Load shedding, risk and your insurance

According to a new report by the Council for Scientific and Industrial Research (CSIR) on SA’s electricity crises and ongoing load shedding, South Africa will grapple with an electricity supply gap until 2022, in a best-case scenario.  Load shedding will be a regular feature for the foreseeable future.

“In our energy-driven lives, there’s precious little that does not revolve around having a secure and stable electricity supply.  Load shedding is massively disruptive to both our personal and business lives, posing a threat to productivity, safety and security and your electronic appliances,” says Mandy Barrett of insurance brokerage and risk advisors, Aon South Africa.

Aon offers some important advice into managing the risks and insurance aspects of load shedding: 

• Safety and security
  In an extended outage, the battery back-up on electric fences and alarm systems may well run out before power is restored.  It is essential to check with your insurer exactly what your policy covers you for if it has what is known as an ‘alarm warranty’ which requires that your alarm is armed when no one is at home.  Under normal circumstances, if these conditions are not adhered to and a burglary takes place, you may be subjected to an additional compulsory excess payment or claim rejection.  But the key term here is ‘normal circumstances’.  This condition should not be applicable if the alarm malfunctions due to a defect or circumstances unknown or beyond the control of the insured – such as an extended power outage.  If you are unsure, check with your broker on what the conditions are around such a scenario. 

• Electrical Appliances
  Power surges spell disaster for sensitive equipment such as computers, laptops, TVs, fridges, sound systems and the like. Installing surge protection at plug points and at your distribution board (by a qualified electrician) is the best way to protect your electronic devices from surge damage when the power comes back on after an outage. Many insurance policies have surge protection specified as a requirement of cover, making it crucial to check policy wording to ensure that there are no surprises awaiting you at claims stage.

• Productivity
  With the work-from-home trend now well entrenched for many businesses, remaining productive during power outages becomes a challenging task. An Uninterrupted Power Supply (UPS) may be the perfect solution, as it will tide you over by keeping your computer, internet router and cell phone charged until the power is restored, depending on how long the outage is. This will mean that you can continue working, no matter the power situation. And as long as the cell phone towers or your fibre connectivity provider remain operational during the outage, you should have internet connectivity too.
  
  The added benefit of having a UPS, is that it acts as a surge protector to all devices connected to it, which is ideal. The proviso is to invest in a good quality, pure sinewave inverter to ensure that your sensitive equipment like a laptop and router are protected from power spikes. 

• Generators and Solar Photovoltaic systems
  Many homeowners are installing generators and solar photovoltaic (PV) systems in a bid to reduce their dependence on the grid. It is essential that you get these systems installed by qualified installers and that they provide you with an Electrical Certificate of Compliance (COC) for any electrical work done at your home.  Your insurance will request this should you need to claim in future to prove that all work was done to required safety standards and regulations. Most crucially, you want the peace of mind that your installation is safe and fit for purpose to be connected to your single most valuable asset – your home! 

“Our changed electricity situation brings a new set of risks and challenges for homeowners in so far as safety, security and productivity goes.  Talk to your professional broker about any potential risks you could be facing, and that your insurance policy is still fit for purpose given the changed circumstances.  Also, remember that any additions such as generator, UPS or PV systems will need to be insured as they add to the value of your property, and ensure that they are supplied and installed by qualified individuals.  Make sure that you are not compromised or prejudiced by unforeseen limitations on your cover or lapses in standards of any electrical work done in your home,” concludes Mandy.  

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About Aon

Aon plc(NYSE: AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

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