A policy provision that has been rarely litigated, but often disputed, is the exclusion for above-ground electrical transmission and distribution lines. A common feature in policies for electric companies in reference to certain utility lines, a standard exclusion might state as follows:
This Policy does not cover loss or damage to above-ground electrical Transmission and Distribution Lines.
What are transmission and distribution lines? Commonly called “T&D,” they carry electricity over long distances and often appear along roadsides as wires strung between metal or wooden poles. A transmission line usually carries a higher voltage of electricity, which is then stepped down to a lower voltage that runs through the distribution lines to houses and businesses. Policies will often exclude or limit T&D coverage. However, many policies will not define transmission and distribution lines.
The definition of transmission or distribution line can be troublesome. Does the term include the pole, wire, and attached structures, or is it only meant to refer to the wire? Depending on the answer, there may not be coverage.
One case that addresses the transmission and distribution lines exclusion, Howard Berger Co. v. Liberty Mut. Fire Ins., No. 1:14-cv-06592-NLH-AMD, 2017 U.S. Dist. LEXIS 78336 (D.N.J. May 23, 2017), may be persuasive. In Howard, high winds from Superstorm Sandy broke a utility pole, which in turn caused the supported wire to fail. The failure of overhead transmission and distribution lines was a non-covered cause of loss of utilities. According to the policy,interruption of service was not covered for physical damage to “overhead transmission and distribution lines.”
The plaintiff argued that the utility pole was an “electrical generating plant,” which was covered under the policy, and that the excluded “transmission and distribution lines” referred only to the wire/conductor. The court, however, found the plaintiff’s definition strained the policy “beyond its plain and ordinary meaning” and instead looked to the New Jersey Administrative Code for the definition of “transmission lines.”
Transmission line” means an electrical line, wire, or cable, (including the supporting structures) and appurtenant facilities that transmits electricity from a generating plant to electric substations or switching stations. An electric transmission line usually has a rating exceeding 69 kilovolts.”
Although the plaintiff argued that the N.J. Administrative Code definitions should not be considered since an insured would not consider the technical definitions, the court found that the plaintiff’s provided definition of a wooden utility pole as a “plant” would not be understood as such by an insured. The court stated it “should not write for the insured a better policy of insurance than the one purchased” and that far-fetched interpretations were not sufficient. Therefore, the court ruled in favor of the insurer and against coverage for the insured’s losses from interruption of electric service.