Wednesday, December 19, 2018

A 100% Legal Home Insurance Boondoggle

About one year ago, our regional electric utility Kentucky Power (a subsidiary of American Electric Power) sent out mailer reminding everyone that home owners are financially responsible for any repairs necessary to outside electrical lines from the point where utility maintained lines attach to the home and to weather heads, risers, meter base and the service entrance conductor that attaches to your fuse/breaker box. This was something of which we were already aware, since we had to pay for the installation of all those things when we bought our new house just eight years ago.

What was new, was that Kentucky Power was offering all customers an "inexpensive"  insurance provided by another independent corporation HomeServe to cover the cost of repairs to those outside electrical elements between the lines that were the utilities responsibility and the interior electrical system of the home.  HomeServe would provide the services, but for convenience the cost of the insurance could be paid monthly with a couple of dollars added as part of your utility bill.  Our recent experience with setting up a new home, made us aware of how expensive those repairs might be, so it seemed like a good deal.

Unfortunately, I like many other people did not read all the fine print and details as carefully as I should have. When I was thinking about the possible need for repairs I was thinking about damage that might occur during a storm, due to wind, hail, ice, falling trees etc. I was thinking about accidents that might cause a failure of the components, such as when there was a lightening strike, or even a power overload or transformer going out.  Well it turns out that NONE of those things are covered, as I learned yesterday.

Yesterday, we received a mailer from HomeServe thanking us for being customers and informing us of a rate raise in the next year: a 100% rate raise, from $2.49 to $4.99.   Which immediately caught my attention, part of the appeal of the service was that it was so cheap. Suddenly it was not going to be as cheap.

There was also included in the mailer information on what is covered and not covered by the policy. I'm usually pretty good about thoroughly reading information about coverage on insurance, so I'm not sure how it was that I missed this. It turned out that this policy explicitly excludes damage from nature (storms, ice, wind, snow, falling trees, etc.), or accidents including power surges, power outages, and damaged transformers.  The ONLY thing covered by the insurance is "normal wear and tear."

Normal wear and tear? We previously had a 30 year old home that never had any "normal wear and tear" on its electrical components. I am almost certain that they have prescribed time periods for each, so that any damage or failure short of those time periods would almost certainly NOT be covered. After doing a little research, it would not be at all surprising if HomeServe were to determine that a metal riser and weather head should have a life of 40 years or more, meaning that any problem with it, prior to that time could not be considered "normal" wear and tear, and therefore not covered.

So today I cancelled the insurance.  I suppose if a person had an old house, with electrical equipment that was already more than 30 or 40 years old, they might consider such insurance, but for most of us, we would pay in for years and years and never be covered for anything that happened to our external electric supply components.  I strongly suggest that anyone that has agreed to such insurance, rethink the likelihood that it would ever pay off.