Why Your Insurance Company Cares About Your Electrical Maintenance

Introduction

Do you help operate a commercial facility? 

If yes, someone on your team has likely met with your property insurance company to chat about coverage and risk. These conversations may have been even more substantial if your facility has high-risk electrical equipment on-site.

Here is a quick article discussing why electrical maintenance should matter to you, and why it absolutely matters to your insurer. 

Electrical Maintenance

Simply put, electrical maintenance consists of inspecting, testing, repairing, and replacing electrical equipment or equipment with electrical hazards.

If you have an electrical maintenance plan (that you use regularly) we would classify you as a prepared and proactive company. Good Job!

Having a robust electrical maintenance plan, puts you in a strong position to manage and understand guidelines. These plans play a vital role in lowering the risk associated with electrical systems, by identifying faults, preventing overloads, spotting deterioration and more. 

Theoretically, instead of waiting for something to go wrong (which can be dangerous and costly), proactive maintenance planning identifies and addresses potential problems early, ensuring the electrical system operates safely and reliably. 

Understanding the importance of property insurance 

Property Insurance helps protect a company’s financial well-being and ensures business continuity through these key drivers: 

•    Business interruption coverage.
•    Reduced downtime and revenue streams.
•    Avoiding catastrophic losses. 
•    Peace of mind.
•    Maintaining operations normally & consistently.

Why does your insurance provider have such a key interest in your electrical systems?

Well...simply put, an insurance company would rather not have to pay out a claim. 

That is why they care, and why they care a lot. The risk of accidents, fire, and *down time is important when they choose who to insure and for how much. Those who have a higher risk, usually pay more. Unplanned electrical issues can lead to significant disruptions and costly insurance claims. 

*your plan may or may not cover downtime under business interruption coverage

At Leaf, we're committed to helping you mitigate these risks using proactive electrical safety measures, that should abide by your insurance company’s requests. 

Have a glance at our electrical safety services and learn how they fit together. 

Insurance companies may implement mandatory electrical safety services for properties with a history of electrical issues or a higher potential for incidents. A new build may also be subject to a list of safety services.

It's important to understand that electrical failures originating within your own facility’s equipment, can lead to particularly serious problems. That's why investing in preventative electrical maintenance planning is so vital. Not only does it significantly reduce the risk of outages and fires, but it also extends the service life, dependability, and overall reliability of your electrical equipment.
 
Potential Requirements

Leaf can help you with services your insurance companies may be requesting. 
Consider asking us about the following services to assure reliability in the electrical systems:

•    Up to date Single Line Diagram: Maintaining or creating a single line diagram of your electrical system is fundamental for effective troubleshooting and planning.

•    Arc Flash Study/Hazard Analysis: Determines the potential incident energy and arc flash boundaries for your electrical equipment. Identifying these data points, allow for the selection of appropriate Personal Protective Equipment (PPE) and the implementation of necessary warning labels to protect personnel. Training and other elements further strengthen the effectiveness of this service.

•    Short Circuit Study: Conducted typically every five years or after significant renovations/new build, this study analyzes potential fault currents to ensure your circuit interrupting devices, transformers, and conductors are adequately rated. It identifies the need for system upgrades or current limiting devices.

•    Thermographic (Infrared) Survey: (or IR Scanning) Performed annually, this non-invasive survey can detect hot spots and potential points of failure in your electrical system before they lead to outages or fires.

Other tests that may be on their radar include - Protective Device Coordination Study, Insulation Coordination Study, Load Flow Study & Motor Starting Study, among others. 

Why these specific services?

The simple answer… risk assessment and underwriting accuracy. The outcome of these services provides a clear understanding of an electrical “condition.” Think of it like a physical health assessment for life insurance applications.

For example, there is more risk for the life insurance company if you:

- smoke

- have a pre existing health condition

- have weight issues

Any of these added risks will likely add to a higher payment for you. 

Their underwriting team will produce quotes based on the condition of your facility and the services above. It is their job to set appropriate premiums that reflect the actual level of risk for each facility. 

Closing

Implementing these preventative measures is not just about avoiding insurance claims; it's about safeguarding your property, ensuring the safety of your personnel, and maintaining daily business.

We are here to help you navigate some of these complex conversations you may have with your carriers.

Reach out to us anytime!

 

Interested in improving your facilities electrical safety but not sure how to start? There are two ways we can help you:

- Learn even more about Electrical Safety Training from our industry experts or by downloading our Free Ultimate Guide To Improve Electrical Safety In Your Workplace.

- Don’t have time to read our free resources? Request a Free 15 minute call with an Electrical Safety Expert today by booking here -> Book Now

• Category:
• ESP
• PPE