A power cut in the evening, the power comes back in the morning – but the boiler's control panel no longer starts, the fridge is silent and the water heater's display is dark. The first question at such a moment is not what has broken, but who pays: the home insurance, the electricity company, or the owner out of their own pocket. As a broker, I see that boiler and fridge cases are among the most frequent types of question in expert advice columns, and that some of the answers are negative because the client reports a “breakdown” while the insurer pays only for an event – and others because the damage really was a fault of the appliance itself. This article shows where the line runs: what the difference is between a breakdown and damage, when the overvoltage cover of home insurance comes into play, and when the liability of the operator of the electricity network, the distribution system operator (DSO), does.
- A mere breakdown – wear, a faulty component, ageing – is not an insured event: home insurance is not a warranty and not a repair service; a fault in the boiler, water heater or fridge itself is a matter for the warranty and the statutory liability for defects.
- If the appliance was destroyed by an external, sudden event – the induction effect of lightning, overvoltage from the grid, a broken neutral conductor – it may be payable, depending on the policy conditions: the basic cover typically covers only the secondary effect of a lightning strike, while with several insurers overvoltage originating from the grid is a separate add-on, with a limit and a deductible.
- If the fault arose in the network of the distribution system operator (DSO), the damage can also be claimed from the DSO by filing a claim with an expert opinion from a specialist service; the two routes do not exclude each other, but the damage is compensated only once, and an insurer that has paid can recover the amount from the DSO.
Breakdown or damage? The first question in home insurance
Home insurance pays for sudden and unexpected events acting from outside that are named in the policy conditions. An internal fault of an appliance – the dead control panel of a condensing boiler, the fridge's failed compressor, the water heater's burnt-out heating element, a perished seal – is not such an event but a breakdown, which Hungarian policy conditions typically exclude, together with wear and tear and manufacturing and maintenance defects. This is not the insurer being strict but the logic of the product: home insurance is not a warranty and not a repair service; for a fault in the appliance itself, the tools are the manufacturer's warranty, the seller's statutory liability for defects or a service contract. Two things may nevertheless belong to the insurance. One is consequential damage: if water from the failed water heater or boiler floods the floor, the water damage may be payable under the escape-of-water cover, even if the appliance itself is not – this varies between policy conditions. The other is assistance: for a home left without heating, some contracts send an emergency repairer, up to a limited cost; this is covered in the article on assistance.
What happens on the grid: power cut, reconnection, broken neutral
A power cut by itself rarely destroys an appliance; the trouble typically arises during the fault or at the moment the power is switched back on. On a three-phase network, the neutral conductor keeps the phases in balance; if it breaks on the pole, in the service cable or in the building's main distribution board, the voltage on individual phases can shoot above the usual level, and electronics connected to the mains – control panels, power supplies, compressor controllers – are destroyed within moments, often several appliances at once and in several neighbouring households. A voltage surge on reconnection and sustained overvoltage resulting from a grid fault can have a similar effect. From the point of view of the insurer and the DSO, this damage is not a breakdown but an external event: the only question is where the fault arose and who is liable for it. The typical signs of a broken neutral – several unrelated appliances died at the same time, at the neighbours' as well, and light bulbs shone unusually brightly or dimly during the event – are important facts that are worth writing down straight away. A short circuit in the home's own wiring or a cable burnt out inside the wall is a separate question, covered in the FAQ; here we are dealing with damage coming from the grid.
When does home insurance pay: lightning or grid overvoltage?
In most Hungarian home insurance policies, overvoltage damage to electrical appliances appears under two separate headings. One is the secondary effect of a lightning strike – the inductive, overvoltage-generating effect of lightning without a direct strike – which is part of the basic cover or of an add-on, with its own limit and deductible; proof and the typical reasons for rejection are covered in the article on the secondary effect of lightning. The other is overvoltage originating from the grid: a broken neutral, a fault in the DSO's equipment, a switching surge. Several sets of policy conditions pay for this only under a separate add-on called “overvoltage damage to electrical equipment” or something similar, others together with lightning in an extended package, and in some, overvoltage unrelated to lightning is expressly excluded – this varies from insurer to insurer, so you need to check the “overvoltage” and “secondary effect of a lightning strike” sections of your own policy conditions, together with the limit and the deductible. What the conditions typically require for payment: showing that the external origin and the time of the damage are plausible (the DSO's certificate of the outage, simultaneous damage at the neighbours'), an expert opinion from a specialist service stating that the failure was caused by overvoltage, and acceptance of a depreciation deduction matching the appliance's age. For these covers, the boiler, the water heater and the fridge are electrical appliances just like the TV; some policy conditions treat the boiler as a fixture of the building and others as contents, which can matter for the limit.
The DSO's liability: the Vet., the claim and the penalty payment
The electricity network up to the connection point – typically up to the meter or the end of the service cable – is operated by the distribution licence holder, which, under Act LXXXVI of 2007 on electricity (Vet.), is responsible for the condition of the network and the quality of the service. If the neutral broke on its pole or line, the damage to the destroyed appliances can be claimed from the DSO under the damages rules of the Hungarian Civil Code (Ptk.). In practice, the process at DSOs typically looks like this: a written claim filed with the DSO's customer service or on its online portal, stating the time of the fault and listing the appliances; the DSO examines its fault log and the site; for the damage, it asks for an expert opinion from a specialist service on the cause of the failure and on the cost of repair or the fact that the appliance cannot be repaired; when paying, it may take depreciation into account. A rejection typically comes if the fault was beyond the connection point, in the user's own installation, if the damage was caused by a lightning strike or another unavoidable external cause, or if the expert opinion finds a fault of the appliance itself. The so-called assured services (garantált szolgáltatások) are a separate concept: service levels prescribed by the Hungarian Energy and Public Utility Regulatory Authority (MEKH) and backed by penalty payments – for example, deadlines for fault repair or for replying – where the penalty is paid for the delay, not for damage to appliances; one does not replace the other. If the DSO rejects the claim, the complaint route is the DSO's customer service and then, for a household consumer – under the rules of the Vet. on competence – the consumer protection authority or the MEKH, which, however, do not award damages; in a claim for damages brought by a household consumer, the conciliation board can also proceed, and ultimately a court decides.
Two routes, one loss: how do the insurance and the DSO fit together?
Home insurance and a claim against the DSO do not exclude each other – they just do not add up. If your contract includes overvoltage cover, the simpler route is typically the insurer's claims line, because there you do not have to prove liability, only the event; under Section 6:468 of the Ptk., the insurer can recover the amount paid from the DSO if the DSO's liability is established. If there is no such cover, or a significant part remains with you after the limit and the deductible, the claim against the DSO can also cover the remainder – but you cannot be compensated twice for the same damage, and the DSO typically asks what the insurer has already paid. In the case of a boiler, it is often the two routes together that cover the real loss: the insurer up to the limit, the DSO for the remaining part, provided that the fault was shown to be in its network.
What should you do after the damage?
Do not throw away the appliance or have it repaired until the expert opinion has been prepared, and photograph its rating plate as well. Write down the time and circumstances of the event, ask your neighbours whether they also suffered damage, and ask the DSO for a certificate of the outage – the timestamp of a report logged on the fault-reporting line is evidence later. Ask a specialist service for an expert opinion on the cause of the failure; for a boiler, the report of the gas fitter or the authorised brand service. Report the damage on the insurer's claims line and, in parallel, file the claim with the DSO. As prevention, a surge protection device installed in the home's main distribution board absorbs a good part of short grid surges, but against the sustained overvoltage caused by a broken neutral, what protects is not this but a voltage-monitoring relay that disconnects the supply; some policy conditions may also take the presence of such protection into account when paying – this varies from insurer to insurer. If you are unsure whether the overvoltage cover in your own contract also extends to grid damage unrelated to lightning, let me know and I will help where I can.
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Sources
- Vet. – Act LXXXVI of 2007 on electricity (duties of the distribution licence holder, the route for consumer complaints)
- Hungarian Civil Code (Ptk.) Section 6:468 – the insurer's right of recourse against the party that caused the damage (Act V of 2013)
- MABISZ (the Hungarian insurers' association) Home Insurance Guide (20 February 2025) – point 17: basic risks, lightning strike; point 14/b: exclusions (manufacturing and technological defects)
- Allianz Hungária: Overvoltage – supplementary insurance (AHE-12239/1-2015, effective from 1 July 2015; supplementary conditions belonging to a corporate property insurance, copy published on semmelweis.hu – an example of how grid overvoltage cover is structured, not home insurance conditions)
- Allianz Hungária: Frequently asked questions on lightning damage (4 September 2017)
- MVM Next (universal service provider): Garantált szolgáltatások (assured services) – an example of service levels backed by penalty payments; the distribution operators' assured services (for example the deadline for fault repair) are set out in the business rules of the locally competent DSO and in the MEKH decision
