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2012 will be busy year, what with solar storms and world ending

As if 2012 won't have enough problems with the end of time foreseen by the Mayan calendar, an insurance group is forecasting powerful solar storms next year that could cause massive blackouts.

According to a study by the German insurance group Allianz, an upcoming cycle of stormy solar activity may damage electrical transformers and threaten vulnerable energy infrastructure around the globe, causing more than $1 trillion in economic losses.

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The sun storms are expected to arrive sometime in 2012 or 2013. There is some uncertainty about when the storms will arrive, despite 11-year activity cycles.  

insurance for power outagesA large explosion on the sun's surface can release superheated, magnetically charged gas that triggers a large solar storm when the gas hits the earth's magnetic field. If this comes to pass, sections of a country or continent could be without electricity for weeks or even months.

Check your home insurance policy to see if you're covered for such events.  Most homeowners insurance policies cover a variety of "perils" that cause damages related to power failures, including lightning and wind storms, according to the Insurance Information Institute.

Lightning is the most common cause of power outages. The National Lightning Safety Institute (NLSI) reports that 3 percent to 4 percent of insurance claims are for lightning, causing nearly $800 million in insured losses in 2009.

Preparing for the worst

Homeowners can get ready for sun storms by stockpiling food and water and buying power generators, although it may be more difficult to prepare for blackouts that last longer than a week, says Michael Bruch, a risk consultant with Allianz. If there are longer blackouts, the government may steer emergency supplies to high-priority locations, such as hospitals, Bruch says.

Power outages may trigger home insurance claims related to spoiled food, although a high policy deductible would require a large amount of food to be lost before the policy kicks in. Power companies sometimes reimburse customers for such losses.

Insurance companies may require an "on premises" cause, such as a falling tree hitting your power line. Homeowners insurance generally does not cover power outages caused by "off premises" events, such as something that happens away from your property and causes your block to lose power.

Allstate Insurance, for example, generally includes coverage for refrigerated food spoiled in a power outage as part of the standard home or renters policy, says Stephanie Sheppard, an Allstate spokesperson. Allstate's coverage also includes outages that were caused off-premises, Sheppard says.

She says insurance policies also typically cover power surges, which send too much electricity to appliances and damage them once power is restored. Plugging computers, TVs and other electrical devices into a basic $20 surge protector can help prevent damage related to power surges.

It's important not to simply assume that your policy will cover all these mishaps, however. Instead, check  with your agent to be sure of coverage limitations.

But one group of people may actually be looking forward to solar flares: The National Aeronautics and Space Administration (NASA) says that this solar activity benefits astronauts traveling through space because the increased magnetic fields provide extra protection by decreasing the biologically dangerous energy range of cosmic rays.

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