Electrical Potential

Insured losses to homeowners from lightning-related claims make up only a small portion of total weather-related residential claims in Canada. That said, the cost of one such infrequent claim could exceed $1 million, prompting experts to occasionally remind insureds that losses may result from both fires and electrical surges that can damage contents.

“Approximately 5,000 insurance claims are estimated to be filed in Canada for lightning-related property damage (excluding fires) each year,” reports John Bordignon, a spokesperson for State Farm Canada, now owned by Desjardins Group.

“In our experience, the overall frequency of lighting claims is relatively low,” notes Spencer Bailey, property and casualty supervisor for Toronto West at Crawford & Company (Canada) Inc. “However, the severity associated with such claims can be rather significant,” Bailey points out.

Lightning “can lead to losses that are quite substantial,” agrees Jason Forogulo, Allstate Insurance Company of Canada’s agency manager for Courtice-Oshawa in Ontario. Across the country in 2014, Forogulo reports, Allstate Canada had “upwards of 40 losses” related to lightning.

Lightning is a very small portion of “the impact of water intrusion, wind, sewer back-up and some of the other more common perils that can occur to a Canadian home,” he says. As the numbers of lightning claims are so low, these are “negligible in terms of the impact on coverage and pricing,” Forogulo explains.

Still, lightning “is covered under almost all basic property policies,” says Alex Walker, director of national claims relationships for RSA Canada. “Typically, an all-risk property policy, either personal or commercial, will cover lightning strikes and resulting damage,” Walker reports.

“Unless a risk was specifically written on a manuscript wording, and lightning was written in as an excluded peril, or there was an endorsement added in excluding lightning, it would be a covered claim,” he points out.

Over the last three years, RSA Canada has tracked 470 lightning damage only claims for its clients/policyholders, specific to Canada, Walker reports. “Typically, we see more residential strikes than commercial strikes,” he notes, mainly because “there are more residences than there are businesses.”

IN A FLASH

In Canada, lightning flashes occur approximately 2.34 million times a year – about once every three seconds during the summer months, Environment Canada reports.

In its map of lightning “hot spots,” Environment Canada plots the average number of lightning flashes per square kilometre per year. “Southwestern Ontario sees some of the highest lightning flash densities in the country,” notes information from the federal agency.

Other regions with relatively high lightning activity include southern Saskatchewan and Manitoba, and the Rocky Mountain foothills of western Alberta, it adds.

However, global warming could result in an increase in lightning. Using climate models, researchers south of the border recently predicted that there will be about a 12% increase – in cloud-to-ground lightning strikes – per degree Celsius of warming in the contiguous United States, notes a press release issued by the University of California Berkeley. The research findings were published in the November 14, 2014 issue of Science.

“The risk of a lightning strike varies depending on the dwelling’s proximity to ‘hot spots’ mapped by Environment Canada, as well as the home’s surrounding environment, such as a low-lying dense neighbourhood versus an isolated hilltop location,” Bailey explains.

“The structural composition of the home is another factor to take into consideration. Homes built with metal roofing and framing, and older, more highly flammable building materials are at a higher risk,” he adds.

DAMAGE TALLIES

The damage resulting from lightning “can generally be classified into two segments: direct lightning strikes and indirect lightning strikes,” says Bailey.

For its part, The Co-operators Group Limited divides lightning claims into two major categories: fires caused by lightning and lightning surge claims.

The Guelph, Ontario-based insurer had 38 lightning fire claims (most involve “a direct hit” on the roof of a home) and 498 lightning surge claims from 2010 through 2014, reports Leonard Sharman, senior advisor for media relations at The Co-operators. The numbers do not include farm or business claims.

For its 38 lightning fire claims over five years, The Co-operators paid “just over $3 million for an average claim of around $72,000,” Sharman notes. For the 498 lightning surge claims during the same period, the total payout was nearly $7.695 million “for an average of $15,451,” he says.

“The effects associated with a direct lightning strike include fire damage, power surge damage, and/or shockwave damage,” says Bailey.

On average, he points out that “the value of damages associated with lightning claims range anywhere from $7,000 to more than $10,000. Instances of total losses resulting from lightning-induced fires can span into the millions.”

For Allstate Canada, the average lightning loss in 2014 was “just a little over $6,000 on average,” Forogulo says, adding that the company has “had three large losses (of) over $100,000.”

As for RSA Canada, Walker reports that the insurer’s average cost per claim “was as low as $1,200, but we have had a few that have exceeded $100,000 for commercial losses.”

HITTING THE MARK

The Co-operators breaks down its claims by region. Of the lightning fire claims from 2010 through 2014, 27 were in Ontario, nine were in Alberta, and there were one each in Saskatchewan and New Brunswick.

Of the lightning surge claims, 359 were in Ontario, 48 were in Alberta, 20 were in Nova Scotia, 15 apiece were in New Brunswick, Quebec and Saskatchewan, nine apiece were in Manitoba and British Columbia, and eight were in Newfoundland and Labrador.

“Damage is most often to contents, particularly electronics, but we also get damage to the building, e.g., garage door openers, alarm systems, electrical system, cable and phone lines, etc.,” Sharman notes of lightning surge claims.

Walker recalls hearing about one residential loss – which was not an RSA Canada claim – in which lightning struck a solar panel at a recreation property. “The solar panel exploded, the solar batteries exploded, the explosion propelled rocks upwards of 50 yards away from the actual solar panel, and there was damage done to the building,” he reports. “The total of that claim was probably about $80,000 for the solar panelling system,” he expects.

On the positive side, Sharman reports that total lightning claims reported to The Co-operators have actually dropped since 2011. Of the 38 lightning-related fires since 2010, four were in 2010, 13 were in 2011, 10 were in 2012, eight were in 2013 and three were in 2014, he says. Of the 498 claims from lightning surge, 95 were in 2010, 152 were in 2011, 89 were in 2012, 82 were in 2013 and 80 were in 2014, he adds.

Allstate Canada’s claims are also down. “Because the loss counts are so low, it’s difficult to actually say why we are seeing a decrease in those numbers over a five-year period,” Forogulo says.

PREVENTIVE MEASURES

On the home front, a residential lightning strike “almost always” results in surge damage to contents such as televisions, DVD players, computers, gaming consoles and microwave ovens, Walker says. “We have seen claims where air conditioning units get blown,” he notes.

A direct lightning strike can generate surges of 6,000 volts or more, “producing an intense electronic surge on the home’s power grid/electric panel, which can cause damage to equipment that is connected to the grid, ” Bailey explains.

“This type of lightning strike can also spark a fire in a home. Additionally, the sheer impact of the hit can cause damage to the exterior brick, masonry and other structural components, (although uncommonly reported),” notes Bailey.

Indirect strikes “are more frequently the cause of a loss as they can generate surges on both external-based utility lines and data communication lines (i.e., computers, appliances, phone systems and interior electrical systems),” Bailey says. “A lightning strike to a conductor can generate a large electromagnetic pulse of energy that can be picked up by nearby cables and cause significant damage,” he explains.

To reduce losses, Walker advises that homeowners should consider purchasing good surge protectors.

“You get what you pay for,” he cautions. “If you’ve got a cheap surge protector, it’s not really going to do much. But if you have invested in one that’s pretty heavy duty, then you may (be able to) protect your computer equipment,” he adds.

Allstate’s Forogulo also recommends that homeowners keep large, tall trees around their homes trimmed to ensure there are no overhanging branches.