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Electrical Systems and Insurability

Blog Issue #: 

6

Electrical Hazards

Faults More Likely to Cause Fires Than Electrocution

According to the 2009 Ontario Electrical Safety Report, between 2000 to 2009, there were 207 electricity-related fatalities in the province. 90 were from electrocutions, and 117 from fires where the ignition source was identified as electrical. Since powerlines accounted for nearly half of all electrocutions, and nearly 60% of all cases were found related to the work place, electrical fire represents at least four times the hazard to the general public than electrocution. As there were no statistics available to determine what percentage of powerline injuries were work place related, versus downed lines, this number may be even greater. (Electrocutions in the United States were markedly higher, but that is the subject of a much different blog.)

4th Leading Cause of Fires

According to the Council of Canadian Fire Marshals and Fire Commissioners (CCFM/FC) report, Fire Losses in Canada Year 2007 and Selected Years, , just fourth behind cooking, heating, and arson. The statistics in the United States were very similar, and electrical fires out ranked smoking, clothes dryers, equipment malfunctions, and candles in both regions. Fire related deaths and injuries also closely matched the statistics for causes, except arson ranked higher. For the participating provinces (BC, AB, MB, ON, NB, NS, SK, and NT), the reported data amounted to 1092 fires, 11 deaths, and 60 injuries - all but NT reporting for a single year.

8% of house fires are preventable by correcting electrical deficiencies.

Not all electrical fires, however, are caused by the building electrical system. According to the US National Fire Protection Association, a quarter of electrical fires (26%) are caused by the devices plugging into the electrical system or were not identified. The remaining three quarters of electrical fires that are related to the building electrical system are significant, however, and are why these systems are subject of insurance company attention.

Electrical causes of residential fires in America

Cause of fire

Percent

fixed wiring

34.7

cords and plugs

17.2

light fixtures

12.4

switches, receptacles, and outlets

11.4

lamps and light bulbs

8.3

fuses, circuit breakers

5.6

meters and meter boxes

2.2

transformers

1.0

unclassified or unknown electrical distribution equipment

7.3

Lowering Risk

Unlike random circumstantial events like lightening strikes, or deteriorated electrical components in concealed spaces, wiring methods and major components are usually readily identifiable and can be so identified in advance of insurance companies accepting a risk. This provides an opportunity to lower the insurance companies risk by either requiring upgrades and repairs, increasing rates, or refusing to insure. Given the simplicity of these choices, they are an obvious objective for insurance companies.

However, as you'll read in the next section, the following components, which are common insurance industry targets, don't have an exceedingly high probability of causing fires or injury. Therefore it is likely that some insurance companies will not refuse insurance, or may consider alternatives in order to provide coverage. Usually such an alternative will involve conducting a more detailed electrical inspection, and providing a certificate letter. Likewise, it is in best interest of homeowners to understand the risk and options available.

Insurance coverage is usually available from another provider.

While each property is unique and specific conditions will influence our advice, our general recommendation is that additional due diligence may be required where the following issues are identified, and further investigation is encourage. Recommendations for complete replacement is usually reserved for systems with multiple deficiencies, inadequate performance, or where opportunities like extensive renovations minimize the financial burdens of performing upgrades. A specific answer will depend on conducting a thorough and complete home inspection.

A Quick Review

The Insurability Series

Starting this series on insurance and insurability, and how they relate to home inspections, we defined key terms and established the relationships between insurance brokers, underwriters, and real estate professionals including home inspectors. If you haven't yet read Insurance and Insurability take a moment to review those important concepts.

Key Terms

Insurability:
The ease of obtaining coverage for a property at a rate similar to the market average.
Broker:
Insurance specialists that assist consumer with selecting and purchasing insurance coverage, as well as with making claims.
Underwriter:
Evaluate potential clients shopping for insurance to decide if they will accept their risk, how much coverage they may provide, and the rate.
Insurability is determined by insurance companies, not by home inspectors, so be prepared to check.

Insurance companies decide which risks they will cover and at what rate. Underwriter and risk assignments are proprietary information and their decision making process may change without notice. The Insurance Bureau of Canada (IBC) does not establish or make public risk criteria. Since home inspectors are not provided this information, and it is constantly changing, it is not possible for home inspectors to report on insurability. Home inspectors do recognize patent defects, explain their significance, and make recommendations for improvements.

Common Electrical Insurance Issues

Caution: This is not an exhaustive list. Please see Insurance and Insurability.

60 amp Electrical Service

These panels were common in the 1950's and 60's and were a great advancement at the time. However, regardless of the size of the building, a 60 A electrical service is now often deemed insufficient. The reasons for this new position may include the increased likelihood that these services will be:

  1. attached to open wiring,
  2. have ungrounded circuits,
  3. be over-subscribed,
  4. have fused circuit protectors, be tampered with, and have double tapped circuits.

In addition, these systems are usually quite old and age is a well understood contributing factor. The US Consumer Product Safety Commission first sponsored a project investigating the causes of residential fires in the early 1980s. Of the factors, age was one of the more significant. The fire rate of dwellings over 40 years was 1.5 times that of 21 to 40 dwellings, and 3 times that of 11 to 20 year old properties. The 1980 Consumer Product Safety Commission study found that 37% of electrical fires were caused by improper alterations, another 15% were due to inadequate electrical capacity, and 17% due to age related deterioration. That's 69% of electrical fires having causes that are known to be common with 60 A service! That is not to say 69% of electrical fires are caused by 60 A panels, or that 100% of 60 A panels have these deficiencies, however the risks are greater and additional due diligence may justified.

Fires occurred 3 time more often in buildings over 40 years versus 11-20 years. Home inspections cover most of the deficiencies identified in the 1980 Consumer Product Safety Commission study.

Wiring and grounds are covered in another section below, so the remainder of this section will explore the latter examples: over-subscription, fused circuit protection, and double-tapped circuits.

Fused Circuit Protectors

Common understanding is that fuses are unsafe, but this is not accurate. Fuses are virtually 100% reliable because they rely on a process of melting to disrupt current. Breakers, on the other hand, use a mechanical process and may fail due to circumstances like a manufacturing error. A well known case involves the Federal Pacific Electric Stab-Lok circuit breakers. In 1980, Reliance Electric (who purchased FPE) advised the United States Product Safety Commission that many of the Federal Pacific breakers did not comply with Underwriters Laboratories requirements: "UL listings on circuit breakers made by Federal Pacific have previously been obtained through the use of deceptive and improper practices." According to Jesse Aronstein, an engineer who had researched FPE breakers for more than 20 years, “there is no inconsistency and no dispute in the fact that they are defective.” His research came to the conclusion that these breakers are responsible for nearly 2000 fires in the US each year.

Of course, FPE breaker are one of the exceptions to the norm and electrical breakers are proven to be a modern and reliable method of circuit protection. Circuit breakers also address some notable problems with fuses: over fusing and fuse bypassing. Edison-based plug fuses are all the same size which means that any socket will accept any fuse. Fuses were often increased in size, either to avoid nuisance tripping or due to having large fuses immediately on hand. The problem with over fusing is the potential overheating of circuit components. Combined with the fact that the fused circuit was already tripping, and the potential for other electrical faults to exist, this is a risky practice. Fuse bypassing is a variation on over-fusing where another conductor, often a penny, is inserted behind the fuse. This is extremely dangerous because all circuit protection is removed and an electrical short to ground would almost certainly cause a fire.

S-type fuses prevent installing oversized fuses but they are easily tampered with by removing the plastic inserts used to reject other plug sizes. As discussed in a later section, 60 A panels are more likely to supply knob and tube wiring. This open wiring is designed to work in free air. Since the wires are able to dissipate heat more readily, the same #14 gauge copper conductor is rated for 25 amps, versus only 15 amps for plastic sheathed cables (NMD). Sometimes these electrical systems have cable replacements without changing the fuse sizes. This results in nearly 70% over-fused #14 cables. As you can see, the problems with fuses are not related to the technology, but to consumer behaviour!

Over-fusing modern 15A wiring by connecting it to 25A knob&tube circuits is easily corrected.

Over-subscribed Distribution (Fuse / Breaker) Panels

Over-subscription is a term used to describe an undersized electrical distribution panel, as well as related consequences such as an inadequate number of circuits, receptacles, and circuit capacity. Determining the required electrical service is set by Canadian Electrical Code. The calculations take into account floor area, space heating, air-conditioning, electric vehicles, ranges, and other high loads. Consider the following two examples: a small townhouse and a medium to two storey. By increasing the size of the building, and changing the space heating from oil to electric, the minimum main fuse / breaker jumps from 60 A to 200 A.

Small Townhouse

900 square feet of main floor living space with oil fuel space heat.

Preliminary calculations not for construction purposes.

Demand Input Calculation Watts
Basement Floor Area: 400 ft. sq.    
Remaining Floor Areas Combined: 800 ft. sq.    
Total Floor Area for Demand Calculation 1100 ft. sq.  
Total Watts Assigned to All Floor Areas   6000 W
Space Heating: 0 W    
Factored Space Heat Watts 0 W  
Air-Conditioning (Assuming Simultaneous Operation): 0 W    
Watts Assigned To Space Heat and AC Loads   0 W
Electric Range: 4500 W    
Watts Assigned To Electric Range   6000 W
Water Heaters (Excluding Hot Water Tanks): 0 W   0 W
Electric Vehicle Charging Equipment: 0 W   0 W
Other Loads (Greater Than 1500 w): 3000 W    
Watts Assigned To Other Loads 750 W
Total Demand Watts 12750 W
Total Demand Amps 53.13 A
Minimum Service Amps: 60 A
Hot Conductor Size: #6 AWG Copper or #6 AWG Aluminum
Meter Base Rating: 100 A
Main Fuse / Breaker: 60 A
Service Grounding Conductor: #6 AWG Copper
Service Bonding Jumper: #8 AWG Copper
Threaded Metal Service Conduit: 1"
Minimum Service Panel Size: 16 circuits
Medium Sized Two Storey

3600 square feet of main floor living space with electric space heat.

Preliminary calculations not for construction purposes.

Demand Input Calculation Watts
Basement Floor Area: 1200 ft. sq.    
Remaining Floor Areas Combined: 2400 ft. sq.    
Total Floor Area for Demand Calculation 3300 ft. sq.  
Total Watts Assigned to All Floor Areas   8000 W
Space Heating: 36 000 W    
Factored Space Heat Watts 29 500 W  
Air-Conditioning (Assuming Simultaneous Operation): 0 W    
Watts Assigned To Space Heat and AC Loads   0 W
Electric Range: 5500 W    
Watts Assigned To Electric Range   6000 W
Water Heaters (Excluding Hot Water Tanks): 0 W   0 W
Electric Vehicle Charging Equipment: 0 W   0 W
Other Loads (Greater Than 1500 w): 4500 W    
Watts Assigned To Other Loads 1125 W
Total Demand Watts 44 625 W
Total Demand Amps 185.94 A
Minimum Service Amps: 186 A
Hot Conductor Size: #2/0 AWG Copper or #4/0 AWG Aluminum
Meter Base Rating: 200 A
Main Fuse / Breaker: 200 A
Service Grounding Conductor: #6 AWG Bare Copper
Service Bonding Jumper: #6 AWG Copper
Threaded Metal Service Conduit: 1.5" for #2/0 Coper; 2" for #4/0 Aluminum or #3/0 Copper TECK
Minimum Service Panel Size: 40 cct

Over the years, the electrical code has been updated, not only to account for new things like electric vehicles, but also increasing consumer demands for electricity. Due to these changes, new panels requirements are calculated to be much higher than in previous years. Unfortunately, while household electrical consumption has risen, many of the electrical panels from several decades prior have been subjected to loads greater than designed, or over-subscribed. As the Consumer Product Safety Commission study found, 15% of fires were due to inadequate electrical capacity.

Resizing your electrical panel can eliminate 15% of fire causes related to inadequate electrical supply.

The argument can be made that 60 A is sufficient for some dwellings. Consider the above example. The reduced floor area and non-electric heating significantly decreases the electrical requirements for the town house. It is possible for a newly constructed dwelling, with a small floor area and non-electric heat, to be equipped with a 60 A service meeting all electrical code requirements. Although it may be a tempting argument to make, dwellings of this configuration are not common and slight increases are enough to require a larger panel. For example, increasing just the main floor area from 800 to 900 sq. ft. increased the minimum main fuse or breaker size to 100 A. Since the space heating was non-electric, the increased requirements are caused only by additional light fixtures and receptacles. (We calculate that the largest main floor, having no basement, would be 870 sq. ft.)

Double Tapped Circuits

Small panels lead to another problem: double-tapped circuits. This is where more than one wire is attached to a fuse or circuit breaker to extend a circuit. This technique causes several problems. The most obvious is the additional load placed on the circuit protector which may result in nuicance trips or blown fuses. Usually any significant expansion would require the addition of a new breaker, but because 60 A panels are physically small with a limited number of circuit positions, it may not be possible to add a new circuit. Shortcuts are taken.

The least obvious, but much more serious, risk is arcing. Most fuses and circuit breakers are not designed for double poles, so the conductors are forced into a single load terminal. This may result in unequal contact and compression between the conductor and the terminal screw, causing two of the three possible modes of electrical fires: arcing and excessive ohmic heating.

Since double-taps can result in a poor connection which is not mechanically secure and of low electrical resistance, it can being a progressive failure. The high resistance creates heating at the point of the poor connection, which increases oxidation and further loosening of the connection. As the connection deteriorates, further heating occurs until high temperatures are reached. At the end point of failure, the poor connection can become a glowing connection and ignite nearby combustibles.

It does not take a great deal of current to create a glowing connection. A 1961 test of insulating materials for resistance to heat and fire concluded that just 4 A was necessary (CEE Working Group). Homeowners and contractors looking to avoid an expensive panel upgrade have been known to take this dangerous shortcut.

Four amps can create a glowing connection. Fixing this hazard may be as simple as adding a $9.27 breaker.

Aluminum Wiring

Starting in the mid-60s, a number of factors affected the price of copper. President John F. Kennedy's politics saw troops in Vietnam increase and, by 1963, there were 16 000 American military in Vietnam, up from Eisenhower's 900 advisors. This was followed by a period of strong growth, and later a very long copper strike, which all further increased the price of copper. Aluminum, on the other hand, remained relatively stable in the low to mid $0.20 per pound range, as capacity increases were able to keep pace with continuous growth. These economic factors made aluminum a very popular choice for electrical wiring from about 1965 to 1976.

While aluminum is well suited to electrical systems, and is the primary metal of choice for high tension power lines (mainly due to its lower mass), it requires additional installation steps. Aluminum wire does, however, have a lower melting point and a study by J. Aronsteign, Fire Due to Overheating Aluminum-Wired Branch Circuit Connections, 1983, found that glowing connections of just 45 - 50 W were sufficient to melt aluminum: subsequently igniting other materials. The primary concerns for aluminum wiring are oxidation, loose connections, incompatible components, and tool damage during installation (e.g. knife cuts). All of which contribute to poor connections susceptible to failure. These problems mainly involve 120 v circuits due to the nature of the splices and wire gauges, and are less likely to be a problem for 240 v circuits like baseboard heating, hot water tanks, ranges, and dryers; however this should not preclude a complete investigation.

Receptacles were a particular problem as the screw connections were prone to creep and devices not rated for aluminum wire were often used. As receptacles are usually daisy chained in such a fashion as that every receptacle forms part of the complete circuit, a bad connection on an unused outlet could fail under load from another. Ontario Hydro conducted a study of receptacle failures, Fire Initiation Potential of Failing Electrical Receptacles, using aluminum wire exposed to a 27 A overload, and then tested with a 15 A cycled load. Even though the cycled load did not exceed the circuit rating, some test scenarios resulted in ignition of cellulose insulation. Tests were inconclusive as to screw versus back-wired connections.

Properly installed aluminum wire is not hazardous. Provided all connecting hardware is rated for aluminum, the wire ends are treated with a corrosion resistant compound, and all connections are made securely. For this reason, insurance companies may request a thorough electrical inspection be performed rather than flatly deny coverage. Even if this request is not made, homeowners may want to consider taking this step themselves.

Correctly installed and maintained aluminum wiring is safe; however, a secondary electrical inspection is recommended.

Knob and Tube ("Open") Wiring

Contrary to popular belief, knob and tube wiring is permitted by the electrical code. Rules 12-202 to 12-224 of the Canadian Electrical Code apply to single conductors run as open wiring. It is possible for local authorities to make other rules, however no such rule currently exists in Newfoundland and Labrador under the Public Safety Act (which governs electrical installations).

Knob and tube (K&T) gets its names from the porcelain insulators that isolate electrical wire from the remainder of the building. Knobs support wires and allow for changes in direction, while tubes shield wires that pass through wood framing. Because K&T is designed to be free air (i.e. open), and the hot and neutral conductors are not sheathed together in the same cable, the same gauge wire has a greater ampere capacity (ampacity) than sheathed cables. For example, a #14 copper K&T wire is rated at 25 A, but a #14 copper NMD-2 cable (plastic sheathed, 2 conductor + ground) is only rated for 15 A. The greater ampacity may have been a feature, but it has later became a cause of problems. If K&T were covered with insulation, it would loose its free air heat dissipation and could potentially overheat. However, this particular fire hazard may be overstated, as there have been conflicting reports on if K&T has even started fires in insulation (outside of the lab), according to Smith, L. E., and McCoskrie, D. in What Causes Wiring Fires in Residences (1990).

A more significant fire hazard, which is related to K&T's greater ampacity, is improperly rated over current protection for new cables. As electrical systems were repaired or extended, it became a common malpractice to replace #14 gauge K&T with the same gauge NMD cable without reducing the fuse from 25 A to 15 A.

Other problems included poor installation and modification as well as natural deterioration of the system. Since the hot and neutral conductors were run separately and switching was not confined to hot leads (the Carter system), mis-configurations were more likely, and neutral fusing made this much more hazardous because it was possible to have energized wires on a disabled circuit. K&T components may also fail. Open junctions, although soldered, were exposed to physical damage, and the cloth and rubber portions may deteriorate.

Finally, the most obvious fault to end users, is the lack of a ground. K&T is a two wire system that does not include the third wire providing ground protection. Grounds protect against electrical faults where dangerous voltages may be applied to the chassis of an appliance. In this event, a circuit breaker would trip immediately to remove the hazard.

Home Inspections Are Necessary

As discussed previously in the first blog in this series, Insurance and Insurability, insurance underwriter and broker risk assignments are trade secrets, policies may change without notice, and home inspectors are not advised of these changes. Home inspectors are, however, experts with respect to identifying system components and reporting deficient conditions. As such, an inspector can identify the installed systems and insurance companies may require an inspection be performed for this purpose. More importantly, inspectors can recognize patent defects, explain their significance, and make recommendations for improvements.

What Options Are Available for Electrical Insurability Issues

Home owners may choose the most drastic measure of completely replacing electrical systems like aluminum wiring, knob and tube, and 60 amp panels, however other options exist. Aluminum and open wiring are both acceptable materials and wiring methods. Neither require replacement according to the Canadian Electrical Code, but additional due diligence is advisable. For aluminum, a qualified electrician should inspect each junction and device box, ensuring that aluminum compatible components are used and that each connection is secure, free from oxidation, and undamaged. Knob and tube should be inspected for age related deterioration, correct free air installation, and selectively replaced on circuits where a ground is desirable.

60 A panels are more difficult to correct in the eyes of insurance, as well as an adequate electrical system for most houses. While some properties may be small enough to only require a 60 A service, the vast majority require a larger panel. Upgrading a panel to 100 amps or greater is not a case of simply installing a larger panel. In Newfoundland and Labrador, as well in many other areas, panel upgrades require a service wire upgrade and also trigger code requirements on the entire electrical system. In other words, replacing the panel may require substantial improvements to the entire electrical system of the property. Such costs could be significant.

Finally, a consumer may simply leave a property as-is, and find insurance with another company. Being denied insurance by one underwriter does not preclude insurance from others.

What Do You Think?

Have you had any trouble insuring knob and tube? Did your insurance company require aluminum wires to be inspected by an electrician? Have you considered making electrical improvements for your own safety and peace of mind? Your comments and questions are welcome. Please add them below. Thank you!

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