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Why Are Certain Electrical Panels Ineligible for Insurance?

If you electrical panel looks like this call an electrician immediately!

If you electrical panel looks like this call an electrician immediately!

Q.  Why Are Certain Electrical Panels (Federal Pacific Electric & Zinsco) Ineligible for Insurance?

A.  Passing judgment on these types of electrical panels isn’t something that insurance professionals can do, but many insurance companies say that they experience more claims related to electrical fires in homes with these panel boxes.  Many times homeowners don’t know they have a questionable electrical panel until they have had a 4 Point Inspection.

Federal Pacific circuit panels were one of the most used panels from the 1950’s through the 1980’s. The danger with these panels is that they work fine for years, but one short circuit can cause the panels to overheat and become fire hazards.  I found a great website that goes into much more details on problems with Federal Pacific and Zinsco electrical panels – Is My Panel Safe? Check them out to learn more and see pictures of problematic panels.

There are insurance carriers that will provide coverage on homes with this type of electrical panel. If you need help finding one of those carriers let us know so we can help.

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About the Author

Jason Levine

Jason received a Masters of Science & Management in Risk Management & Insurance from Florida State University. He has been with Harry Levine Insurance for 9 years and handles the leadership of daily operations. He was the 2013-2014 Florida Association of Insurance Agents Young Agent Council's Agent of the Year. Currently serves on FAIA Board of Directors.

17 comments

  1. I am a Electrical contractor and was asked to do panel change, the existing equipment is Sylvania but not a Zinsco model. I see no issues the breakers they are Siemen style. I believe the home inspector has grouped this with a Zinsco style. Have you heard of any issues with the Sylvania panels.

    • Hi Wayne,

      Typically, we see Zinsco and Federal Pacific as the “no no” panels. Without seeing the inspection in question it’s really hard to say. The inspector could’ve made an error, there could be something uniquely off about that particular panel, or any of several other possibilities. Sylvania is usually A-Ok, but again without specifics it’s impossible to say too much on this one.

      Best of luck!

  2. what about Siemens electrical panel outside. Just had an agent say that it would have to be swapped out to insure. It does not show as a problem on 4 point though.

    • Hi Randy,

      I am not aware of any eligibility issues with Siemens electrical panels. There may be an underlying issue like cloth or aluminum wiring, but the only panels that I’m aware of creating universal issues are Zinsco and Federal Pacific. That doesn’t mean that some unique guideline ma y not be in place in your case though. I suspect there is more to the story. However, in general, a Siemen’s panel should be no problem if in good working order.

  3. I’ve never had too many problems with these, but I’ve known a few people who have heard the same thing about higher amount claims with these panels. Thanks for the info!

  4. I have worked around n on federal pacific boxes n never had any issues. Also breakers are still very common. The bs insurance claims is just that. We have lived in our home for years with one and have never had a issue. It’s just another way for insurance companyso to deny you. They claim they want flip n the panels catch on fire blah blah blah. It’s not a problem for aep so why should it be a problem for insurance company?

    • Mr. Vaughn,

      Thank you for your thoughts on the matter of electrical breaker panels and increased fire risk. I would not dispute that you’ve had a good experience with your Federal Pacific equipment and that which you’ve worked around. There are a large number of their units that will work as they’re supposed to and stay in safe service for years. However, I would like to address your frustration about the insurance market and the reality behind cautions over Federal Pacific and Zinsco breakers.

      First, it is statistically proven that stab-lock breakers used on these panels pose a much higher risk of fire. They are inferior units. I appreciate your opinion, and I acknowledge your experience. If you look at dozens of years’ worth of data there is a striking pattern in what causes fires that started at a breaker box: a disproportionate amount of Zinsco and Federal Pacific equipment is involved. It’s just like wearing a seat belt when driving a car. You may or may not be injured depending upon the accident if you or don’t wear one. You are certainly significantly more likely to be hurt if you don’t wear a belt (use one of these breaker panels in question). There is a treasure trove of articles and statistics readily available online and through local sources. The following article – to which I have no connection, do not endorse and do not warrant – from a popular contractor referral website explains nicely: http://bit.ly/1SSYU1X.

      Regarding your feelings towards insurers, this is something that we’ll always have to face in our industry. It is my pleasure to share a little bit about what we do, how we do it and why we do it. First and foremost, insurance is not a home warranty. It is not designed or intended to fix things when they break from wear and tear or reach the end of their useful life. Insurance is there to protect sudden and unforeseeable accidental loss. Insurance companies collect massive amounts of data over multiple years and millions of people. They then use that information to reliably predict when, where and how losses (claims) will happen. They then price and underwrite to maintain a profitable . This means that certain increased risks cost more, decreased risks cost less and very high risks may not be acceptable to certain insurers. This is the case with Federal Pacific and Zinsco breakers. Insurance companies have paid out millions of dollars in losses they’ve caused. Underwriters know that with those panels X % of buildings will have fires, while those with other panels will only have fires Y % of the time, which is much less. It becomes predictable that Zinsco and Federal Pacific will cause fires, cost insurers more and present an unacceptably high increased risk. This does not mean that every such panel will fail. Many will work as intended for many years, but many will not. Cloth insulated wiring is another example of this situation.

      Knowing the how and why helps make sense of what insurance companies do. They’re not out to deny you. I fully support filing complaints with your state’s insurance regulator if you truly believe an insurer is mistreating you. Whether it is about electrical panels or some other building system I know as a homeowner that making improvements, using the safest and best equipment and enjoying every moment in my castle with peace of mind is of paramount importance.

      Thank you so much for your input and experience.

      Best wishes,

      Jason Levine

      • Accurate and good points made about why and how insurance carriers will react to FPE Stab Lok panels. I just wanted to add that circuit breakers are a safety feature. They are mainly there to protect the wires in each circuit from overheating and causing a fire. They may work fine for years because they never had to perform this task or they may work a few times. With the passing of time and the increase in electrical demands of a modern households, does this increase the likely hood of failure? Stab lok circuit breakers are documented to have a high rate of failure by the Consumer Product Safety Commission in there testing of this product. Some of the circuit breakers did work correctly. So the question would be is anyone willing to gamble on these breakers and panel to providing the safety that they are suppose to. Its a safety feature. It has nothing to do with whether the panel is correctly wired or if it has never had any issues. There is a possibility that they may fail just when you need them to work. Some carriers will not take that risk while others will accept that risk . This is what they do based on the data they have or the amount of claims that they paid in the past. It is a business. Insurance rates are regulated by states. Building owners will have to decide if they will risk having these panels or have the funds to purchase a new panel. I have seen apartments with 60 plus units with Stab lok panels.

  5. Hi! We are under contract with an FHA buyer on our home in Florida. They are stating that for insurance reasons the Zinsco panel needs to be replaced. Funny thing is our current loan on this house is an FHA loan and we have full insurance coverage. We are not wanting to pay to replace this panel. Do you know Florida carriers that will insure this panel? Thanks!

    • Hi Karen!

      Thank you for your question. Unfortunately, I do know why Zinsco and Federal Pacific (in particular) electrical panels are almost universally blacklisted by insurance companies both in and out of Florida. The answer is that over a period of many years and hundreds of thousands of homes they present a very high risk of causing an electrical fire compared to other brands.

      Your particular panel might work perfectly for many years and never cause a fire. However, if you took 100,000 Zinsco panels and 100,000 panels from another manufacturer a disproportionate number of Zinsco panels would be involved in electrical fires. It’s a statistical fact. Some carriers don’t require 4-Point Inspections (Wiring/Plumbing/HVAC/Roof) at all or until a home reaches certain age. I would guess that you weren’t required to have one when you first insured your home. Now that the existence of the Zinsco panel has been revealed you really only have three choices:
      1. Replace the panel.
      2. Make a concession to the sale price so that the new owner can replace is immediately upon closing.
      3. Do nothing and risk the sale.

      You may be able to discover some other potential paths in consultation with your realtor and your prospective buyer too, but those three are the most common in this situation. We wish you the best of luck!

  6. I’m a seller under contract in Florida. We are selling “AS IS” and have a Federal Pacific Panel. We have agreed to help with the costs for the need change out of the panel but the buyers agent insists that the repairs be performed prior to closing in order for the buyer to be able to secure insurance. We have concerns with having the buyer hire electricians to do work to our home while we are still owners. Can you provide insurance companies that will provide coverage on homes with this type of electrical panel that i can give to my buyer. Thank you.

    • Hi Lisa!

      Thank you so much for your question. The Federal Pacific panel issue has gotten a little trickier over the last several months as the Admitted Market carrier that we referenced will no longer accept them. However, it is likely than your Independent Agent could place coverage in Florida via the Excess & Surplus Lines Market. Suffice it to say that I just used a bunch of lingo. What matters is that coverage is possible. However, E&S coverage is often much more expensive and less comprehensive in the homeowner sphere. It is also typically 25% minimum earned, meaning the first 90 days of coverage are not refundable. If the repairs were made in the first week you’d still have to pay for 3 months of potentially inferior coverage that would no longer be necessary.

      My advice: If you are worried about the buyer hiring an electrician to make repairs just choose and hire the electrician yourself. Another option is to knock the cost of the new panel/wiring off the sale price. Your buyer should be able to show a signed contract to their insurance underwriter immediately after closing. Many will make an exception if the work is to be done with 10-15 days. If the buyer remains entirely insistent, we’re back to the first suggestion. Hire an electrician. Write something into the sale contract that guarantees your sharing of the expense and get to closing!

  7. We were informed by our insurance broker in New York City that homeowner’s carrier will not insure us at current rate because we still have Federal Pacific panels. What I’d like to know is: Must we replace the whole panel or only the circuit breakers to qualify for a preferable rate? The panel does not look terrible like the one in your photo. It is very safe and have never had a hint of a problem and no fires.

    • Hi!

      Objection to Federal Pacific breaker panels has become a very common practice by insurers. As you know, insurance companies work with millions of clients such as yourself, and thus they have a tremendous amount of data. That data illustrates that the electrical panel in question does have an increased incidence of failure when held against other manufacturers. You will have to ask your carrier directly for the precise nature of the replacement that they require, but typically it means replacing the entire breaker panel apparatus. No parts manufactured by/for the suspect panel may remain in most cases. Is your residence in New York or elsewhere? If it is in Florida we would greatly appreciate the opportunity to further discuss it and your other insurance needs with you. Please call us!

  8. Jason,

    If I notify my insurance company that I have a Federated Pacific panel will that have negative financial consequences for me?

    My insurance company is State Auto insurance. I’m in Minnesota.

    Thank you for your help.

    Julius

    • Hi Julius,

      Thank you for your question. We are not licensed in Minnesota and not familiar with the underwriting guidelines for State Auto Insurance. Regardless, with any insurance program you want to be upfront and honest with your agent who will be best able to advise you. An insurance application is a contract and any misinformation on the application can result in your policy being cancelled and possibly a claim being denied. We wish you the best of luck!

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