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Power Surges and Electric Utility Losses

When a surge fries appliances or starts a fire, the first question is where it came from: the utility's lines, lightning, or something inside the building. Utility claims are winnable, but the utility's tariff often limits what it owes. Pull the tariff early, and focus on physical damage you can prove.

What it coversTransformers, lost neutrals, tree trimming, utility tariffs, lightning

Step-by-step checklist

Identify

Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
Make sure no evidence is touched or moved until the expert has secured the scene
Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
Find out whether neighbors lost equipment at the same time
Ask the utility for its outage and event records for that address and time
Check for lightning strikes near the property

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

File a claim with the utility and get a claim number
Notify any tree trimming contractor or other crew working on the lines
Save the damaged equipment and the electrical panel parts

Investigate

Pull the utility's tariff and its limitation of liability
Get an electrical engineer to inspect the service entrance, meter, and panel
Request line work orders, outage restoration times, and equipment records
Get lightning strike data for the date and time

Demand

Review payments and out-of-pocket costs
Sort the supports into photos, estimates, invoices, and reports
Send the full demand packet

Negotiate

Follow the utility's claim process
Follow up, and use a tolling agreement if the deadline is close
If liability is accepted, negotiate. If not, review for suit or a complaint to the state utility commission.

Settle

Review the release
Receive payment, issue the deductible and client payments
Final file review, then close

1. Identify

Common causes

Cause	What goes wrong
Transformer failure	An old or overloaded transformer fails and sends high voltage into homes
Lost neutral	A broken neutral connection on the utility side causes wild voltage swings in the building
Crossed or downed lines	A higher-voltage line falls onto a lower-voltage line
Power restored too fast	The utility restores power in a way that causes a spike
Tree contact	Trees the utility or its contractor should have trimmed hit the lines
Vehicle strikes a pole	A driver hits a utility pole and causes a surge (the driver may be responsible too)
Lightning	Usually no recovery, unless a surge protector or lightning system was installed wrong

Responsible parties to consider

The electric utility
A tree trimming contractor working for the utility
A contractor who damaged a line while digging or working
A driver who struck a pole
An electrician who installed a surge protector or panel wrong

Neighbors are your best clue

If several homes on the same transformer lost equipment at the same time, the surge likely came from the utility side. One damaged home with no storm points more toward a problem inside that building.

2. Notify and investigate

Pull the tariff first

Utilities file tariffs with the state utility commission. The tariff is part of the service contract and often limits liability for surges, outages, and voltage changes, or requires customers to protect their own equipment. Many states still allow recovery when the utility was negligent, and most tariffs don't protect gross negligence. Read the tariff before you spend money on experts.

Where to send notice

Look the utility up in the Subrobuddy Utility Directory, then add them to your letter with the Party Finder. Most large utilities don't post a claims mailing address or email. They send you to an online claim form or a phone line, so file there first, get the claim number, and then send your notice letter referencing it.

Sister companies can share one claims team. LG&E and KU in Kentucky use the same claims address and email.
In most of Texas, the company on the bill only sells the power. The delivery company (such as Oncor or CenterPoint) owns the poles and lines, so it gets the notice.

Evidence checklist

Damaged equipment, with make, model, age, and repair estimates
The meter base, service entrance parts, and panel parts the electrician removes
The utility's outage, restoration, and work order records
Lightning strike data for the time of the loss
Names and damage of neighbors on the same transformer
Photos of the service drop, pole, transformer, and nearby trees

3. Demand, negotiate, and settle

Liability theories

Negligent maintenance of lines, transformers, or equipment
Negligent tree trimming
Negligent restoration of power
Strict liability, in some states, for electricity as a product once it reaches the customer's meter

Defenses to expect

Defense	How to answer it
The tariff limits our liability	Read the actual wording. Check whether it covers negligence, and whether the state's rules or courts limit it.
Lightning or a storm	Lightning data. In some states a storm only excuses the utility if it was the only cause.
The customer didn't have surge protection	Tariff rules on customer equipment rarely excuse the utility's own fault
The problem was inside the house	The electrical engineer's inspection of the service entrance and panel
Depreciation	Many utilities pay actual cash value, not replacement cost. Plan for this in the demand.

Negotiating and settling

If the utility denies the claim, a complaint to the state utility commission can sometimes restart the conversation.
Review the release with the release checklist.
Close with the standard closing letter and the deductible reimbursement letter.

4. Letters for this loss

Step	Letter	Sent to
Identify	Subrogation Opening Letter to Insured	Insured: damaged items list, receipts, photos
Notify	Notice of Subrogation Interest and Insurance Request	Utility claims department, tree contractor
Investigate	Evidence Preservation and Joint Scene Exam Notice	Utility and other parties
Investigate	Joint Lab Exam Notice	All parties
Demand	Subrogation Demand to Responsible Party or to Adverse Carrier	Utility or its carrier
Negotiate	Second Demand with Escalation Notice, Tolling Agreement Request	Utility or carrier
Settle	Release Review Checklist, Closing (Made Whole) or Pro Rata, Deductible Reimbursement	Client and insured
No recovery	No Recovery Closing Letter	Client, for example a confirmed lightning strike

Sources