Recall what went on in Texas, the snowstorms throughout the East Coast, and the Midwest, and power failure is a big issue.
There are two types of power failure,
- There is the power of failure that specifically affects your home or your business, generally from a covered peril, such as a tree coming down and breaking the power line off to your building.
- Then there’s the other type of power loss, which is a broad area outage, which is usually failure from a much larger reason, transfer switch, or a transformer from the utility company.
They are handled completely differently from one another.
If it’s specific to your home or business, there will be a direct interruption, so we would prove that the tree came down and broke the power line on my property and created the power loss.
That means that everything happening from that moment forward is covered.
- So, it triggers additional living expenses, meaning when you’re out of power, you generally need to move out of the property.
- So, therefore, it would be covered for you to go to a hotel.
- It would trigger business interruption coverage, meaning the losses that start to accrue because you can’t operate your business.
- Also start with that moment. Now there may be a time deductible there. But it also triggers a duty to maintain heat.
- So, you’ve got to remember that when you lose power, you don’t lose the responsibility under the contract.
- So, you still may need to provide temporary heat to protect the property from further damage, which may require emptying the plumbing and draining the systems or providing temporary power to keep the property from freezing.
You need to remember that because it does fail and you just left that property because you had a power failure, the duty to mitigate and keep that property from further damage still remains in place.
Now, a broad area of power outages, just the more common, meaning power is out everywhere, the block, the neighborhood, the town, you know, 4 million homes in Texas.
Coverage does not trigger from a power failure. Power failure is not a covered loss.
- It’s also generally not a trigger, with a few exceptions and commercial policies.
- It’s generally not a trigger for additional living expenses or business income losses.
- But it does trigger coverage for what we call ensuing damages.
And basically, when you have a power outage, the ability to maintain heat in a property becomes extremely limited, and therefore, frozen pipes occur.
Now, in Texas, that is the biggest issue. So, we have everybody lost their power basically simultaneously.
Now the pipes are freezing, and even though a power failure is not a covered loss, your ability to maintain heat has been removed.
Therefore, the frozen pipes are still covered. The ensuing damages from both of these scenarios, so frozen pipes, whether it be general power loss or specific, frozen pipes are going to be covered.
Sump pump endorsements on residential policies generally also are triggered because they don’t have the power to run, therefore, the endorsement kicks in and does cover the damage from an inundation or overflow of a Sump pump.
Food spoilage starts to occur. Most people say, “Well if it’s that cold, put the food outside.”
Ironically, most people do lose most of their food after a power failure generally covered under either condition.
Again, additional living expenses generally going to be covered only under the direct loss meaning your property only.
- But additional living expenses (only on direct) could then be covered once the power is restored, and the water damage causes you to have to move from the property.
- So, if I have a broad power failure, loss of power to my property, frozen pipes, and no coverage for additional living expenses.
- Once the pipes defrost and create water damage power back on. I may now have additional living expense coverage.
- One of the biggest items that get damaged from power failures is flooring. Refrigerators meltdown, the ice cubes in the ice chest, and the freezers meltdown and causing damage to flooring.
- So, please do yourself a favor, anywhere there was frozen food or frozen product, look around the general area of that floor because the power failure generally triggers the discharge from those devices.
Hopefully, this information may make some Power Outages Insurance Claim clearer to you. However, if you need any additional assistance, you can contact us at faq-info@majoradjusters.com
