Should I Pay $80,000 To Update My Electrical System? -Action Economics

I just received a quote to update my electrical system for $80,000 should I do this? (Of course not!)

In 2024 I purchased a 7 unit commercial building for $36,100. Since purchasing this building we have greatly increased its value and brought the property from having 3 tenants with 2 not paying to 5 tenants with all paying. When we first bought the building we could not get insurance due to broken windows, a roof leak, and high vacancy. We fixed all of those issues and we then pursued getting insurance for the building.

When we applied for insurance we were first told that due to the building not having had insurance we are high risk, so the cost would be more. We then were told that the insurance company we were working with would not insure the type of breaker boxes the building had (Pushmatic), but they would connect us with an insurance company that would.

This new insurance company took multiple weeks to get us a quote and wanted very detailed information about the building. They finally gave us a number: $10,683 for the year due in full. We agreed and paid it. They required an inspection, and their inspector came out, found no issue and approved it. Additionally they required us to get a separate electrical inspection that we had missed in the fine print. They wanted the Pushmatic breakers tested by an electrician and for them to state the breakers were in working order. Sounds simple enough.

We struggled to find an electrician to do an inspection in a timely manner. Most were several weeks out. Mrs. C. ended up contacting an electrician at a national chain who could be out within 2 weeks.

Why Pushmatic Breakers Are An Issue:

Pushmatic breakers work based on a spring mechanism. You push them in to turn them on and push them again to turn them off. If a breaker trips it pushes the breaker to the off position. Over time these springs can fail preventing the breaker from tripping properly. This is most common with panels where the breakers are never used or are in high moisture settings. If the spring has been compressed for 60 years then it may not release when needed. Breakers that are exercised yearly tend to last longer. The design is not the best, but just because they exist does not mean they are a massive hazard. Pushmatic breakers have not been recalled. They are recommended for replacement solely based on age and degradation, since they generally stopped being installed in the late 70s early 80s.

Many insurance companies have decided to not insure properties with these types of breakers and require replacement of the panels in order to insure the property. In our case we had an insurance company that required these breakers be tested by an electrician. Sounds fair. I do think the idea of requiring replacing the entire panel is also a bit much because UL approved replacement breakers are still manufactured. It would be far more reasonable to request changing out the current breakers with new replacement ones. This would represent a roughly $600 cost of materials and about 2 hours of labor to replace the breakers in an entire panel without changing out the panel.

Another concern for Pushmatic breaker boxes is that the boxes do not have the ability for a main disconnect to be installed, so many places that have these breaker panels have no main disconnect at all. This is a legit problem and every panel should have a means to fully shut off. In my case there is a separate electrical room that has a main disconnect for each of these panels. The power comes from the street to the electrical room, where there is a meter and a main disconnect for each Pushmatic breaker box, then the wires run to those boxes in their respective units. We have main disconnects.

Discussions With The Electrical Contractor:

We stated we needed an electrician for an inspection of our building with Pushmatic breakers. After scheduling a tech to do the inspection, their office called us to verify the appointment and during this call when we confirmed that this was a 7 unit commercial building they stated the electrician they were initially going to send was not a commercial electrician and we had to wait for the commercial tech to be available. We discussed that these were Pushmatic breakers and the admin stated they would make sure the tech is familiar with them so we get the inspection we need.

The Inspection:

The inspector walked through all of the units and when he found something wrong he repaired it while he was there and added it to our bill. We were charged $1,600 for the inspection with about $600 being little corrections. He did not find any breakers that did not function.

The Report:

When we asked for a report to send to the insurance company we were not given one. Then we were contacted by the admin who stated the owner was not comfortable signing off on the inspection because the breakers are Pushmatic. The only reason we hired them was to inspect these specific breakers. If they were going to say they would not approve them regardless of functionality due to the type of breakers they could have done that in the initial phone call without charging us $1,600.

About a week later we received a series of quotes for electrical work from this electrical contract company. They quoted us a total of $80,728. Effectively they wanted to charge $10,000 per electrical box to switch out the boxes. This included the main panel which is not a Pushmatic panel.

They wanted to change the main panel out because the door to the room has a $50 drop box we installed on it, and when the door is fully opened the box can touch the closed electric panel. Rather than suggesting we remove the $50 box, they wanted to relocate the panel and install a new one. They also wanted to install an additional light fixture at a cost of $545 (in addition to the one existing) in this 3 X 8 room. Swapping the bulb out with a 100 watt bulb would make more sense.

This quote is absolutely ludicrous. Not only did they not provide us for the service we asked for, (or decline it), they quoted us several times what any rational electrician would charge. I will say these panels have the added challenge of being inset into brick, but still, this is a massive quote.

It costs about $500 in material for a new box and breakers. Let’s double that to $1,000. A competent electrician can change one out in about 5 hours. At a charge rate of $250 per hour (About $100 more than most would charge) this would be $1,250 for labor added to the $1,000 of materials would be $2,250. Let’s even give a 2nd electrician and take the same amount of hours and we are at $3,500.

Even if we really padded this thing and charged a full 8 hour day for 2 people at $250 per hour per panel, the labor cost per panel would still be only $4,000 and adding in the material cost would put us at $5,000 total, still half what they wanted.

Path Forward:

Our path forward is not to have insurance with this company and certainly not to do business with this electrical contractor. We only need liability insurance and this company also would not offer just liability, they wanted us to have a rebuild policy, which required us to insure the building for $1.7 million. We have since found an insurer who will provide the liability insurance for around $100 per month with no required inspections or repairs. In addition to that we are putting the property into an LLC for another layer of protection. We will have to surrender $2,500 of the initial insurance payment and will be refunded the rest.

The panels are not deficient. All of the breakers work and all of the breaker boxes have a separate main breaker that is not a Pushmatic. Eaton manufactures a product where you can remove the guts of an existing panel and install new that will take their breakers. This is a much more economical way to replace panels in this scenario. The retrofit kits appear to cost around $800 each, which is about $400 higher than what a typical panel box costs. The labor cost would likely be the same as changing out a normal breaker box, which is much closer to $3,000 than $10,000.

Although this work I am likely capable of, when I am ready to swap these panels out I will search for a local electrician to do it. 7 boxes at roughly $3,000 a piece would still be $21,000, but this is in the realm of reasonability. The breakers function. I have personally tested all of them and so did the electrical inspector. The panels show no signs of moisture intrusion or degradation. They have worked fine since they were installed and will likely work for decades to come. I will likely replace the panels prior to trying to sell the building in the future so that a future buyer will not struggle to get insurance, which will be required to get a commercial loan. I do not want to limit myself to only cash buyers when I sell the property in the future.

Have you received outlandish quotes for work in the past? What did you end up doing?