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   Lightning Damage v. Mechanical Breakdown
P:  3/21/2006 3:58:27 PM
PR_ Adjuster

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I have a property damage issue for which I'd like to see other adjusters' opinions.

During a recent lighning storm an auxiliary power generator's gen set suffered damages.  The generator is set to work automatically, after a one minute warm up.  The Insured claims that after a ligjhing hit somewhere around the building (no actual point of impact was discovered) electrical power service went down so the generator turned on.  After the minute warm up, it did not generate any power.  After verifying the generator, smoke was comming out of the gen set.
 
The Insured submitet a lighning damage claim for the replacement of the gen set.  After we verified the premises and the system hook up, and spoke with technitian, the following was discovered:
 
The generator ground was ok (no damages).  The generator's and the building's wiring was ok (except of course for the internal gen set wiring with suffered a melt down).  The automatic transfer switch was ok.
 
In our opiniong, the generator suffered a mechanical breakdown and not lightning damages.  We think that there was no electrical (lightning)  charge transfered to the generator, as it would first damage the wiring or the ground or the transfer switch, or the electrical ignition mechanism, before damaging the gen set.
 
The Insured supports his argument that it had to be a lighnting, as it occurred during a lightning storm.  Also, another building on the same premises (with a sepparate electrical system) had some electrical wiring that feeds interior lights burned out.
 
Your opininions will be appretiated...
 
 

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P: 3/29/2006 5:42:38 PM
ebrooks

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The suspicious timing could be pure coincidence–but not likely. There seems to be a link between the power loss and the generator failure.

Pure coincidence equals non-accidental causation. The only causal connection being that the loss of power due to the storm caused the generator to turn on as it was designed to do and this happened to be the last time it powered up before it had an internal malfunction.

This seems unlikely though strange coincidences can happen. On this score, is this an engine that just sits for months or even years before a power outage turns it on? Sitting for a long time is not good for an engine, and weakens it. It would then be more susceptible to a breakdown on its rare start up–BUT I gather it was not a mechanical failure but an electrical failure.

Any connection between mechanical and electrical failure? Why the one-minute run time before the electrical load is put on the engine? So the engine can warm up a little before being strained? Any possibility of a voltage/amperage anomaly due to a mechanical fault in the engine that might cause an electrical failure?

Was somebody watching this generator at the moment the power outage occurred? How do we know the generator did what you describe, went through normal one minute warm up, then no power. Unclear what "after verifying" means, then someone watched smoke coming out? Somebody happened to be standing there watching the generator at the moment power was lost and generator activated?

Could the power outage create an electrical environment for the generator such that the generator was overloaded/over stressed when it started its normal routine?

Then there is direct causation, i.e., damage to the generator caused directly by lightning.

The power loss was I gather caused in some manner by the lightning storm–but was it directly by a lightning strike or merely due to the non-electrical part of the windstorm--a tree knocking down a power line? Big difference there. What was the specific cause of the power loss?

If it was only the usual downed power line situation, then lightning is out of the picture.

If the tree was knocked down by a lightning strike, that could make some difference.

If the power loss was caused by a lightning strike near the generator, then other scenarios suggest themselves.

I’ve heard lightning can travel in mysterious ways–can it jump the intervening circuits/components/wiring and go to something attractive to it in the innards of the machine where the melt-down occurred?

When you say melt-down, this indicates a short. What exactly was the device that failed causing the short? Could it be an electronic device that could be affected by a very strong magnetic field? In other words, an electronic weak spot among the various electric/electronic parts/components exposed to the lightning magnetic field? In this scenario, the magnetic field leaped over closer/less susceptible components and zapped the one that failed causing the short (explaining why none of the components you looked at were damaged).

One problem with the magnetic field theory is that the strike or current from the strike would have to be very close to the generator, and you say there is no evidence of a lightning strike in the immediate area.

Is there any other more remote path to the generator for a large amperage current surge to get to it? You mention that the ground wasn’t affected–does that mean the earth/foundation etc. is eliminated as a conductor?

The internal short in the generator it seems could have been caused in several ways:

1. A component failed and the normal current then shorted through it; but this involves a kind of bootstrapping, the machine kills itself, slowly-still possible I suppose;

2. A heavy current caused a component to short; is there a current regulator and does the generator

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P: 3/30/2006 9:58:21 AM
PR_ Adjuster

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Thanks for the input.  It raises more questions than answers, but that's the way these things go!!!  I'll try to answer them as best as I can...
 
On this score, is this an engine that just sits for months or even years before a power outage turns it on?
 
Supposedley the engine / generator turns on every other week.
 
Why the one-minute run time before the electrical load is put on the engine?
 
Warm up time for the engine before loading it.
 
Was somebody watching this generator at the moment the power outage occurred? How do we know the generator did what you describe, went through normal one minute warm up, then no power.
 
The Insured states that he was away from the premsies but on the phone with an employee when the power went out.  After the minute, his employee told him the generator was not powering up the building, so the employee went to check it.  That's when he saw some smoke coming out of the casing.  Funny, I would think that if the lighning was strong enough to damage the gen set, it would also damage the phone lines!
 
The power loss was I gather caused in some manner by the lightning storm–but was it directly by a lightning strike or merely due to the non-electrical part of the windstorm--a tree knocking down a power line? Big difference there. What was the specific cause of the power loss?
 
The power loss seems to have been caused by lighning away from the premsies.  No evidence of direct hit on the premises was found, but the whole area (couple of blocks) was left without power.  There was not enough wind for a fallen tree.  The specific cause of the loss is really unknown, and the Power Authority ussualy does not cooperate for fears of claims against them (government owned).  It may have been a strike on a transformer that feeds the premsies, but is a couple of blocks form the premsies...
 
When you say melt-down, this indicates a short. What exactly was the device that failed causing the short?
 
It's the gen set, see attached photo...
 
In other words, an electronic weak spot among the various electric/electronic parts/components exposed to the lightning magnetic field? In this scenario, the magnetic field leaped over closer/less susceptible components and zapped the one that failed causing the short (explaining why none of the components you looked at were damaged).
 
Maybe, but the gen set is enclosed on a metal box, so wouldn't the current have to hit the metal box first?  Wouldn't there then be some marks?
 
Is there any other more remote path to the generator for a large amperage current surge to get to it? You mention that the ground wasn’t affected–does that mean the earth/foundation etc. is eliminated as a conductor?
 
I don't think so.  The ways in would be the ground to earth, (which was ok), or the automatic transfer switch.
 
I would pump the technician for more answers.
 
The tech is the same guy who installed the generator, so he is basically defending his work, sayi

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P: 3/30/2006 11:58:13 AM
Reb

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I don,t understand why you would want to ponder over this issue.  Sounds to me like you need a qualified engineer to nick this in the bud.  The manufacturer of the generator should have their own engineers that can dissassemble the generator and tell you exactly what the failure was.  I would suggest you contact them.  Of course this action entails a cost to have the generator picked up and checked.  For this reason, it may not be a realistic approach for you. 

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P: 3/30/2006 1:08:30 PM
PR_ Adjuster

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That is exaclty the right approach, and th eone I suggested after the inspection.  However, it seems the company does not want to spend money on an engineer...

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P: 3/31/2006 11:15:12 PM
Reb

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Then there is nothing to argue about.  Let em pay the claim.  They will be in trouble if they try to deny it.

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P: 4/1/2006 8:34:24 PM
ebrooks

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The insured has presented a weak prima facie claim based on the proximity in time.

If this is a named peril coverage, which I assume it is, the insured has the burden of proving by a preponderance that the loss was caused by a covered peril.
 
Proximity in time without more is not enough: it is a fallacious legal argument: post hoc ergo propter hoc (it happened after therefore it was caused by what preceded).
 
But the "more" might be provided by surrounding circumstances.
 
The carrier doesn't necessarily have to go the whole nine yards (the manufacturer's engineer). He can have a repair field technician (unbiased) look at it.
 
The carrier does owe the insured a reasonable investigation before taking a position on the claim.
 
I think everyone agrees the big question is, How did the breakdown occur?
 
If the carrier is unwilling to spend any money on an independent investigation, maybe it wants to pay the claim as a business decision.
 
I agree if it denies the claim without an investigation it is exposing itself to a bad faith lawsuit.
 
The limited investigation to date of the biased technician favors the insured--so if nothing further is done by the carrier, the claim seems destined to be paid-or litigated.

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P: 4/3/2006 9:52:51 PM
rover

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PR:

 
Look, I allways use the formula.  KISS.  Keep it simple stupid.  That is myself anyway, not to imply your stupid.
 
First, lightning goes where ever it wants.  I have been very near lightning strikes, close enough to have been scared pale.  My own home or i should say at least 2 of the 3 homes I have owned have had lighning strikes.  One direct that I found very specific evidence, albeit not really too easy to see.  The two others were when lightning struck the power lines outside my home.  So, I do have direct knowledge as well as a lot of investigative knowledge.  And no doubt there will be those who think keeping it simple just does not work.
 
In any storm, lightning may strike thousands of times in any given area.  There are lighning verification websites you can go to to see if a specific site took a direct hit.  You cant see them all, because there are too many.  Did you ever watch a lighning storm come into the area you were.  It looks like spider webs.  Those are the ones you see.  There are many others.
 
Getting back to lightning doing what it wants!  Your talking millions of volts that move along the path of least resistance in an instant.  It can hit buildings, utility poles, automobiles, commercial vehicles etc etc etc.  It may do damage or it may not.  Lightning is like a shark, totally unpredicatable in what it can destroy.
 
Because of todays electronics in almost everything we use, there are circuits and circuitboards that will only take a couple of dozen volts above its working voltage to cause problems. 
 
More often than not, the only evidence you will find in a lightning damaged product is a burnt odor and sometimes a small resistor or diode that is burnt through.  Your really have to look hard to find this stuff, but its there.  The entry of lightning to my own home was at a 2nd floor bathroom exhaust fan which was attached to a metal pipe which ran through the roof.  The strike hit the pipe and went into the electrical system through the fan itself.  The only evidence of the strike was a very small, almost undetectible carbon track inside the fan which had become noisy right after the strike. 
 
I had numerous electronic items damaged in the house.  The garage door opener, a ceiling fan with an electronic control, a dvd player, a television and a telephone.  All of this and only a very small black line inside of the exhaust fan. It was very random.  You can even have a phone line coiled on the floor that will cause a surge in the lines because of the magnetic pulse.  You know how they generate electricity, they run a magnetic force through a coil of wire.  The phone system is grounded to what, the electrical system.  So, it gets in.
 
So, just because you dont see it, doesnt mean its not there.  Sorry for the long explanation, but some people need it.
 
Second, generator units operate on two levels, one is the stand by level of operation and the other is as needed basis.  When the generator runs on it standby mode, it is set on a timer that automatically starts the generator when it is scheduled in on-board timer.  It does this to keep the engine fresh and oil up in the places it needs to be.  It checks the circuits etc etc.  And who says engines go bad if they arent run on a regular basis.  You can do just a little pre-start work on an engine that has not been run for 30 years and it will start.  Sometimes it will start right up, sometimes not.  However, we are dealing with a system that is designed (not to fail).  The second mode is when th

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P: 4/3/2006 11:09:13 PM
ebrooks

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Rover brings common sense and an impressive amount of personal experience to bear. But how did the unit fail? The "lightning does weird things" argument falls short.

On a minor note, Rover says " And who says engines go bad if they aren't run on a regular basis"?
 
Lycoming and Continental, for two. If you buy an aircraft engine, you will find that the warranty maxes if the plane is flown a specified number of hours per month/year. Less hours, less warranty.
 
 EB

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P: 4/4/2006 8:48:43 AM
PR_ Adjuster

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Thanks everybody for their opinions and information.  Rover: I know the KISS rule, so no implications taken.
 
Again I would think an expert contracted by the company would put and end to this, but hey, it's their decision.
 
Although these auxiliary power generators are designed not to fail, they do fail.  I've seen them fail after proper maintenance, and that is just what I want to avoid, paying for a maintenance claim.
 
However, as Rover points out, there is no doubt that there was lightning, and it seems to be closely tied in time and space, so a Judge would find coverage in an open peril (CP 0010, CP1030) policy.
 
I will forward this discussion to the company so that they may take it into consideration.
 
Again, thanks to everybody...
 
 

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P: 4/4/2006 8:09:15 PM
rover

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PR:

After pondering it for a while I did come up with a bit more.  Indeed this type of system encorporates a switching system which trips when power fails in the local grid.  Theoretically, (I think I spelled that right), there should be no hard through connection to the generator from the power grid as it is isolated by the switching system.  Yes indeed mechanical failure is always, always, always possible, but I think that simply blaming it on mechanical failure is just to easy.  In this case, I dont see the power grid involved in this unless there was a lightning strike on the grid which negates anything you can say about what you know about electricity.  Lightning will jump across gaps, go through brick walls, and melt glass.  I have even seen it enter a concrete floor through the reinforcement fabric laid down before the ready mix is poured.  It blows the concrete away at every intersection of the wire fabric. 

I have seen the results of it striking an antenna on a commercial truck.  Now you might think that how the heck could lighning go to ground on a truck with those big rubber tires.  Simple, It goes all the way through the metal systems, through the frame and suspension and strangley enough, the steel fabric in the tires causes a great conductor.  Of course there is the insulation factor of the tires and a gap between the concrete and the wire fabric, but again, you are looking at millions of volts. 

Yes, simply put, an engine that is run on a regular basis is a happy engine.  But, aircraft engines are precise engineering instruments compared to a simple diesel engine that runs a generator.  And yes of course they do fail.  But, its easy enough to spot a neglected piece of equipment from one that is maintained.  Its like two automobiles sitting side by side in a parking lot, one with 90,000 miles and one with 190000 miles.  If the lower mileage engine is neglected, it looks the part. 

Years ago, deciding weather you were going to pay for something or not was first based "how can I denie this claim".  Pure and simple, companies or rather some adjusters decided that at all costs, fight paying a claim, weather it was warranted or not.  Now days, the courts and consumerism have forced us to interpret coverage in as broad  an interpretation as possible.  And, the open perils policies have made it less complicated. 

What it always boils down to is what is the most logical evidence you could offer a judge.  I always use the premis of what would I have to say if I was sitting in court.  Reality is, any case we handle could ultimately end up in court, so just do things in a manner that if you end up at the bench, you have a very good chance on winning just by using good common sense and a reasonable observation of what you are looking at.  And, with the internet today, you can learn anything about anything.

If you get things down to a time and place, there is damage then you have to apply the common sense on what does the evidence present.  What is plausable?  Checking on maintenance and a good eyeballing of the unit should make up your mind for you.

Rover

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P: 5/3/2006 12:47:14 PM
Mike-C

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Lightning claims never cease to amaze me and I've adjusted many of them.  Seems as though everyone is a liar when it comes to these losses.

One aspect that should never be forgotten by an adjuster is that when the coverage is all-risk, the carrier must indemnify unless an exclusion or condition prohibits payment.  It's as simple as that.  You must prove that it is "not covered."  Therefore, under all-risk, the carrier must hire the engineer, etc. in order to prove a non-payable situation exists.  If the carrier relies on what the adjuster thinks, unless an exclusion/condition is quite obvious, a plaintiff attorney can make mince meat of an adjuster with the first question being, "and where did you get your electrical degree, Mr....?" -- Get the picture?  So, let's cut to the quick on lightning denials under all-risk -- is your denial readily provable to a jury?  If not, you'll look like the liar.

It doesn't get much easier under a named peril contract.  Like in this case, the insured says "lightning did it because it's electrically damaged in a way consistent with a high voltage surge" (i.e. opens or shorted wiring).  The carrier must still prove otherwise or risk spending $10,000+ plus for a defense attorney.

Air conditioning compressor damage is always another good lightning denial laugh half the time.  I can't imagine people sweating it out for months with a broken air conditioner waiting for a lightning storm to come by so they can make a lightning claim.  Can you?  Would you?  In 90 degree plus temps, the humidity alone in most lightning prone states would make 99.99% of us "buy" that compressor within 3 days.
; )


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P: 5/9/2006 11:09:01 PM
ebrooks

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Everybody (including me) has risen to the bait and indulged theories on this lightning claim.

I think the trick is to keep it to the basics--steady eye on the coverage language and the dictionary.
 
"Reminds me of a claim...",  kind of like "there I was at 10,000 feet...." But it does remind me of when an agent tried to go all out for his big customer and push through an electrical short claim (not covered) by calling it an explosion (covered).
 
I visited the headquarters of the regional power company and met with a VP and the agent, the VP was a technical type and drew a sketch of what happened.
 
I delved into the dictionary and dictated a denial letter. The law is pretty simple when it comes to what do words in a policy mean, first you look for the common meaning as found in a dictionary. If that solves it then it's over.
 
The agent made a big thing about it (after trying to be a hero for the insured and falling flat), but the claims manager supported me. "That's it, unless we're going to hand the check book over to the agents...." was his comment.
 
EB

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P: 6/5/2007 5:43:41 PM
Utility Damage Claims Specialist

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Lightning Damage v. Electrical Disruption

 
I was an adjuster for a large Midwestern electric utility for a number of years and probably the most common type of customer damage I encountered was from non-lightning-related electrical disruptions of the electrical distribution system.  By "disruption" I mean any voltage irregularity or momentary outage occurring in the electrical distribution system.
 
The classic example for residential customers is a windstorm that causes a tree limb to contact a power line.  The breaker at the substation senses that there is a problem somewhere on the circuit, and opens momentarily in an effort to blow the closest fuse and isolate the fault.  This is what we have all experienced during a storm when the lights momentarily blink off and on.  When this occurs all customers on the circuit, which could number into the thousands, experience the momentary blink.  If this happens during the summer when your A/C is running your unit will power off and then try to restart under pressure which burns up the compressor.  This very common occurrence is also the kiss of death for televisions, computers, and other sensitive electronics.
 
Commercial customers with 3-Phase equipment that isn't properly protected are susceptible to loss-of-phase damage.  This condition can occur, for example, if a vehicle strikes a pole and causes a fuse to blow on one of the phases but not the other two.  The customer is now in a single-phase condition until the utility can get a lineman dispatched to replace the fuse.  HVAC units, elevator motors, and air compressors without loss-of-phase protection to automatically shut them down can all be damaged.
 
In case you're wondering about the utility's liability for such disturbances transmitted through their power lines, all utilities have what are known as "tariffs" on file with each state public service commission.  The tariffs are the rules the utility must abide by in providing electric service to customers.  The tariffs provide that the electric utility is not liable for voltage irregularities, and does not guarantee an uninterrupted supply of continuous electric service to customers.  
 
    
 
 

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P: 6/5/2007 10:13:37 PM
sspalto

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It looks like you might qualify as an expert witness on these cases.

What caught my eye was your comment:
 
"The tariffs provide that the electric utility is not liable for voltage irregularities, and does not guarantee an uninterrupted supply of continuous electric service to customers."

Are you saying that these "tariffs" are a get out of jail free card? That the utility can walk into court and show the judge "Here is our tariff, throw out this case for damages caused by our voltage irregularities" and the judge will be bound to throw the case out?

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P: 6/7/2007 9:06:38 AM
Utility Damage Claims Specialist

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I have adjusted over 12,000 utility damage claims.
 
It IS a get out of jail free card from the electric utility's perspective.  I believe the rationale of the public service commissions in that they are allowing protection for the utilities since they serve the greater good of providing a vital service to the public.  The duty of care that must be breached for the utility to be liable in tort is gross negligence such as inexperienced linemen replacing a leaking transformer with one that is the incorrect voltage and buring up everything inside a hardware store (really happened).
 
Another way to look at this is that a typical electrical distribution circuit serves thousands of customers who all receive their power from the same point of origin at the substation.  During a windstorm, if a tree limb were to fall across the conductors just outside of the substation and create a voltage fluctuation, then that irregulairty would then be transmitted to every customer on that circuit.  If the utility did not have the protection afforded by the tariffs, then it could have thousands of damage claims successfully asserted against it through no fault of its own.  Now imagine a major ice storm with tree limbs breaking off and falling into the power lines all over town affecting multiple circuits simultaneously - the utility could now have literally tens of thousands or hundereds of thousands of damage claims filed against it.  The utility I worked for has 500,000 customers and during a major ice storm in 2001 about half our customers experienced power outages so you can see that without the tariff protection a major storm, which happens every few years, could literally bankrupt a utility. 
 
Years ago when the typical customer had a 60 amp service and the only electronics in the house were a black and white television and a refrigerator, there probably wasn't much need for tariff protection.  Today the typical residence has a 100 amp or 200 amp service that serves sensitive electronics on every floor of the home so probability that something is going to be damaged by a power fluctuation is much greater and thus the need for tariff protection. 
 
If any of the readers here need assistance with a utility damage claim I would be happy to assist.  My e-mail is:  dpack@capitalelectric.com
    

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P: 6/7/2007 5:05:03 PM
sspalto

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Interesting speciality area.

You said "If the utility did not have the protection afforded by the tariffs, then it could have thousands of damage claims successfully asserted against it through no fault of its own."

If a tree limb falls in a windstorm through no fault of the utility, how could thousands or any claims be asserted against the utility? I mean, since negligence is based on fault.

I think you meant if there was ordinary negligence (negligently trimming the branches leading to the fallen branch, let's say), you believe the tariffs insulate the utility from liability.

What statute or regulation would apply in California, if you happen to know? I'd like to look it up.  Is it the tariff itself? Is that an order of the PUC? Can you tie that in with general law? (Does the tariff get incorporated into general law--how?) Where is the gross negligence standard written-in the tariff?

Which brings up another issue, do sub-contractors of public utilities (tree trimmers, for example) get the same free ticket?

I wonder because I sued a utility-hired tree trimmer once for cutting down my trees and it didn't assert any special defense based on tariffs.

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P: 6/7/2007 6:23:07 PM
Utility Damage Claims Specialist

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The utility owns the power lines through which the electrical irregularity caused by the fallen tree limb is being transmitted directly into your home thus causing damage.  Since such occurrences are extremely common, without the tariff protection a customer with a damaged A/C unit could argue that the utility was negligent not for the fallen tree limb, but for failing to protect the customer from foreseable and resulting voltage irregularities.  It is not practicable or cost effective for a utility to protect individual residences the way, for example, an internet hotel would have redundant feeds which automatically switch to a second circuit in miliseconds if a problem is detected on the first.

Here is PG&E's tariff regarding continuity of supply:
 
Here is ConEd's:
(This one is interesting because any agent of ConEd does get the same tariff protection from ordinary negligence).
 
The public service commissions have the ability to make law (rules) so the tariff protections would be administrative.   
 
 
 
 
    

Revisions : 0   |    Posted:  6/7/2007 6:23:07 PM    |    IP:  Recorded    |    Report this post
P: 11/28/2013 12:51:58 PM
danielhermann

Member

Total Posts: 23
Last Post: 1/25/2014
Member Since: 8/26/2013

Whatever is thr problem if the generator is not working properly be it whatever reasons, if the generator is covered under insurance then the insured have every right to claim the damage. What I feel is that all these should be mentioned in the policy itself. So I would request to clarify the policy and discuss with the insured.

http://www.scholarsinsurance.com/

Revisions : 0   |    Posted:  11/28/2013 12:51:58 PM    |    IP:  Recorded    |    Report this post

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