Home Insurance Cancellations Over Electrical Panels

A young couple recently bought their first home in North Carolina. They did what many would call “everything right”—hired an appraiser, brought in a home inspector, secured home insurance, and started settling in. A few weeks later, their insurer notified them that their policy was being cancelled. The reason? The home has a Federal Pacific Electric (FPE) panel.

They were given 30 days to either replace the panel or lose coverage.

If you’re a homeowner—especially a new one—this scenario might sound confusing and unfair. Why would an insurance policy be pulled after it was already accepted? Why didn’t the home inspector catch this? And if the electrical panel is technically working, what’s the problem?

Let’s break this down from an insurance agency perspective. We’ve seen this situation more than once. It’s avoidable—but only if you understand how insurance works after closing, and how certain home features affect your eligibility for coverage.

Why Electrical Panels Are Suddenly a Big Deal

Not all electrical panels are created equal. Some older models are now known to pose serious safety risks, even if they’re still functioning.

The most notorious? Federal Pacific Electric (FPE) panels.

FPE panels were widely installed in U.S. homes between the 1950s and 1980s. They look ordinary—but many of them fail to trip during overloads, allowing dangerous levels of electricity to continue flowing. That can cause overheating, melted wires, and house fires.

There are also questions surrounding how these panels originally passed safety inspections. Multiple studies and class-action lawsuits have highlighted safety concerns. At this point, the industry consensus is clear: they’re a major fire risk.

That’s why most insurance carriers flag them immediately—and often won’t insure the home until they’re replaced.

How Can Insurance Be Cancelled After It’s Active?

This is where many homeowners get caught off guard.

When you purchase a policy for a new home, the insurance is often issued "subject to inspection." That means the carrier has the right to perform a property inspection after the policy is bound. If the inspection reveals something that doesn’t meet underwriting guidelines, they can cancel the policy—or require you to fix the issue within a set period.

In the case of an FPE panel, most carriers will require immediate replacement. If you don’t comply, the policy is cancelled, leaving you uninsured.

So even if your home insurance was approved and active, it’s conditional until that post-bind inspection clears.

But What If Everything Was "Working Fine"?

Functioning doesn’t mean safe.

Some homeowners get conflicting feedback from home inspectors, electricians, or home warranty reps. An electrician might say the panel looks fine. A home warranty might decline to cover the replacement because the panel hasn’t failed. That’s not unusual—but it’s also irrelevant from an insurance standpoint.

Insurance companies aren’t focused on whether the panel works today. They’re concerned about whether it creates an unreasonable risk of catastrophic loss tomorrow.

And FPE panels have one of the highest failure rates in the industry. That’s all it takes for a carrier to say “no thanks.”

Why Inspectors Sometimes Miss This

Here’s the reality: not all home inspectors are equal.

Some will flag outdated or unsafe panels in their reports, especially if they know how they affect insurance. Others won’t. They might note the panel brand but stop short of recommending action. Some may not mention it at all if it looks clean and functional.

This is one reason we recommend having your insurance agent review your inspection report with you—before closing, if possible. We know what’s insurable and what’s going to create issues down the road.

If your inspection didn’t mention the FPE panel, and your policy is cancelled because of it, you can (and should) report that to the inspection company and your state’s licensing board. It might not change your situation, but it’s important documentation.

The Bigger Picture: Insurers Are Cracking Down

This situation isn’t isolated—and it’s not just about electrical panels.

Insurance companies are becoming more aggressive about risk mitigation. Rising claims, natural disasters, and the cost of materials have all contributed to carriers pulling back or tightening their underwriting standards.

In December 2024, a homeowner in South Carolina made headlines after their insurer cancelled their policy over property risk factors. After media pressure, the carrier reversed the decision—but it highlighted a trend that’s gaining speed: zero tolerance for avoidable risk.

Outdated electrical systems, old roofs, certain plumbing materials, and even overgrown trees are all being flagged more often. This isn’t a scare tactic—it’s just where the industry is headed.

If you’re a homeowner, you need to start thinking about your home as a risk profile, not just a living space.

What You Should Do If You Have an FPE Panel

If your home has an FPE panel—or you’re not sure—here’s what to do now:

Identify the Brand of Your Electrical Panel

Check your breaker box. If you see "Federal Pacific" or "Stab-Lok," you likely have an FPE panel. Take a photo and confirm with a licensed electrician.

Get a Replacement Quote

Expect a cost of $1,500–$2,500 for a full replacement. While it’s not a small expense, it’s a smart investment—both for your safety and for your home’s long-term insurability.

Talk to Your Insurance Agent

If your current carrier is threatening cancellation, ask if they’ll reinstate the policy once the panel is replaced. In many cases, they will.

If your policy has already been cancelled, you’ll need to shop for a new one—but be aware: most standard carriers won’t take you without replacing the panel first.

The Real Cost of Doing Nothing

Choosing not to replace the panel might seem like a way to save money, but here’s what it actually costs:

• You may have to use a non-standard insurer with higher premiums, higher deductibles, and fewer protections.
• Your home may be harder to sell. Many buyers won’t move forward once they hear the panel needs replacing—especially if it impacts their insurance approval.
• Your safety is at risk. These panels are known fire hazards. Insurance or not, that should be reason enough.

Our Take

At our agency, we’ve had countless conversations with frustrated homeowners who feel blindsided by policy cancellations. And while we understand the frustration, here’s the truth:

This is exactly what good insurance is supposed to do.

Insurance is about managing risk. When a home has a clear, documented safety hazard, it’s in everyone’s best interest to fix it—not ignore it.

If your home has an outdated electrical panel, don’t wait for a cancellation notice. Be proactive. Replace it now. It protects your home, your family, and your long-term financial security.

And if you’re not sure what’s in your home, or whether your current setup puts you at risk of losing coverage—call us. We’ll review your policy, walk you through any red flags, and help you plan your next steps.

That’s the kind of service every homeowner deserves.