Aluminum Wire and Home Insurance

Elliott Insurance Services    February 7, 2017

Aluminum Wire and Home Insurance

 

Perhaps you have found your dream home; you made an offer and hired a building inspector.  When your building inspector tells you that your dream home has aluminum wiring, you now start a long process to make sure your new home can be insured and is safe.  In this article, we will dive into the world of aluminum building wire and the insurance consequences that come with it.

In North American homes, aluminum wiring was used for the short period between the 1960’s and the mid-1970’s.  Aluminum wiring provided cost and weight advantages over the more traditional copper wires and is still in many homes today.

The Safety Concerns:

Aluminum building wire was recognized as having more conductivity than its competitor copper wiring and was available at a cheaper rate.  This created a lot of opportunity to trim costs from the builder to the purchaser for the home.  The installation methods were exactly the same for aluminum as for copper, just different gauges needed to be used.  This allowed builders to quickly adjust to the new building materials.  As soon as the new building wire became popular, the issues with aluminum wiring became apparent.   Once they did more research and testing of the wires, they found that aluminum wires were not as good as copper once out of the science labs.

  • Rusting: When copper wire rusts it creates a copper oxide that forms on the wire. The copper oxide is also electrically conductive.  When aluminum wire rusts, the aluminum oxide is not a very good conductor and interferes with the flow of electricity.  When the flow of electricity is impeded, it will cause overheating.  Overheating next to flammable materials can cause fires.
  • Creeping: When electricity flows through a wire, the wire heats up and the metal expands. Aluminum wire will expand more than copper wire once it has been heated.  The constant heating and expanding will cause the aluminum wires to creep themselves loose from their connectors.  Loose fittings on electrical wires will cause overheating and possible fires.
  • Softness: Aluminum wire is significantly softer than copper wire. The aluminum wire is much easier to nick, pinch, or cut than its copper alternative.  Once an electrical wire has been nicked, pinched, or cut, the damage can create localized hot spots and result in overheating.

The Insurance Concerns:

With the knowledge that aluminum wiring can easily overheat and possibly cause a fire, insurance companies will classify aluminum wiring in a home to be a greater risk than copper wiring.  After reading about how an aluminum wire is more likely to overheat and possibly cause a fire, one can’t blame them.  Insurance companies are taking a risk by insuring any home.  If your average house insurance was say $1,200 a year and the average home was for example $400,000 to rebuild, you can see why this is a great risk for them to undertake.  If a home were to burn completely down, it would take the insurance company longer than your lifespan to recoup the money through premiums.  Try it yourself; divide $400,000 by 1,200 and see how many years it would take for the insurance company to make that money back.

The Solutions:

Some insurance companies will still write homes with aluminum wiring.  In fact, if you have a licenced electrician come and fix the wires at their connection points, your home could be considered safe.  The building industry knew that ripping every wire out of a house was not practical or very cost efficient to the homeowners.  Electricians today will have the knowledge to replace receptacles, switches, and the connections to these receptacles and electrical panel.

Once a licenced electrician has retrofitted the existing aluminum wire connections, they should be able to provide a certification that the work has been completed.  This is the critical part of insuring a home that has aluminum wiring.  The insurance companies that will provide insurance for a home with aluminum wiring will require a certification from a licenced electrician to ensure that the home has been brought up to electrical code and modern safety standards.

Insuring a home with aluminum wiring is not impossible, but it will take a few extra steps for the homeowners.  Once they received their electrical certification from a licenced electrician, property owners still need to provide the certificate as proof that their home is safe.  Your insurance broker or agent will use this certificate to try to obtain insurance for you and your home.  If you are having problems insuring your home with aluminum wiring, contact us today so we can try to make sure your investment is insured properly.

To learn more about aluminum wiring and other forms of electrical safety, please visit the Electrical Safety Authority for further information.

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