Load shedding leads to rise in insurance claims
Justmoney contacted several insurance companies to see what their experiences with load shedding related claims have been.
Anton Botha, general manager of personal lines at Hollard, said: “The switching on and off of the electricity supply that is experienced during power outages can result in damage to or loss of electrical and electronic equipment and machinery as a result of power surges. Indications are that there has been an increase in claims of this nature due to load shedding.”
Vickey Swanevelder, head of claims and claims support for Momentum Short-term Insurance, noted: “Like many other insurers, we have seen an increase in load shedding related claims especially items damaged as result of power surges after a load shedding event. We have also seen generators, purchased specifically to lessen the impact of load shedding, becoming a sought after item for criminals.”
Natasha Kawulesar, head of client relations at OUTsurance agreed that there has been an increase in the number of claims it has received as a result of power surges and dips.
Kawulesar noted: “It is a variety of electronic equipment and appliances that are claimed for including items such as alarm systems.”
Is load shedding covered by insurance?
There are certain events or claims that insurance companies may not cover under any circumstance due to a clause or loophole in the insurance agreement. For example, unless you have specifically informed your insurance company that you have a generator, and want that generator insured, if something happens to it, your insurance company probably won’t pay out.
Swanevelder revealed that certain claims that are as a result of load shedding may be covered. “At Momentum Short-term Insurance we believe a power surge as result of load shedding to be a sudden and unforeseen event, and therefore automatically include it under the insurance policy. Therefore, any surges resulting from load shedding will fall within the ambit of the agreement.”
OUTsurance will also cover claims that are as a result of load shedding, if covered by your insurance policy. “At OUTsurance damage as a result of a surge or dip in power forms part of our standard personal insurance cover and is included under both our contents and buildings cover,” stressed Kawulesar.
“Hollard policy cover will depend on the specific policy wording. Where there is cover (this applies to most Hollard wordings) no excess applies if approved surge protection is fitted. Otherwise there is both a policy limit and an excess. We are in the process of trialling an automatic free benefit with limited cover that applies to policies which do not provide comprehensive cover,” noted Botha.
He added: “Hollard will not seek to avoid claims providing the insured has otherwise observed policy conditions.”
However, it is important to note that an insurance company’s decision of whether or not to approve a claim will be based on the individual situation of the specific claim.
Momentum noted: "The financial wellness and safety of all clients, families, businesses and communities is central to the company’s existence."
Security and load shedding
Security is another issue that is raised by load shedding. When the power is off your home is vulnerable, making it the ideal time for criminals to make their move.
Botha noted: “Security systems in most homes rely on electricity for power. In the absence of an electrical supply, electric fences become totally ineffective and alarm systems default to battery backup. The problem is that even fully charged and functional batteries have a limited lifespan and in the event of lengthy outages end up providing no protection. Of course, most batteries are operating at less than full capacity and may fail earlier than expected. We thus urge everyone with alarms to check their batteries regularly.
“In addition, you should also make sure that your home is secured by physical means. Security gates, windows and unprotected doors should be closed so that the building is secure (while ensuring that there is adequate ventilation!)”
Botha added: “Hollard will not prejudice clients where load shedding renders an otherwise operable system that was armed, inoperative.”
Tips to minimise the impact of load shedding
Momentum offers some tips to help minimise the impact on items that can be damaged as a result of load shedding.
· Switch off and unplug electronic equipment: “Disconnect all electronic equipment from wall outlets when the power goes out until at least 15 minutes after the power returns. Sometimes when the power is restored, a ‘power surge’ occurs, which can increase the current flowing to your wall outlet and then short circuit some of your electronic devices,” explained Swanevelder.
· Prevention is better than cure: Swanevelder suggests that consumers purchase affordable surge protectors to protect their electronic equipment from a power surge.
Botha agrees with Swanevelder, adding: “We urge everyone to install proper surge protection on their distribution boards. These are inexpensive, typically costing a few hundred rand. They should be installed by a qualified electrician. If you don’t have surge protection, unplug all your appliances and devices to protect them from the possible surge when the power comes back on.”
However, it is important to note that power surges are not the only reasons for insurance claims. Momentum highlighted that load shedding offers criminals an opportune moment to break into houses and perform other criminal acts.
In response to this, many people worry if their insurance claim will be paid out if “the power is off for periods exceeding the life time of the backup battery to [their] alarm,” revealed Swanvelder .
To help prevent your claim from being denied, Momentum advised:
· Ensure that your alarm system is in full working order at all times.
· Regularly test that your backup battery is in working order.
· Switch the power off and then test the system to see if the backup battery works.
· “For a nominal fee, you can ask your security company to test it for you,” noted Momentum.
· Your security company should contact you if the backup battery runs out, so keep your mobile phone charged and close at hand.
· “For those who are fortunate to have generators, ensure that this is correctly covered under your insurance policy and hidden away from the public eye,” highlighted Momentum.