By BreAnn Stephenson
Welcome to our “Is It Covered?” series. For a fuller introduction of the series, read HERE. We hope these quick reads will help you increase your understanding of your insurance coverage, clear up confusion and avoid preventable losses!
So, what’s the confusion?
Many people simply don’t know their policy may contain an exclusion of coverage when a fire results from the use of aluminum wiring. However, many homes being purchased today as investment properties were built during a time where aluminum wiring was widely used. It is estimated that between 1.5 to 2 million single-family homes, mobile homes and multi-family dwellings were completely wired with aluminum. This number doesn’t even include properties that were partially wired with aluminum because of renovations, alterations or additions.
What makes aluminum wiring dangerous?
Aluminum wires are larger, softer and more brittle than copper, leading to poorer connections and connection failures. Aluminum’s oxidation process also creates a surface coating with high electrical resistance. That resistance is one factor in creating excess heat buildup in the connection. It is this breakdown of the connections at outlets, light switches and other junctions that can create enough heat to start a fire.
A study done by the U.S. Consumer Product Safety Commission (CPSC) revealed that “homes wired with aluminum wire manufactured before 1972 [‘old technology’ aluminum wire] are 55 times more likely to have one or more connections reach “Fire Hazard Conditions” than a home wired with copper.” A typical home can have 200 or more connections, exponentially increasing the risk of fire.
How can I tell if my property has aluminum wiring?
Aluminum wiring was widely used in the mid-1960’s through mid-1970’s to reduce construction costs when the price of copper suddenly escalated. If your property was built or remodeled between 1965 and 1973, you are more likely to have aluminum wiring.
Your electrical system will also be labeled. Cables with aluminum conductors will have “Al” or “Aluminum” marked on one side of the cable jacket every few feet along its length. You may also find markings that read “CU-clad” or “Copper-clad” which means the cable uses copper-coated aluminum wire.
If my property has aluminum wiring is there a way to make it safer?
Yes, there are several ways you can upgrade a system that uses aluminum wiring. The best of the four discussed here is to upgrade the electrical service to all copper. For some homes with a larger square footage, some may feel replacing the entire system is cost-prohibitive. However, it is the most effective way of knowing that all connections have been remedied.
One common method is called “pig-tailing.” This method involves splicing short pieces of solid copper wire to the end of the aluminum wire. The copper pieces are then used to make connections with the outlet, light switch, etc.
Two other methods recognized by the CPSC to provide a “complete and permanent” repair are the AlumiConn and COPALUM methods. The COPALUM method uses a proprietary crimp-on connector to join the copper wire to the aluminum wire. The dies and tool are only made available to electricians who receive training from the manufacturer, so if you hire someone who uses this method, ask to see their credentials.
The AlumiConn method uses a lug-style connector that can be used in both residential and commercial applications. There are no special tools required to complete the connection and repair process; however, you should always seek help from a licensed and insured electrician when seeking to remedy any wiring issue.
Can I still get coverage if my property has aluminum wiring?
Some insurance companies are willing to insure a property if the aluminum wiring is “corrected” through “pig-tailing” or the AlumiConn or COPALUM methods. Others, however, may not want to insure a property that has aluminum wiring as any part of the property’s electrical system. As each insurer’s stance on aluminum wiring can vary, always check with the agent about this specific detail before insuring your property. If for some reason they don’t ask you if your property has aluminum and you know that it does, be upfront during the application process. Having to shop around a bit is much less of a hassle than having a fire and not having the damage covered.
What does the lawyer-y-speak version of this exclusion look like in my policy?
Sample policy language may look similar to this:
“We will not pay for the loss or damage caused directly or indirectly by or resulting from aluminum wiring. Such loss or damage is excluded regardless or any other cause or event that contributes concurrently or in any sequence to the loss. This exclusion applies whether or not the loss event results in widespread damage or affects a substantial area.
But, we will pay for loss or damage to Covered Property resulting from fire caused by aluminum wiring if, prior to the fire causing the loss or damage, the aluminum wiring was remediated by a licensed electrician using the AlumiConn or Copalum connector methods; and all such remediation, including modifications and additions to installed wiring, was completed, inspected and approved and in compliance with all applicable local codes and laws.”
Or, if your policy excludes coverage for properties with electrical systems that contain aluminum:
“Any location at which the electrical wiring is wholly or partially aluminum is excluded.”
*As insurance policies may vary, please check your own policy for language specific to your covered property.
How much can this type of damage cost me?
Fire losses can vary from a few hundred dollars to a total loss of the property. They are among the top five frequent losses for investment property owners and typically the most costly. If you own a multi-unit property, adjacent units could also become “casualties of war” or you could even be liable for a fire that spreads to your neighbor’s property causing a headache for them and causing potential strain on your relationship. Worse than property damage, a tenant could be injured if an outlet doesn’t work properly or if a fire starts from faulty electrical.
What can I do to protect myself?
First, know what is in your policy: Read the sections of your insurance policy that address aluminum wiring. It is important to know both what you are and are not covered for. If you don’t understand your coverage or have questions, don’t hesitate to ask your agent who should be happy to help you!
Inspect your electrical system and make repairs promptly: Always ensure your electrical system has had a thorough inspection prior to purchase. Once you are aware of any repairs or upgrades that are needed, make your repairs promptly. Continual use of a faulty electrical system just amplifies the risk of fire. Hire licensed and insured electricians so electrical repairs are done safely and according to current local codes.
Regularly inspect smoke detectors and fire extinguishers: Smoke and carbon monoxide (CO) detectors should be tested on a monthly basis, and follow the manufacturer’s instructions for maintaining your fire extinguishers. Daylight savings is a great time to change batteries in smoke and CO detectors and don’t forget to replace the alarms themselves every 10 years.
Make sure your tenant has a fire escape plan: Show tenants the location of fire protection devices and teach them how to use the fire extinguisher before they move in. Show the tenant ways out of the property in case of emergency and encourage them to conduct their own safety drills with their family.
Make sure your tenant understands their personal property isn’t covered by your insurance: Require your tenants to carry renters insurance in the lease and enforce it. Let them know any insurance you carry on the property as the owner does not apply to their personal belongings. Impress upon them the importance of reporting any hazardous conditions on the property to you or your property manager immediately. You may want to include a section in your lease where the tenant acknowledges their understanding of these items.