Power Surges Are a Serious Risk to Business -
Here’s How to Strike Back

Folk wisdom says lightning never strikes the same place twice. With 20 million cloud-to-ground strikes in the U.S. every year, it doesn’t have to in order to affect your business.

In fact, your critical business equipment - from business computers to production machinery - could be damaged by power surges caused by a lightning strike miles away from your workplace. Without insurance for commercial power surge protection, you could be responsible for the repairs.

A typical power surge can send 500 to 1,000 volts through any cable, line, or wire that connects your equipment to the outside world. These and other power fluctuations can disrupt software, delete data and destroy circuitry meant to handle a mere 120 volts. For businesses, that can mean downtime, lost income, the expense of replacing equipment - even a fire caused by overloaded power strips and electric panels.

“Lightning strikes and power surges are very common but completely random and unpredictable,” says Nationwide Agent Ron Keats, president of The Keats Agency in Long Island, N.Y. “Everything you have plugged into a circuit is at risk.” And may not be covered by your property insurance if the damage is the result of a power surge.

The good news? Owners can prepare for a shock to their operation with the right insurance policies and preventative measures. The key is to strike first - before a sudden power surge affects your business.

 

Shock and aftershock: how surges strike businesses

Power surges, also known as transient voltages, can find a variety of routes into (and through) the workplace.

A single bolt of lightning can deliver a whopping 100,000 volts of electricity. As that bolt travels toward earth, it searches for the path of least electrical resistance. On contact, it can travel up to three miles through the ground to find it.

Once in your building, this energy can race through any conductive material: copper electrical wires, data cables, phone lines, and even plumbing and ductwork. It can even jump between those systems in dramatic and extremely dangerous — electrical arcs.

“We often find boxes full of paper records stored near main electric panels,” says Keats. “We advise our clients to clear that area because if there’s a surge-related arc, those boxes could catch on fire. Imagine if that happens on a weekend, with no staff there to stop it.”

Repeat offenders: small power surges can lead to equipment breakdown too

Not all surges are as spectacular as a lightning bolt or electrical arc. Switching on large equipment like a photocopier creates a brief spike in your building’s power system. Peak-demand events like a hot summer day can cause a temporary loss of power, or “brown out,” in your area. Construction or line work can cut all power to your business - suddenly, and without warning.

Individually, most power spikes and sags are insignificant. But over time an unsuspecting power surge can cause equipment breakdown, like hard drive failure or motherboard crash. And virtually every machine your business relies on can be at risk, including:

• Elevators, security systems and fire alarms
• Production machinery for manufacturing
• Point-of-sale systems for retail
• Climate control systems for schools, churches and rental units
• Diagnostic equipment for healthcare and automotive
• Refrigerated storage for food retail and warehousing

The biggest of shock of all? Damage to your equipment isn’t automatically covered by your property insurance policy. Nor will it cover losses due to lost income, spoiled inventory, replacement costs, rush repairs, and more. Specific endorsements need to be added to your insurance coverage, like lightning and power surge protection.

Your surge strategy: three lines of defense

Business owners can take three simple steps to ensure their operation is ready for storm season and random power surges.

1. Use and understand point-of-device surge protectors
   
   When selected carefully (see sidebar), point-of-use surge protectors provide a valuable line of defense for your equipment. They do have limitations, however. After absorbing a few significant hits, these devices can wear out, leaving your equipment to bear the full brunt of the next surge. Be sure to read each unit’s instructions in full.
   
   
2. Install a main service panel suppressor
   
   While they have their place, surge protectors are no replacement for a heavy-duty surge suppressor at your main service panel.
   Service panel surge suppressors are designed to deal with large transient voltages as they enter your building, lessening the impact on surge protectors and business equipment down the line. These suppressors must be installed by a licensed electrician and inspected periodically.
   
   Look for models with a response time of 5 nanoseconds or less and a visible alarm that indicates when they’ve suffered significant damage. A good service panel suppressor will cost between $200 and $700 dollars. Because the average claim for lightning-related damage is well over $10,000, they easily pay for themselves.
   
   
3. Invest in equipment breakdown insurance
   Your agent can recommend additions to your coverage that will protect you against damage caused by power fluctuations. Equipment breakdown insurance, for example, can cover the cost to repair or replace the equipment your business relies on, and even stock spoiled by equipment breakdown.

No surge protection is foolproof. Power fluctuation can happen at any time, and at some point a significant voltage will get through. That’s why a review of your surge protection protocol – and of your equipment breakdown insurance needs – is so important. Contact a Nationwide insurance agent for a free analysis and business equipment breakdown insurance quote today.

In partnership with Hartford Steam Boiler, one of the world’s leading providers of equipment breakdown insurance, we can even offer preventative inspection of your equipment - from boilers to refrigerators - to catch electrical and engineering issues before they pose a problem. Ask your agent for a full list of additional services and policy upgrades to your equipment breakdown policy, like power surge protection.