October 1, 2016

Lightning struck a detached sign and power pole. The sign and pole fell on power lines, which in turn caused a power outage and surge at the insured premises. The insured is making a claim for damaged electronic business personal property items such as cash register, due to the power outage and surge.

We are contemplating whether there is coverage under CP 10 30 06 07, Utility Services exclusion.

Our initial opinion is that while there is an on-premises outage, the language regarding power surges in the exclusion may eliminate coverage for this loss.

Colorado Subscriber

We agree with your thinking on this loss—the surge language states that loss or damage caused by surge of power is excluded if the surge would not have occurred but for an event causing a failure of power. The language here does not specify an on-premises or off-premises failure, just a failure. Since the surge caused the damage to the electronics, the loss would not be covered unless the loss was caused by a resulting covered cause of loss. So, if the surge caused a fire that destroyed the cash register, that would be covered. But if the surge alone damaged the cash register, it would not.