How the insurance industry is providing risk mitigation for South Africans during load shedding

Eskom board chairperson Mpho Makwana’s recent announcement detailing Eskom’s plans to implement permanent stage 2 and stage 3 load shedding over the next 24 months confirmed the worst-case scenario for individuals and businesses – that blackouts will be a part of daily life for years to come.

Apart from the inconvenience for South African households and the workforce, who have experienced load shedding every day so far in 2023, these intermittent power cuts can severely damage electronic items and increase the likelihood of compromised home security systems.

Naturally, this raises concerns about home safety and whether insurers will pay out load-shedding-related theft and damage claims.

The insurance industry has been quick to adapt to the changing landscape

Load shedding has become a common occurrence in South Africa that significantly impacts individuals and businesses. Although most insurers don't consider blackouts an insurable risk under most insurance contracts, some providers like Santam realise that the cause of the loss is beyond the client’s control and will consider claims related to power surge damage or theft during load shedding. For example, theft resulting from malfunctioning security systems during a power cut.

Santam offers:

• Limited cover for building: Minimum cover against power surges of R5 000 with an excess of R2 500 under the building cover;
• Comprehensive cover for building and house contents: In the case of power surges, clients can opt to take up power surge optional cover under the house contents and increase the R5000 limit for power surge under the building section. However, clients must check if there are any exclusions in their policy schedule that they need to be aware of.
• Additional cover: Power surges are covered for the full house contents or building insured value but subject to a R2500 excess.
• SOS services: Six free SOS services to all personal lines clients.

The frequency of power cuts during load shedding increases the risk of damage to sensitive electronic equipment due to power surges and dips – increasing the risk of fires and crimes because of malfunctioning security systems.

As a result, Santam recorded a significant increase of about 60% in claims for damage to sensitive electronic items due to power surges across its personal and commercial insurance portfolios in the first half of 2022.

South African consumers and businesses must, therefore, review their insurance policies to ensure that they have sufficient coverage for the potential damage caused by power surges. They must also review their power surge cover limit regularly to ensure their insurer covers all new electronic equipment for the correct replacement value.

That's because some insurers will opt to include this cover while others will offer it as an optional add-on in other cases, requiring clients to select the appropriate cover limit.

South Africans must take extra measures of protection during load shedding

While insurers can offer some protection, it is equally essential for South Africans to take additional steps to protect their devices and stay safe during power outages.

These steps include using surge protection devices, ensuring alarm systems are in good working condition and have backup batteries, keeping a torch handy, saving emergency contact information, charging devices before scheduled blackouts, unplugging devices during outages, and backing up their electronic device data.

Load shedding is a challenge for everyone, but with responsible insurance coverage and proactive measures, individuals and businesses can minimise the risk of damage and keep their electronics and homes safe during power cuts. This approach can help more South Africans navigate life under load shedding.