Several short-term insurers in South Africa have pulled or plan to remove national power grid failure cover from their policies in 2023, making it more important that those with alternative power supplies know what they are covered for, Andrea Tucker, the director of MortgageMe, says.

A national grid collapse is, however, unlikely despite persistent load shedding. Researchers and analysts from ETM analytics said that headlines pushing such a narrative are misleading, as a blackout could only result from unexpected circumstances such as nationwide power station shutdowns or several power lines being destroyed simultaneously.

Tucker said that fixed devices such as solar panels are typically covered under homeowners building insurance – but it is up to the homeowner to inform their insurer to adjust the total sum insured accordingly.

She added that non-fixed devices like inverters or UPS are usually covered under home content insurance.

“While they don’t need to be individually specified, the total sum insured should be updated to ensure it covers these items’ replacement,” said Tucker.

Tucker said that while home insurance is not mandated by law, it is highly recommended. For example, homeowners insurance is often required by banks if you are getting a bond to finance a new home.

Homeowners building insurance that can cover fixed alternative power supplies also covers the structure of a home against unforeseen losses or damages resulting from incidents such as fire, natural disasters or a burst geyser.

“This policy can often be expanded to encompass additional structures like garages, swimming pools, and even fixed items such as fitted kitchens,” Tucker added.

Insurance is front of mind for many South Africans, especially those spending thousands on their households to escape load shedding. Tucker said that the fact that many insurers are ridding cover for a total blackout paired with rising interest rates, many people are considering ceasing their insurance.

However, she has advised heavily against this. “Instead, consider insurance bundles that combine building, contents, and personal insurance into a single package as a more affordable option.”

“Reviewing insurance policies regularly and updating them according to changes in circumstances is crucial to prevent being under-insured or over-insured,” she added.

A big push toward rooftop solar has been supported by the government’s tax incentives.

During the finance minister’s national budget speech for 2023, new amendments allow for individuals who install rooftop solar panels will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15,000.

A different kind of problem

Load shedding has also created another insurance headache for South African consumers, with sudden power surges damaging household appliances.

Dialdirect said that there has been an 80% increase in power surge claims in 2022/23 compared to three years prior.

The insurer said that this coincides with a 970% GWH (gigawatt hours) increase in load shedding for the same period.

Amidst the increase in load shedding-related damages, many South Africans still do not know if their items are covered by these surges.

“While grid failure was never stipulated as an insured event and has never featured in policy terms and conditions, load shedding-related power surge damage is still a grey area,” Anneli Retief, Head of Dialdirect Insurance, said.

“Some insurers have capped power surge payouts; some say, ‘we’ve got you covered, but at a higher cost’, and some will cover some power surge-related damage but not all.  It’s confusing.”

Amidst the problems caused by load shedding, Dialdriect said that it had designed a combo deal to protect consumers from power surges and the emerging trend of solar system crime.

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