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An arc fault is caused when there is damage to the wiring in the home is damaged. This type of electrical hazard is likely when there is loose wiring, faulty switches, damaged electrical cords or frayed cords. There are parallel faults where an electrical arc jumps between the live wire and the neutral wire, or when electricity"arcs to ground".
An arc fault can ignite any flammable material including the frayed or damaged electrical cord itself, the wall surrounding a wall socket, even a pile of clothing close to the arc fault. A square D circuit breaker designed to detect arc faults can prevent this situation by cutting the power before the arc fault has a chance to become what firemen call a "source of ignition". Installing an AFCI Square D circuit breaker is an added layer of protection from house fires.