Power Surge Insurance
Electricity makes our appliances work. But a sudden spike in electricity (sudden increase voltage above an appliance’s normal operating voltage) – a power surge – can damage or destroy appliances and gadgets in the blink of an eye. And with more electronics in our homes than ever, that can be costly.
Power surge may be caused by two main events:
- Lightning can cause a power surge when it strikes the home, telephone wires or power lines or cable TV
- Switching surges are caused by sudden changes in electrical loads, either within the home (when large appliances like air conditioners and refrigerator motors turn on and off), or because of power company operations.
Electrical surges can instantly overload and short out the electric circuit of electrical appliances.
Does Insurance Cover Power Surge?
Ordinary domestic or household insurance policies do not cover damage to electrical appliances or machinery as a result of power surge caused by the operations of the power utility company as insurance companies expect customers to recover these losses from the utility company.
This policy has been designed to provide cover for sudden power surges as an alternative to recovery from the utility company. Of course the policy will have certain exclusions like gradual degradation due to smaller surges over time.
The coverage under the policy
The policy covers
- Physical loss of or damage to the insured appliances and gadgets occurring at the customer’s premises as a result of a spike in electricity – a power surge arising out of:
- Lightning strikes on the insured’s power lines or telephone wires.
- Switching surges caused by sudden changes in electrical loads because of power company operations
- Electric or magnetic injury, disturbance or erasure of electronic or magnetic recording as a result of lightning strikes or switching surges caused by sudden changes in electrical loads; in a way requiring repair or replacement
The basis of valuation
The sum insured shall take into account the cost of replacement of the insured machinery by new machinery of the same kind and capacity. This means its cost of replacement including, for example, freight, dues and customs duties, if any, and cost of erection.
Basis of claim settlement
- In cases where damage to an insured item can be repaired – the Insurers shall pay expenses necessarily incurred to restore the damaged machine to its former state of serviceability as well as ordinary freight to and from a repair shop and customs duties, if any, to the extent such expenses have been included in the sum insured.
If the cost of repairs shall equal or exceed the actual value of the machinery insured the item shall be regarded as destroyed and settlement shall be made on the basis provided for in b) below.
- In cases where an insured item is destroyed – the Insurers shall pay the actual value of the item immediately before the occurrence of the loss, including charges for ordinary freight, and customs duties, if any, provided such expenses have been included in the sum insured, such as actual value to be calculated by deducting proper depreciation from the replacement value of the item.
- The cost of alterations, additions, improvements or overhauls shall not be recoverable under the Policy.
Documents required for underwriting
- Fully completed proposal form signed by the insured
- Copies of purchase invoices for the appliances to be covered against power surge
- Proof of installed power surge protection devices by a qualified electrical technician
Documents required for claim process
- Fully completed claim form signed by the insured
- Documents (original purchase Invoices relating to the original purchase of the damaged items as well as replacement, invoices, receipts, and quotations) to support claim quantum.
- If it is a large incident such as one involving all the appliances in the home you will be required to provide a detailed incident report and a loss adjuster will provide guidelines.
- In the event of breakdown claim you will be required to provide a technical report confirming the exact cause of the damage. The loss adjuster in conjunction with A on will provide guidelines.