Crime: will insurance pay out if my alarm system fails during load shedding?

Published Feb 25, 2023


Johannesburg – So far in 2023 South Africa has experienced load shedding every day of the year, a continuation of the escalated frequency of power cuts since the last quarter of 2022. This saw the country subjected to its longest frequency of stage 6 power cuts.

The effects of the intermittent power cuts have seen many small businesses unable to shoulder the burden of the cost implications related to the lack of consistent power supply.

One of these is the increase in crime as a result of load shedding, as opportunistic individuals look to take advantage of the situation.

According to private security company ADT during extended power outages, such as during stage 6 load shedding, many alarm battery systems are unable to fully recharge and criminals take full advantage of premises where the security is compromised.

Insurance company Auto & General has found that in the first 16 days of January 2023, in comparison with January 2022, there was a 40% increase in burglaries. It has been found that there is a correlation between load shedding and the spike in crime.

Responding to whether it had seen an increase in load shedding-related claims, insurer Santam said it too had noticed a similar increase in load shedding-related claims.

The insurer’s response, in part, read: “Santam has seen a significant increase in claims for damage to sensitive electronic items due to power surge, across our personal insurance and commercial insurance portfolios.”

The reality is that load shedding has an immense impact on consumers and businesses alike – who must cope with the damage to appliances brought on by power surges and dips, as well as the increased crime-related risks as a result of faulty security systems.

So what are the implications of your residential and commercial property being robbed as a result of compromised security due to load shedding?

Most insurance policies stipulate in their contracts that the security alarm must be activated and armed at all times when premises are unoccupied.

Ricardo Coetzee, head of Auto & General Insurance, explained that they use discretion when such a claim is submitted.

“So, if your property is burgled during a power cut, then, theoretically, your theft-related cover would be moot.

“We believe that load shedding is beyond the control of our customers, and therefore they should not be penalised for it. As such, each case will be considered based on its own merits,” said Coetzee

Consumers are advised to ensure that their alarm systems are in good working condition and the back-up battery is fully functional to provide power to the system in the event of load shedding.

What about losses that businesses incur due to load shedding? Can your business claim for said losses?

According to Santam, load shedding, as currently being experienced, is not an insured peril. Business Interruption, if purchased, provides cover for loss of income caused by a defined set of perils, which are provided in the insurance contract.

Load shedding also has a detrimental effect on electronic devices. Insurers do offer cover for damage to sensitive electronic items that are caused by power surges. Power surges and dips occur because of load shedding, leading to damage to electrical and electronic equipment in your business.

Damage caused by power surge is covered and the terms and conditions associated with this cover will be clearly defined in the insurance contract.

Insurers advise South African consumers and businesses to revisit their insurance policies to ensure that they have sufficient cover that includes potential damage caused by power surges.

Although load shedding or blackouts are not an insurable risk under an insurance contract, the damage to home contents, caused by power surges, is often covered by insurers. But again, this is dependent on the individual product.

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