
We’ve all experienced load shedding, and it has become a part of our daily lives. But when the power outage occurs unexpectedly, things can get messy. Several insurance companies have announced exclusions for total grid failure. And so the big question becomes, what impact does this have on your existing cover and what should you prepare for? Let’s unpack.
Load Shedding vs Power Failure vs Grid Collapse
Let’s clarify the difference between load shedding, power failure, and grid collapse. Load shedding is a controlled electricity supply interruption to prevent the national power grid from collapsing. Power failure is a lack of continuous electricity supply due to theft, vandalism, or breakdowns in a particular area. Grid failure is the partial or total loss of power in the national electricity grid that could lead to a complete blackout for weeks and disrupt municipalities and public infrastructure.
We’ve experienced more than 200 days of load shedding in 2022, but a grid collapse is an entirely different beast.
Covering Total Grid Failure
Insurers are not changing the terms and conditions of policies; they’re being more explicit about what is and isn’t covered. The shift has occurred because reinsurers have assessed the risk of a total grid collapse and decided that if it occurred, the local insurance industry would likely go bankrupt if every insured person claimed.
According to reports, one insurer alone paid out over R21 million in claims in the 14 months leading up to 2023.
Understand Your Cover
It is key to note that in all likelihood your car or household insurance claims related to load shedding or power failures will not be rejected, however they will not be covered in the event of a total grid collapse. Fortunately though, power surges are still covered under specific policy wording.
If a loss occurs due to electrical grid failure, such as food deterioration in the fridge, water disruption leading to geyser damage, or a gas supply failure, these claims will not be covered because grid failure is not an insured peril.
Your policy covers theft, but it’s subject to specific terms and conditions. If the grid collapses and the backup battery on your alarm system runs out, you can still claim. However, you must take all reasonable precautions to prevent or limit potential losses as per your policy.
If you’re in a car accident at a failed traffic light due to a grid failure, your car insurance will still cover you. However, it’s always a good idea to compare car insurance policies to ensure that you have the right coverage.
Don’t be in the dark!
It’s critical to understand your policy wording to know precisely what’s covered and what’s not. This knowledge will help you avoid being caught in the dark when it comes to claims related to a total grid failure.
Need to have an extra set of eyes on your policy? Speak to a Fachs Insurance Broker agent today and we’ll gladly help you explore the optimal insurance coverage for your unique needs.
Disclaimer: This article is for informational purposes only and should not be construed as financial, legal or medical advice.