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| 60 Amps
and Insurance |
| "Catch-22"
can make insurance difficult to obtain. |
November 2001 |
An insurance bulletin #AM96-04 first distributed in 1996 by the Insurance Bureau of
Canada, seemed to indicate that the Bureau shared with the former Ontario Hydro and
others, the opinion that 60-amp electric services are not categorically unsafe of
inadequate.
However
as the ready may be aware, the practical reality was that most insurance companies had
already declared "war" on 60-amp electric services.
Discussions with the Insurance Association of Ontario
(IAO), Ontario Hydro, fire departments and electricians confirmed that 60-amp services are
not necessarily problems in themselves. They
recommended inspection to ensure that wiring is safe and adequate for the usage of the
household.
Electricians
continue to advise that upgrading to 100 amperes or more, from a 60-amp service in a
smaller dwelling which has been checked by an inspector or electrician, provides little
additional benefit but costs consumers an average of $800.
Despite
these discussions, the Insurance Bureau’s Ontario Consumer Information Centre
continues to receive an increasing number of inquires where homeowner policies are being
cancelled at renewal, or individuals are unable to obtain new coverage in the regular
market, because of the input rating of their electric service.
In
May of 1996 the Insurance Brokers Association of Ontario (IBAO) called for common sense in
the evaluation and underwriting of homes with 60-amp services. IBAO had researched the issue in response to the
apparent market withdrawal from such homes and found no statistical data to support
concern. Ontario Hydro advised that only 4%
of all electric panel fires occured in homes with 60-amp input services.
Insurance companies believe that a 60-amp electric service is indicative of a
"certain profile of home."
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Prior
to May 2001 a limited number of insurance brokers continued to obtain standard policies
for homes with 60-amp services – with or without inspection of the household wiring. Some of these brokers were able to secure
coverage, while others claimed they could not.
Since
May 2001 most applications have been refused – even with a favorable inspection
report. When asked, one insurance broker
stated that the insurance companies have come to believe that 60-amp electric services are
indicative of a “certain profile of home.”
The
presumption seems to be that homes with 60-amp services are more likely to have limited
electrical distribution, a greater potential for over-extended circuits and resultant
over-fusing of individual circuits.
The
recommendation that homes be individually inspected, seems to have been largely ignored.
"Catch-22"
Homebuyers whose applications
are refused on the basis of their input electric service may find themselves in an awkward
situation at closing - unable to provide evidence of insurance coverage - and unable to
provide the required upgrade, because they don't own the house.
|
What to do?
Homebuyers should
start early, to seek out an insurance policy well in advance of the date upon which they
are responsible for obtaining coverage.
Coverage may be available in
certain high-risk or “facility” markets, however it is becoming increasingly
apparent that vendors may be obliged to provide these upgrades. Many vendors have already done so, having been
dropped at the time of their own renewal.
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