Ducking for cover !

It would be any householders worst nightmare !  To be woken in the middle of the night by bright electrical flashes from appliances and the smell of something burning.   To be in the dark with no light - and the expectation that worse was to come.

That was the situation on Sunday night in two streets in the Wollongong suburb of Austinmer.  The electricity supplier describes it as " an over voltage at a pole mounted sub-station ".    What that means is a transformer that reduces high voltage to house power failed and allowed thousands of volts to run through the system, frying the motors and wiring of fridges, televisions, computers - all the household electrical equipment,

It seems that the company that supplies electricity is far from generous when it comes to compensation and making good the damage done.  Residents are instructed to make a claim on their insurance company, but if they are not insured or their company rejects the claim, they will evaluate the situation on a " case by case " basis, and award restitution on a " depreciated value " basis.

Most insurance polices these days have abandoned " depreciated value " and replaced it with a " new for old " clause.    Under " depreciated value " the age of the damaged item is taken into account,   If an item is deemed to be half worn out, then the reimbursement is for just half it's value.   The owner is deemed to be " no worse off " because the item has already delivered half of what was originally paid for.    This ignores the fact that the owner will be deeply out of pocket and forced to make an unplanned purchase to regain the former standard of  living.

This damage goes far beyond the replacement of electrical items.  If the house wiring has been subjected to a massive surge of electrical current the overload may have caused " hot spots " in the wiring that will continue to deteriorate - and may lead to a house fire.    Owners would be wise to have a qualified electrician run wiring tests to determine the risk.

This incident seems likely to deteriorate into protracted negotiations between the electricity supplier and the residents involved.   Most residents will probably have no problems getting the damage covered by their insurers but as was evidenced by floods in recent times, there are insurance companies who will fight tooth and nail to avoid making legitimate payouts.

This tends to reinforce the wisdom of making careful decisions when buying  insurance.   The cheapest price is not the best criteria.   The wise carefully evaluate the reputation of the company they intend dealing with and it would be a good idea to ask a few questions to try and determine it's past performance in settling claims.