Will Your Insurer Cover Your Claim During Grid Failure

Apr 25, 2024 | Energy

Have you noticed that if you’re in a restaurant or at the office, or even out doing a spot of grocery shopping and the lights go out, we all just carry on like everything is completely normal? Within seconds (most of the time), the backup power has kicked in and it’s as if nothing happened. Nothing at all.  

It’s as if… we’re all just used to the power going out. The truth is that whether it’s loadshedding or a power outage, most of us have become accustomed to the power going off. That’s largely because it’s becoming well known that our national electricity grid simply can’t keep up with the country’s energy consumption, and that loadshedding is par for the course as the powers that be strive to prevent complete grid collapse.  

As consumers, we’ve got a lot decisions looming ahead. One of which concerns our car and home insurance. You see, a number of insurers are rethinking their coverage around total grid failure, with the likes of Momentum Insure, Santam, Outsurance, Hollard Insurance and Naked Insurance already announcing this as an exclusion in their policy documents. 

To help you make sense of what happens with your insurance if there’s a power outage that causes damage or loss to your insured items, we have put together this brief review.  

Insurance & Total Grid Failure 

It’s worth noting that there are differences in the main types of power outages. Loadshedding, everyone’s (least) favourite, is considered a controlled interruption of electricity supply to prevent the collapse of the national power grid, while a power failure is when your electricity supply is disrupted as a result of breakdowns, theft or vandalism.  

The type we’re talking about here, is the electrical grid failure. This is the total or partial loss of power to all or part of the national electricity grid. Grid failure can cause a total blackout for weeks and affect municipalities and public infrastructure. 

Many insurance companies have decided to remove grid failure from their lists of insured perils. While we are sure that it has been a more complicated journey, the long and short of it all is that reinsurers (the companies who provide insurance for insurance companies) have reviewed the risk of a total grid collapse occurring in South Africa. What they have decided, based on their assessments, is that grid collapse is highly likely. 

If (or when) grid collapse does occur, all the policyholders in South Africa who would then claim for damages and losses as a result would collectively cause the local insurance industry to be bankrupted. This is according to Peter Nkhuna, the Senior Assistant Ombudsman at the Ombudsman for Short-term Insurance. 

Essentially, it’s for the survival of the insurance industry that this particular event be excluded.   

What’s The Verdict? 

The information that you can walk away with, is that while not all car and home insurance claims related to loadshedding and power failures will be rejected, those claims related to total grid failure will be rejected.  

We can’t stress just how important it is to read your policy documents, so that you know exactly what is and isn’t covered – especially when it comes to power-related claims. 

Well, that and for you to explore solar power in your home and business. The solar industry in South Africa is booming, and for good reason. Given the abundance of sunshine in South Africa and our ongoing issues with power supply, solar is viable and worthy investment.  

Feeling Informed? 

We trust that this information help you. If you’re looking for car and home insurance, then use the AA Insurance Supermarket to compare put 10 quotes until you find the cover you’re happy with.  

If you’re interested in finding out more about going solar, we have a series of handy articles – including advice on the pros and cons of solar power, a closer look at the disadvantages, how to start your solar journey slowly with a smart geyser, property reports and much more.   

We trust that this will help you make an informed decision.  

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