Home Insurance and Federal Pacific Electric Panels

I reviewed Sheri’s and my home insurance in March. It had gone up again and we’d been with the same company for several years, so it was time. I was very pleased with the rates I found with a couple of my other carriers and decided to call the underwriter to discuss our home since it was built in the mid 1950’s. She told me it would require an interior inspection, in addition to the exterior inspection. I was curious what they’d review and the criteria they’d use to determine whether to write my home insurance or cancel it. What I found out caused me to go to the next option on my list!

The interior inspection would cover several items including whether the electrical, plumbing, and heating and air conditioning systems were up to code and if they’d been updated since the home was built. They would also see if the electrical panel had circuit breakers or fuses and if it is a Federal Pacific panel. We’d replaced the interior and exterior HVAC system in 2016, the water heater in 2009 or 2010 and both were up to code. The one strike against us is we have a Federal Pacific panel and that would cause us to be declined.

I’d been asked by a realtor several years ago about whether a home insurance company would write a policy on a home with a Federal Pacific electrical panel before. Based on my research at the time, the company I was with would and I was not aware of any insurance company that wouldn’t. I’ve not run into any home insurance company since then who will decline a home insurance policy due to the presence of a Federal Pacific electrical panel until a few weeks ago.

Federal Pacific electrical panels were widely installed in millions of homes nationwide from 1950 until 1990. Many people and safety experts believe they are the cause of to 2,000 to 3,000 home fires annually. These fires occur when a circuit becomes overloaded, overheats and fail to “trip” or switch into the off position. A properly working circuit breaker will trip into the off position in no more than two minutes when overloaded. The Federal Pacific circuit breakers weren’t tripping and were believed to cause home fires.

The Consumer Product Safety Commission closed its investigation on Federal Pacific panels in 1983, as they didn’t find a serious risk of danger to consumers based on data at the time. The company, Federal Pacific Electrical Company sold the company’s assets to Challenger Electric which have been subsequently resold several times since then with no one having any ties to the original FPE panel makers.

In most cases, this still isn’t an underwriting question most agents are asking. Most home insurance companies do not specifically exclude coverage for a home with a Federal Pacific electrical panel. I considered having our panel replaced, however the average cost is about $2,000 meaning it will be done either later this year or next year. What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

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