With load shedding a reality of South African life, it’s important to know the risks that electricity outages – and the surges that often follow when power resumes – pose to your home and household contents, and whether or not your insurance policy covers these risks. It’s also important to know what measures you can take – or ought to take in terms of your policy – to minimise loss as a result of load shedding.
“Load shedding results in the increased risk of damage to sensitive electronic items and of fire. Opportunistic crime as a result of security systems not operating properly has also increased,” Marius Neethling, personal lines underwriting manager at Santam, says. He urges households to take extra precautions to manage their risk and protect against losses resulting from load shedding.
Coenraad de Jager, the executive for personal lines insurance at Mutual & Federal, says you should never simply assume that your policy will cover you, because basic cover might not include specific risks related to load shedding, and it’s best to check with your insurer or broker.
“We find that consumers are generally unaware of what their cover includes or excludes. In some instances, additional cover may be required,” he says.
The major risks that load shedding poses to you, as a householder, are:
* Compromised security. During load shedding, your home is more vulnerable to a break-in. The entire area is likely to be in darkness, providing better cover for criminals, and electronic security systems may be out of action. Burglar alarms typically have back-up batteries that keep them activated in the case of an outage, but your insurer may reject a burglary claim if it finds out that you did not maintain the alarm system properly, or that the battery was not working. According to De Jager, load shedding can dramatically reduce the lifespan of an alarm battery.
Steven Isaacs, the Gauteng business unit manager for retail products at Lion of Africa Insurance, says your insurer should cover your claim for a loss if you are burgled during load shedding, provided the alarm was in working order.
“If a burglary takes place because the alarm system was faulty or the back-up battery was flat, a claim for loss or damage as a result of this may be rejected,” Isaacs says.
Neethling says Santam will protect against losses caused by theft if burglar alarms do not operate because of a power cut, or if your alarm response company is unable to respond to an alert.
“Upon reporting this claim, you must prove that the circumstances of non-adherence of policy conditions were beyond your control. You must also ensure that alarms are in working order and are activated if your home is left unattended,” he says.
* Power surges. Electricity surges can occur when the power is restored, which can severely damage household appliances, alarm systems and electronic devices, such as television sets and computers. Such damage is unlikely to be covered by a basic householder’s policy.
Isaacs says that most policies state very clearly that, in such instances, loss or damage as a result of intentional power-cuts by authorities or the deliberate withdrawal of power is not covered.
“It is up to each individual policyholder to know what is stated in his or her specific policy contract, as contracts differ among insurers,” Isaacs advises.
Neethling says Santam has extended power-surge cover of R5 000 at no extra charge to all existing clients with household contents or homeowner's cover. If you have optional accidental damage cover with an indemnity limit of more than R5 000, you will enjoy the same (higher) limit for power-surge cover.
* Fire. There is a heightened risk of fire during and immediately after load shedding. In a recent letter to its homeowner clients, building insurance specialists CIA said: “We urge owners to be extremely careful when power outages occur. We have seen an increased number of fire claims in the last few months, most of which can be attributed directly to load shedding. Some of these claims have also sadly resulted in the loss of life. It is vitally important to be aware of the dangers associated with these power outages.”
CIA says your claim will normally be honoured in the event of a fire occurring in such circumstances. It gives the following examples of recent claims:
- A hairdryer left on a bed (and left switched on) when load shedding began set the bed alight when the power resumed.
- A candle fell over, setting curtains and bedding alight. “Never leave candles unattended or burning when going to sleep!” CIA warns.
- An iron left on during load shedding set the ironing board alight, causing fire damage.
* Food deterioration. Food in a freezer is unlikely to be affected in the event of a two- or four-hour power cut, but it may begin thawing over periods longer than that. Up to certain limits, most personal lines policies cover refrigerator and freezer contents if food is spoilt due to a breakdown or accidental damage to the unit or to a power failure. However, the policy may cover you only if, for example, the power was off for more than 24 hours.
SIMPLE STEPS
Neethling provides the following tips to minimise damage and loss during load shedding:
* Arriving or leaving home: be particularly alert when arriving or leaving your home in the dark, if the street lights and your outside lights are out.
* Automated gates and garage doors: ensure that you have alternative ways to enter and exit your home if your electric security gates and garage door are out of action. Keep the keys to the gate motors in an accessible place.
* Alternative light sources: invest in solar- or battery-powered LED lamps, which are far safer than candles and paraffin lamps.
* Surge protection: you can buy a surge protector for your electric mains board, as well as surge-protector plug adaptors, at most leading hardware stores. Mains surge protectors should be installed by a certified electrician.
* Burglar alarm and electric fence: if your burglar alarm and electric fence have back-up batteries, they need to be tested regularly and replaced if necessary.
“In any event, you are advised to revisit your insurance cover and obtain advice from your broker to take into account different circumstances and risk situations which may arise as a result of power cuts,” Neethling says.
SANTAM SURVEY SURPRISES
A recent client survey by Santam showed that most respondents (63 percent) do not switch off their appliances before load shedding to prevent power-surge damage when the power comes on again. Almost a third of respondents said their appliances had been damaged as a result of load shedding.
Only 21 percent make use of generators, but of these, 30 percent are not sure whether their generators are SABS-certified and properly connected.
Many South Africans use alternative light sources that are potentially a fire risk: 65 percent of the respondents to the survey used candles, 24 percent used gas lamps and 18 percent made use of paraffin lamps.
Marius Neethling, the personal lines underwriting manager at Santam, says: “The survey also revealed that, whereas many people have burglar alarms that have back-up batteries, many do not and live in the hope that nothing serious will happen while they are in the vulnerable state of not having electricity. People also often do not test the batteries of their alarm systems regularly to see that they are functioning properly.”
GENERATOR SAFETY
If you install a generator to power your home when Eskom is unable to, you must tell your insurance company or broker, and it should be noted on your policy.
“You may need to take out additional insurance to cover a generator if you’re using it at a private residence,” Marius Neethling, personal lines underwriting manager at Santam, says.
He says the generator should be installed by a registered service provider, and its installation and use should comply with municipal by-laws, for the following reasons:
* It emits carbon monoxide, which can build up to dangerous levels if the area in which the generator is situated is not properly ventilated;
* It supplies electricity at mains voltage, so it must be properly connected, earthed and insulated; and
* It is a mechanical device that has moving parts and that can get hot, posing a danger to children.
Neethling says you should take the following safety precautions:
* Buy a recognised brand of generator supported by a reputable dealer who can provide back-up service and advice;
* Never store more than 20 litres of fuel in your house;
* Test the generator frequently;
* Consider your neighbours – buy a generator with noise baffling;
* House an external generator in an expanded mesh cage with a solid roof; and
* Have a fire extinguisher of at least 4.5kg on site.
RISKS TO FARMERS AND SMALL BUSINESSES
If you are facing inconvenience during load shedding, spare a thought for farmers and small businesses, which face major loss of income, among Other things.
“Load shedding is already having a serious impact on farming operations that rely on a continuous or even periodical electricity supply. Sometimes, even short disruptions to supply can cause problems, Gerhard Diedericks, the head of Santam Agriculture, says.
Insurers will not cover you for business interruption resulting from the load shedding itself, but you can be covered for loss of business if equipment is damaged by a power surge, for example.
Diedericks says most recent insurance claims lodged by farmers for losses resulting directly from load shedding have been for business interruption following power surges.
“Business interruption cover entails insurance for gross profits, gross revenue and the additional increase in the costs of running the business. In recent years, this type of cover has been extended to include loss or damage as a result of power surges.”
For business owners, dealing efficiently with electricity interruptions has become a priority, Shehnaz Somers, Santam’s head of commercial lines underwriting, says. She says that not having appropriate contingency measures and a risk management strategy in place can have severe consequences, including loss of revenue.
Somers says the main risks to business owners associated with power cuts are:
* Compromised business security. If you secure your business premises with a motorised gate or safety boom, you may want to consider back-up power.
* Electronic equipment and machinery damage as a result of power surges.
* Business interruption. You may experience a drop in sales, reduced turnover and even additional expenses as a result of a power surge.
* Damage or loss of stock-in-trade. This applies especially to refrigerated goods.
Somers says Santam remains ready to assist policyholders with any claims resulting from power cuts.
“For example, if a burglary occurs during load shedding and if the alarm response company is prevented from responding to alarms because of a power cut, Santam will consider a client’s claim, as this is outside of the policyholder’s control. If the alarm does not work because of load shedding, Santam will also consider the client’s claim, provided that the client has taken all reasonable steps to maintain the alarm, such as servicing it regularly and ensuring that the back-up battery is fully operational.”
She says Santam will:
* Protect commercial premises against power surges up to a limit of R50 000.
* Provide business interruption cover as an option to insure against loss of profit or revenue and to cover costs incurred following power surges.