5 Electronics Categories Often Claimed With the Wrong Peril

Nearly 65% of all electronics and electrically powered specialty equipment that insurance professionals assigned to StrikeCheck last year had a different cause of loss than the policyholder initially reported in the claim, according to the StrikeCheck 2023 Annual Claims Report. Objective testing determined other perils, including some that may not be typically covered by insurance policies, caused damages. Worse yet, there were times when electronics included in claims were non-damaged at the time of assessment. This reiterates the critical need for adjusters to verify the reported perils before settling a claim because erroneous causes of loss may lead to inaccurate or unnecessary settlements.

Why Do Policyholders Report Wrong Causes of Loss on Electronics Claims?

Electronics, similar to HVAC systems or roof damages included in claims, are vulnerable to policyholders reporting incorrect causes of loss – even if unintentionally.

Electrically powered items frequently found in residential and commercial claims are complex. Policyholders who experience a storm in their area may assume lightning or high voltage surges impacted their electronics when in reality it could be wear and tear that took its toll at a coincidental time. Without expert knowledge, they likely wouldn’t be able to tell the difference between one peril and another.

There’s an extra layer of complexity because many electronics are often on the same circuit. Damages could be isolated to one item, occur to several at one time, or even be related to the electrical system and not any of the seemingly failed electronics. This can lead to policyholders reporting an inaccurate cause of loss in claims – and increased unnecessary claims leakage if items are non-damaged.

Electronics Categories With Perils Frequently Recategorized After Assessment

Any claimed property has a certain amount of risk of having an inaccurately reported cause of loss, and policyholders aren’t always incorrect. Below are five categories of electronically powered items with high percentages of recategorized perils following StrikeCheck’s assessment.

Well Pumps: 82% Recategorized

By having an expert verify cause of loss, adjusters can ensure they don’t settle a claim with non-damaged well pumps.

Well pumps had a high rate of recategorized perils because nearly 70% were reported as having sustained damage from lightning. High voltage surge, which can sometimes be indirectly linked with lightning, was most often the actual cause of loss. However, the total percentage of well pumps determined to have sustained damage from wear and tear or that were non-damaged at the time of assessment is almost equal to that of surge damages.

Consumer Electronics: 65% Recategorized

Whether the claimed equipment includes laptop computers, home theater receivers like this one, or other consumer electronics, don’t assume the reported peril is the correct one.

High voltage surge, lightning, and water were among the perils most frequently reported as the cause of loss for consumer electronics that adjusters assigned to StrikeCheck for assessment. Surge and water were the top two actual perils, though non-damaged was the third most common evaluation determination.

Water Heaters / Water Softeners: 62% Recategorized

Electrical components, like those in this tankless water heater, are susceptible to high voltage surge damage, but they may also fail because of wear and tear.

Thanks to different types of water heaters and water softeners and their various electrical components, this equipment is vulnerable to certain perils, though not to the extent policyholders reported. What’s more, insureds listed unknown as the cause of loss for more than 10% of this equipment. Surge, water, and wear and tear were the top actual causes of loss. It should also be noted that one-third of all water heaters and water softeners assessed were non-damaged at the time of evaluation.

Large Appliances: 57% Recategorized

Refrigerators are among the large appliances that are often determined to be non-damaged or can be repaired.

Large appliances, including refrigerators, oven and ranges, and washers and dryers, were high on the list of electronics that policyholders claimed. Most frequently, they reported lightning, water, surge, and unknown as the causes of loss. While surge and water did account for many large appliance damages, nearly one-third of them were working properly at the time of assessment. Don’t forget that confirming large appliance failures doesn’t automatically mean replacements are required. Scope of damage should be determined during any testing.

Solar Power Equipment: 46% Recategorized

Wind, hail, and foreign object impact are among the perils policyholders reported as damaging solar panels.

Solar systems and related equipment round out our list of electronics categories with high rates of peril recategorization following objective assessment. Among the perils most often found to be the actual causes of loss were high voltage surge, wind, hail, and foreign object impact. But nearly a quarter of all claimed solar-related equipment was non-damaged at the time of assessment.

Don’t Risk Inaccurate Cause of Loss or Settlements

While determining one peril versus another was the actual cause of loss doesn’t always affect claim settlements, those that do can have a big impact on claims. Don’t settle for non-damaged equipment or equipment that sustained a failure from a typically non-covered peril.

StrikeCheck, part of the Alpine Intel suite of services, has a nationwide team of experts who can provide objective, accurate, and fast determinations of actual cause of loss and scope of damage to help you feel more confident when deciding how to settle a claim. Submit an assignment to receive a comprehensive evaluation for claimed electronics and electrically powered specialty items.

Alpine Intel’s content is meant to inform and educate readers using general terms and descriptions. They do not replace expert evaluations that determine facts and details related to each unique claim.