Aluminum Wiring and Commercial Policy don't mix?

Question

I am trying to consolidate insurance -- instead of 14 separate DP3 replacement cost policies for individual homes, I am looking for a commercial policy.  Primary reasons being higher water damage coverage and vacancy coverage.  I have a few questions:

1. I am being told that there is no coverage available under a commercial policy for properties with aluminum wiring unless all outlets are pig tailed. Anyone else come across this?

2. Will I be able to name the LLC owner and myself on a commercial policy?

3. I current have $300K liability and additional $2Million umbrella - what coverage should I get on the commercial (assuming I find one which doesn't exclude aluminum wiring properties)?

Steve Babiak · Answer

Here is the post that Brian mentioned:
http://www.biggerpockets.com/forums/67/topics/57144-electrical-has-aluminum-wiring

EDIT: adding another good link where I posted about aluuminum wiring:
http://www.biggerpockets.com/forums/52/topics/71331-lead-paint-and-rewiring-rental-built-before-1978

Timothy W. · Answer

When there is a loss, the adjusters look a lot closer.  If they miss it, you can be the forensic engineer who has been sent out to determine a cause of loss on the fire will find it.  Better to either do the work or find another insurer.

Stephen Masek · Answer

If they really do have aluminum wiring which has not been corrected, you have a real fire risk, and the associated liability.  Hiring an electrician to correct it is cheap by comparison.

JJ Cole · Answer

Thanks everyone for some very valuable info.

Hi Joe,  That is one I specifically asked for -- the American Modern but the agent told me that they would not cover props with aluminum wiring.  I asked if they would cover it if there was a regular breaker box/panel and not a fuse box (which all mine have breaker boxes) and she said no.  Can you give me a few carrier names which will cover aluminum wiring?

Joe Bertolino · Answer

It really varies by carrier... some will not accept aluminum wiring and others don't care as long as it is not knob and tube.  Others will not cover properties with certain brands of electrical panels like Zinsco or Federal Pacific.  Shop around a bit with a good independent agent that specializes in property insurance.  Ask the agent to quote the American Modern 10+ program.

Stephen Masek · Answer

Switches and light fixtures would also need pigtails.

Joel Owens · Answer

It depends on the insurance company and rates you are going for.

For example some insurance companies only insure brick buildings in certain areas built within the last 20 years.

The reasoning is you get ultra low rates by having a low risk pool of properties.

Insurance companies have told me with buildings 30 years or older some do not like to insure unless all mechanicals,plumbing,electrical has been replaced.

The reason is statistics shows a high volume of claims happen after that age from things wearing out.

With 4 units or less many just get the cheaper fire and dwelling coverage instead of a commercial policy.

If the premium low rate insurers won't touch you there are companies who will give the policy to more properties deemed high risk but the policy of course will be higher and usually the deductible is too.

Ryan M. · Answer

I know they are getting all crazy about it in Florida.  My family has a condo near west palm, which has al wiring along with thousands of other condos in that area. When I was there this spring, they are now saying anything 2 story or more the al needs to be in conduit. Which is saying it needs to be rewired with cu without coming out and saying it. Its a good way to drum a lot of work and new wire, makes you wonder!

Account Closed · Answer

Insurance carriers are not created equal.  Here in Washington many carriers won't insure a residential property with knob and tube or fuses.  You have to really look for one that will.

It is my understanding that commercial insurers also can vary as to what they will cover.

Dave M. · Answer

Sorry JJ - you figured out what I meant.  I have never encountered aluminum in 100 year old buildings.  When I googled AL wiring, I saw a reference to its use in 1965 - 1973 due to a copper shortage, was wondering if that was not correct and I needed to look more carefully at my wires.

Sucks that you are getting so much push back on this issue.  Curious, was it just your current insurer or have you already shopped around and heard similar answers from other commercial providers?

Aluminum Wiring and Commercial Policy don't mix?

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