CAI-NJ Aug.2017

A U G U S T , 2 0 1 7

o-op and condo property owners and managers

typically deal with buildings and electrical systems

of varying ages and conditions. As to be expect-

ed, older electrical systems tend to have lower amperage

capacities, fewer safety features, and higher potential for

failure. As a general rule, it is recommended that a pro-

active electrical preventative maintenance program be in

place, conducted by a licensed and insured electrician.

Beyond good

general electrical

maintenance, there

are some critical

legacy electrical

components that

can seriously ele-

vate the risk of

electrical failures in

residential proper-

ties. These issues

Common

Electrical

Problems in

Residential

Real Estate

By Caesar Mistretta and Chris Dunlap

HUB International

not only raise the risk of fire or electrical shock, they can

also have a significant impact on what owners will pay for

insurance. Many property and liability insurers will refuse

to quote policies if certain obsolete equipment or wiring

is present. Other companies such as Excess & Surplus

insurers, may accept the risk with a higher premium, apply

a higher deductible or provide significant coverage exclu-

sions on the policy. While many factors go into rating a

risk, properties with these obsolete electrical systems or

equipment have often seen approximately 30-60% higher

property and general liability premiums as a direct result

of legacy electrical systems. Due to the significantly higher

premiums, remediation can often be in an owner’s best

financial interest over the long term.

Two of the most common and impactful legacy issues,

aluminum wiring and Federal Pacific Electric (FPE) Stab-

Lok brand electrical panels, are outlined below, along

with remediation methods might be considered to reduce

risks.

"...properties with these

obsolete electrical systems or

equipment have often seen

approximately 30-60% higher

property and general liability

premiums..."