For Consumers

New report on utilities’ liability market reveals increased costs, coverage exclusions

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January 19, 2023

OLYMPIA, Wash. — The Office of the Insurance Commissioner (OIC) recently delivered a report to the state Legislature and Governor on the liability insurance market for electric utilities in Washington. 

The OIC worked with the Utilities and Transportation Commissioner and Department of Commerce to survey 36 utilities on the availability and affordability of liability coverage. Most did not report any challenges in obtaining coverage over the past five years. This type of insurance provides a utility with liability coverage if it causes an injury or damage to someone’s property.

The utilities that did report issues, however, said they saw significant changes over the last five years: 

  • Liability insurance costs increased dramatically.
  • Wildfire exclusions were added.
  • The number of companies willing to provide coverage decreased. 

These issues made it difficult for some utilities to purchase an acceptable level of liability coverage at a price that doesn’t impact operations or pass the additional cost on to consumers. These results, which follow industry-wide trends, highlight that the potential for expensive damage claims directly impacts access to and affordability of liability insurance.

The insurers still offering coverage appear to have combined Washington into a much wider risk category that includes other Western states — including California — with unique climate conditions that produce higher risks and, consequently, liability standards.

The OIC’s report provides the Legislature with several policy options to consider, including:

  • Shaping the environment under which a damage claim is generated.
  • Funding mitigation efforts.
  • Modifying the negligence standards for utility companies.
  • Developing educational programs to help underwriters better understand state-specific risks.