Home Insurance

Don't be left in the dark during a storm. Consider getting a generator.

By: Steven Brennan on July 9, 2024
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Although Canada has never been a stranger to extreme weather events, such events have undoubtedly been on the rise in recent years. One of the consequences of worsening storms, such the derecho which swept over Ontario and Quebec in 2022, has been extended power outages.

Severe winds can down hydro poles and transmission towers, or strike down trees over powerlines, which leads to power outages.

With the alarming frequency and severity of these extreme storms, more Canadians are viewing electrical generators as a necessity, particularly in the Atlantic provinces and Ontario, where the risk of power outages is higher.

How do generators work?

Electrical generators are machines that provide electricity independent of the electrical grid. Generators are typically divided between industrial generators are permanent installations, often used as either primary or backup energy sources for businesses, industrial facilities, or high-rise apartment buildings.

Portable generators are smaller units which provide electricity to individual homes during power outages.

Most generators are powered by gasoline, natural gas, diesel, or propane. Some generators will have a bi/tri fuel system, which means they can run two or three different types of fuel, but these models are more expensive.

Generators work by mechanically converting the fuel source into electricity. They can power small electronic devices, household appliances and entire homes, buildings, or industrial complexes, depending on their size and capacity. They can be as small as a hand-crank LED flashlight, or as big as the Hoover Dam, (which is itself a kind of hydroelectric generator that works on the same basic principles of electromagnetic induction).

When searching for your own portable generator, consider what size you need. You can make sure you get the right generator for your home by making a list of everything that would need to be powered and then calculating your total power requirements in kilowatts.

Once you know what size generator you need, you can then get a better idea of how much it’s going to cost to run it, factoring in the fuel type, too.

Related: What is a heat pump and how does it work?

Are generators covered under home insurance?

Running a generator in your home could help you get through a severe storm power outage, but it’s important to know whether it’s covered by your insurance before you buy and use one.

The Insurance Bureau of Canada (IBC) has previously issued warnings to consumers reminding them that use of a generator and the fuel needed to power it are not necessarily covered under your home insurance policy.

A portable generator may be covered under your policy’s contents coverage, while a hard-wired backup generator falls under your building coverage. However, there are nuances to every policy.

The question of whether or not running a generator will increase your premium is a little more nuanced. A permanent generator could increase the value of your home and contents, resulting in a higher premium.

However, as noted by the IBC, having a generator can also help to eliminate or prevent certain losses, which could in turn lower your premium. In essence, if your insurer can see that you’ve taken legitimate steps to prevent damage and retain value in your home, that could stand in your favor.

“Home insurance premiums are based, in part, on the replacement value of your home and contents,” says Brett Weltman manager of media relations at the IBC. “If a backup generator significantly increases the replacement value of your property, the overall premium could be increased slightly, since you are insuring to a higher value.”

However, he adds, a generator can help reduce your likelihood of having to file a claim, which in turn keeps your premium lower, especially when compared to a home that has experienced several claims.

Learn more: Can your home become uninsurable due to climate risk?

Preparation for extreme weather events

As well as checking your insurance policy, there are ways to keep your generator in good condition so it can help you stay safe during a power outage. You should keep your generator dry and store your fuel safely, keeping it in an appropriate container well away from any fire hazards.

Maintain your generator and follow the manufacturer’s guidance, and if you’re running a portable generator, you should always avoid running it inside your home, garage or any other enclosed space, at risk of carbon monoxide poisoning.

Beyond using and maintaining a generator, it’s also important to prepare for extreme weather events. This includes building an emergency kit with essential supplies, conducting routine maintenance in and around the home and storing flammable products away from heat sources.

During an extended power outage, it’s advisable to stay informed, use flashlights instead of candles, and keep freezer and refrigerator doors closed as much as possible.

Whether you’re running a portable generator or a permanent installation, be sure to check if it’s covered within your existing home insurance policy. If you’re preparing for the potential of an extended power outage, you might also consider taking photos or videos of your most valuable items, as well as checking your current home insurance policy to see how well covered you are in the event of an emergency.

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