February, 2002

Inspection News and Views from the American Society of Home Inspectors

Insurers' Denial of Coverage Influences New Jersey Inspector's Reporting


The only constant in our profession is change. For example, industry standards changed as radon, asbestos and oil tanks were introduced and became important. Recently I discovered what appears to be an important change in how I report certain electrical system findings. This change is directly attributed to the insurance industry. But I’m getting ahead of myself.

Not long ago a client faxed me a $1,400 estimate for the installation of a new 150-ampere service. The following note was attached.

“I cannot get fire insurance on my house. The insurance companies will not insure a fused service panel.  Attached please find estimate for new service.  Let me know how soon I may expect your check.”

Needless to say I was surprised and taken aback. After checking the report, I was still puzzled. The service panel was a 100-ampere capacity with copper service entrance cables and copper branch circuits. There were no double tapped fuses. There was, however, one over fused #14 AWG circuit. My recommendation was to replace the present 20-ampere fuse with a 15-ampere fuse. The system was properly grounded, and the total connected load was relatively small (no electric stove, no electric clothes dryer, no electric water heater and no air conditioning.)

I explained to the client that the electrical system was adequately sized and quite safe. In fact a properly fused panel can be safer than a circuit breaker panel. Fuses don’t fail as circuit breakers can and often do. All this reasoning didn’t help a bit. He still wanted me to pay for the new system to be installed. At this point I opened the local telephone book, and I started to call insurance agencies. Maybe I could solve this problem myself. After an hour and 10 telephone calls, I hadn’t found an insurance agent who would write fire insurance on a 40-year old house with fused over current protection. I didn’t give up. I kept at it, and I finally found a willing insurance company. The client accepted this, and the problem was solved.  

The lesson is clear. The majority of insurance companies here in New Jersey have arbitrarily decided to limit their risk by refusing to insure houses with fused service panels. The necessary reporting change is also clear. In order to avoid disgruntled, unhappy clients and potential claims, henceforth my reports will, when appropriate, reflect the difficulty if not the near impossibility of obtaining fire insurance if the house has fused over current protection.

Changes come and go, but this one appears to be here to stay, and it can only get worse. In the face of change my motto is “Protect your client and protect yourself.”