Zinsco: The New Trigger Word

By Terri Guest

This article first appeared in The Communicator Magazine, Spring 2025.

It seems the new trigger word in the common interest development industry is “Zinsco.” Electrical panels and breakers manufactured by this company, as well as several others, have been deemed unsafe by Underwriters Laboratories (UL) as they have the potential to overheat and cause fires. Thus, several insurance carriers have drawn a hard line when it comes to these items, and communities with certain com- ponents will have a difficult, if not impossible, time finding insurance coverage.

Zinsco panels, also sometimes branded as GTE-Sylvania, were installed in the 1960s and 70s and their circuit breakers have been known to melt into the main bus bar, which can start a fire. Federal Pacific panels and Stab-Lok breakers have similar issues and can fail to trip when overloaded. Originally used in the 1950s, Federal Pacific panels and breakers have been used as recently as the early 1990s. Other electrical component manufacturers on the “watch list” include Square D, Challenger, and Eaton.

Communities that use these branded items should schedule an inspection by a qualified electrician as soon as possible. Arrangements should be made to replace all electrical components that could possibly be unsafe.

In addition to the potentially dangerous electrical panels, many insurance carriers are also taking a closer look at other aging infrastructure items. These include:

• Aluminum wiring
• Galvanized plumbing
• Roofs that are approaching or are past their useful life
• HVAC systems

It should be noted that the components insurance carriers are concerned with may be located in the common area or within an individually owned unit. In the past, we have been able to dismiss certain questions with a simple “homeowner responsibility” response. However, this is no longer the case. Carriers are requiring proof of replacements and upgrades (including copies of permits, warranties, and paid invoices) regardless of responsibility, be it HOA or unit owner.

Since most, if not all, California admitted carriers are requiring replacement or update of these components, many communities are receiving cancellations or non-renewal notices if they don’t follow the recommendations to replace them. This usually forces the community into the non-admitted market, also called the excess and surplus (E&S) market.

It is important to note that E&S carriers are not inferior to admitted carriers. They have similar, sometimes even better, ratings with AM Best. They simply choose not to play by the rules of the California Department of Insurance by submitting all forms and rates for approval. Nor do they have to pay into the California Insurance Guarantee Act (CIGA), which provides payment on open claims when carriers go out of business.

While E&S carriers can be a bit more flexible with their underwriting guide- lines, they aren’t overly generous, especially when it comes to those aging infrastructure items. If you can show that a replacement plan is in process with signed contracts and timelines, they may provide a policy with the condition that the project is completed within a specified time period. However, if that timeline is not met, the policy could be cancelled for non-compliance.

Consider the situation from the insurance carrier’s point of view. Would you want to insure a community filled with electrical panels that have been under recall for decades for causing fires? When you look at it that way, it doesn’t seem like a sound business decision. Carriers have two choices: decline to provide insurance coverage or charge an appropriate premium for the level of risk present. Translation: If you can find a carrier to take on the com- munity, it will be expensive.

So, what is an aging community to do? First, work with industry professionals to determine what the issues are. Have inspections completed by qualified and certified contractors to determine if there are any immediate life/safety issues. Obviously, those issues should be rectified right away. If it is discovered that the com- munity has potential problems, but the components are currently operating safely (for example, Zinsco electrical panels that pass inspection), be certain the inspection reports communicate this information clearly and then share them with your insurance professional. The components will still need to be replaced; but clean inspection reports may buy you some time when it comes to insurance carriers.

Once it has been determined what aging infrastructure items exist in the com- munity, work on setting priorities. These types of items can also be added to your reserve study, which will help with prioritizing and budgeting. Come up with a reasonable timeline for project completion.

If the projects include replacement of components that are the maintenance responsibility of the individual homeowner, verify if any owners have already completed replacement and gather the appropriate backup paper- work. For those owners that still need to have work done, there are a couple of ways to approach the project. First, you can make each owner responsible for sourcing their own contractor, completing the project, then providing evidence of compliance to the board of directors or management. Another approach is for the association to make all the arrangements to ensure completion, with either the unit owner paying the contractor directly or the association paying up front and then issuing a reimbursement assessment to each owner. I’ve seen each of these options used by different associations and, in all cases, the work was (eventually) completed. Determining which method to use really depends on the size of the job and the cooperation of the membership.

The most important thing is for the board to acknowledge the issues and communicate with the membership. Having board members defer these maintenance projects by putting their heads in the sand or kicking the proverbial can down the road will only make things worse in the long run. ■

Terri Guest is the director of Client Experience and Education for La Barre/Oksnee Insurance. She has worked in the community association industry since 2003 and currently sits on the board of directors for the CAI Bay Area / Central California Chapter.