Does Home Insurance Cover Electrical Panel Replacement?

How do you know your electrical panel needs replacement?

A number of things may signal the need to replace your electrical panel, including:

• Your home is old. If your home is old (generally at least 40 years old) and the electrical panel is original to the home, it may be worn out and need replacement.

• There’s rust and corrosion. If you spot rust or corrosion on circuit breakers, cables, wires, and other components, contact an electrician as soon as possible.

• The panel smells. Overheating inside the electrical panel may cause an odor like the kind you notice when there’s a fire.

• Your electric bills increase. This may be happening because malfunctioning wires are sending more power to appliances and other items that use electricity.

• Your circuit breakers are tripping. If you’re regularly resetting the breakers after they’ve tripped, it might be time for a new electrical panel. A breaker trips when the panel detects an electrical issue and automatically shuts off the breaker to prevent the circuit from overheating.

• Your lights frequently dim. Dimming lights could be a sign that something’s wrong with the electrical panel.

• You hear strange noises. Loose wiring may create crackling, popping, or sizzling sounds.^[2]

When homeowners insurance will cover electrical panel replacement

The part of your homeowners insurance policy that covers your home’s structure (and not the belongings inside) may cover the replacement of your electrical panel. This coverage, known as dwelling coverage, normally kicks in if there’s been a “sudden and accidental” loss that a covered event causes, such as a fire or a lightning strike.

The cost of installing a new electrical panel varies. Estimates range from about $500 to more than $2,000.^[3]

Commonly covered home insurance perils

Most home insurance policies cover some common events that can damage your home and belongings, called “perils.” Here are the most commonly covered perils for home insurance policies:

When homeowners insurance won’t cover electrical panel replacement

In some situations, a homeowners insurance policy might not cover an electrical panel replacement.

For instance, an insurer may reject your claim if the panel is old or you haven’t properly maintained it.

In addition, the insurer might not pay for a new electrical panel if your home is equipped with knob-and-tube wiring or aluminum wiring. An insurer might even refuse to cover your home at all if these types of wiring are present, or at the very least might charge more for coverage.

Knob-and-tube wiring was common in homes and other buildings in North America from roughly the 1880s to the 1940s. This type of wiring is considered obsolete and could be a safety hazard.^[4]

Insurers also consider aluminum wiring in homes a hazard. In some homes, aluminum wiring was substituted for copper wiring from about 1965 to 1973. The main problem with aluminum wiring is that it deteriorates faster than copper wiring does, creating a possible fire hazard.^[5]

Are electrical systems covered under your home warranty?

A home warranty generally covers problems with electrical systems arising from regular wear and tear. This includes coverage of components like the electrical panel, circuit breakers, and electric wiring.

However, a home warranty usually doesn’t cover issues related to power surges, power failures, lightning strikes, circuit overloads, and similar incidents.

How to prevent future electrical panel replacement concerns

Making sure your electrical panel is running smoothly offers benefits like boosting safety and perhaps even preventing a homeowners insurance claim.

How an up-to-date electrical system benefits you

The benefits of having an up-to-date electrical system include:

• Cutting down on the risk of an electrical fire; faulty electrical systems are among the leading causes of house fires^[7]

• Ensuring your electrical system meets current electrical codes

• Enabling appliances and other electricity-dependent items to run more efficiently

• Making it cheaper to insure your home

• Reducing the likelihood of filing an electricity-related insurance claim

• Potentially boosting the resale value of your home

Things you can do to keep your electrical system up to code

Keeping your electrical system up to code generally means making sure it complies with the National Fire Protection Association’s National Electrical Code. You may also consider including state and local electrical codes when updating your electrical system.

Bringing your home’s electrical system up to code may involve:

• Having a qualified electrician inspect your home

• Replacing potentially hazardous wiring, such as knob-and-tube or aluminum wiring

• Upgrading the electrical panel

• Installing new electrical outlets

• Putting in new electrical switches

• Installing modern lighting, such as LED lights

How to spot issues before they become major problems

Rather than waiting for something bad to happen, you can proactively spot and fix electrical issues before they become major problems:

• Get the electrical system inspected each year by a qualified electrician.

• Address issues with the electrical panel that need to be fixed but don’t necessarily call for replacing the panel. This may include hiring a professional to disconnect wires and terminals, clean the panel’s components, and freshen up the electrical connections.

• Use a multimeter to diagnose potential problems. When plugged into an outlet, this tool measures electrical voltage, currents, and resistance.

• Convert to energy-saving appliances and devices. These will put less strain on the electrical system.

• Switch to power-conserving LED light bulbs.

• Add a whole-house surge protector. This is designed to protect appliances and electronics from damage when a power surge occurs.

• Install ground-fault circuit interrupters. These circuit breakers turn off electricity when a ground fault occurs. A ground fault is an unplanned, potentially dangerous electrical path between a power source and a grounded surface.^[8]

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Home electrical system safety tips

Here’s how you can better manage your home’s electrical system:

• Don’t overload electrical outlets.

• Unplug unused appliances to minimize fire risks.

• Inspect electrical cords and extension cords to look for damage. Replace any that are beyond repair.

• Use the correct wattage for lamps and light fixtures.

• Plug major appliances directly into electrical outlets rather than into power strips or extension cords.

• Keep electric-powered appliances and devices away from water to prevent shocking.

• Store combustible items away from furnaces and space heaters.

• Hire a qualified electrician to do electrical work.^[9]