,500 and $10,000, and installation -- connecting it to your electrical system and gas or propane line -- can add several thousand more. Your reward, in addition to retaining your customary lifestyle while your neighbors are sitting in the dark, may be a small discount on your homeowners insurance. Savings of up to 5 percent may be available to those with permanent generators. So, if you need a generator to keep a home-based business going, enhance your property value or just eliminate a source of worry, go for it. Just don't expect to save much on your homeowners insurance.

Saving on home insurance for power outages

No one wants to pay more than they have to for homeowners insurance. You can find lower-priced policies by shopping online, which allows you to compare insurance quotes easily. Other strategies include:

  • Deductible. Raise your deductible. Experts recommend that you limit the number of claims you file, anyway. So why pay for the right to file smaller claims when you probably won't file them anyway?
  • Bundle. Shop all your coverage at once, so you can save by bundling multiple policies with one insurer.
  • Good credit. Pay your bills on time. Most insurers include your credit score in their pricing formulas.
  • Avoid preventable claims. Maintain your home's systems, winterize, unplug electronics in severe storms, insulate your pipes, and move your food to a cooler filled with ice during outages.

Prevention is a big part of saving on homeowners insurance. By taking care of your insurer, you're taking care of yourself.