Costs, Benefits of a Generator

Many insurers will give you a discount of about 5% on your homeowners premium for installing an automatic standby generator.

Our electricity was off for days last summer after a big storm. I’m thinking about buying a home generator so that I’m prepared this year. Would it be better to get an automatic backup generator or a portable unit? --W.D., Rockville, Md.

Either kind of generator will keep your appliances running in a power outage. Many insurers will give you a discount of about 5% on your homeowners premium for installing a generator -- although to get the discount, you’ll generally need to buy an automatic standby generator. Such units are powered by natural gas or propane and turn on automatically after detecting a power outage -- which not only leaves you in the dark but also could cause your sump pump to stop working (potentially leading to mold if your basement floods while your air conditioning is out, too) and your burglar and fire alarms to fail.

The most common automatic standby generator produces 17 kilowatts, which will power 16 circuits, says Roy Cranford, president of generator dealer CDS Emergency Power, in Baltimore. The unit costs about $4,000, plus about $3,500 to connect it to your electrical system and your gas or propane line, says Cranford.

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You won’t get an insurance discount for a portable generator, but portables cost a lot less and are your only option if you don’t have a gas or propane line. A 6.5-kilowatt generator costs about $800 to $1,000, says Cranford, and can supply about ten circuits -- sufficient to power most of a 2,000-square-foot house, not counting central air conditioning.

A portable generator isn’t as convenient as an installed one. You will need to roll the generator outside (to avoid carbon monoxide poisoning), fill it with gasoline, and run extension cords from your appliances and other electric devices to the generator. For about $1,000 extra, you can have a manual transfer switch installed that links the generator to your electrical panel and lets you power everything with just one cord.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.