Insurance against power surges caused by load shedding
As if the insurance industry does not have to pay enough money to disrupted households and businesses for claims caused by rioters, strikers, arsonists and rock throwers, another risk, called load shedding, poses a major threat to the entire country.
Load shedding is a reality that will be with us indefinitely. This has an extremely detrimental effect on, in particular, electrical and electronic equipment of households and businesses alike. The constant change in power supply causes damage and loss due to power surges. Furthermore, it also leads to an increase in burglaries and theft due to the fact that security measures such as alarm systems are out of order.
As loss and damage caused by power surges became the rule rather than the exception, insurers extended their short-term insurance policies to automatically include coverage against power surges caused by load shedding for a limited amount. Previous decades, power surges was caused only by lightning strikes, which is an insured risk, but currently our national electricity provider is a greater risk.
The insurer’s reimbursement for these types of claims is limited to the auto-insured amount as shown in the policy schedule. The proportionality (underinsurance) does not therefore apply to the power surge extension. However, the insured will always be responsible for the co-payment, which is usually a percentage of the claim with a minimum amount. More coverage than the amounts automatically included in the policy sections can be obtained by paying an additional premium. Under Personal Policies, the amount for mechanical, electrical and electronic breakdown may be increased. For Commercial Policies, the amount can be increased under the various sections where buildings and contents are secured or equipment can be specified separately under certain sections.
Insurers usually place a power surge protection condition on policies. It stipulates that all conductive services such as applicable electrical distribution boards, power supply plugs, telecommunication lines, data lines, etc. Be supplied with surge protection equipment. In failing to comply with this requirement, the insurer will not be liable for any loss or damage caused by a power surge. Where insurers make use of power generation equipment, insurers require that such equipment be equipped with appropriate surge protection in order to continue to enjoy power surge coverage.
Regardless of the insurer’s surge protection requirements, it remains in the client’s best interest to take adequate precautions to avoid disruptions that power surges may cause. It also remains important to ensure that your respective policy sections have adequate power surge coverage. Do not hesitate to contact your broker for advice in this regard.
Please contact one of our expert advisors for further information.
The above-mentioned is for information purposes only and is in no way advice. Boshoff Visser Konsult (Pty) Ltd. encourages readers to get in touch with an expert financial advisor before making any decisions.
Article written by Bert Kleinhans