- By Indwe Risk Services
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With a bleak power generation outlook, and increased demand during the upcoming colder months, it seems that load shedding is here to stay.
South Africans are certainly not out of the woods from potential damages caused by Eskom’s rolling blackouts. Claims are generally made for scenarios like food deterioration and spoiling of refrigerated stock, and damage to appliances or equipment due to power surges. While personal belongings and business equipment may have emerged unscathed from the recent power outages, increased risk and damage from load shedding remains an everyday threat.
As the adage goes, prevention is better than cure. But how prepared are you for the next bout of blackouts?
FIVE RISKS FACING INDIVIDUALS:
- Damage to appliances from surges:
Some policies cover damage to appliances from power surges triggered by lightning and thunderstorms, but not for damage caused by load shedding. Check if your policy covers damage from surges caused by load shedding. Switch off appliances before load shedding is implemented and consider having surge protectors installed by a certified electrician.
- Fire risks:
Insurance cover for fire damage from candles or electrical fires from malfunctioning appliances, will depend on the type of cover taken out by the policyholder. If household goods are damaged, a policyholder cannot claim for fire damage if they only have building insurance. Most house fires are caused by candles that are left to burn or electrical appliances that short-circuit when power comes back online. Be extra vigilant when using candles or anything that could be a fire hazard during load shedding.
- Theft and burglary:
The risk of opportunistic theft and burglary is heightened when the lights go out. If a claim is submitted following a burglary, proof will be required that security systems were functioning properly at the time of the incident. If not, and the malfunction is found to be due to negligence, the claim could be rejected. Policyholders should ensure that their alarm system is working properly and has a back-up battery in the event of a power cut.
- High risks on the road:
Load shedding severely affects traffic flow. No traffic lights means gridlocked traffic, which gives rise to smash and grab threats. Dark roads and intersections increase the risks of vehicle and pedestrian collisions, as well as hijackings. Regardless of what insurance cover you have in place, it is essential to exercise caution when driving during a blackout.
- Departing or arriving at home:
The risk of being held at gun point for your belongings like your cell phone or laptop increases when arriving or leaving home in the dark. Ensure that you are aware of your surroundings as an attack can happen when you least expect it.
FIVE RISKS FACING BUSINESS OWNERS:
- Security threats:
Load shedding schedules are in the public domain, which means criminals can use them to their advantage to carry out crime in affected areas. At the same time, owners should know when load shedding will take place, therefore the onus is on them to ensure alarm batteries are in working order before load shedding is implemented. Malfunctioning security equipment like alarms and electric fencing could cause a claim to be rejected. Many insurance policies require annual or bi-annual alarm system checks, which must be logged by the security company for approval on full functionality. Failure to do so could impact your claim.
Ensure security systems are in working order, have functioning back-up battery power, and be vigilant about automated access control and who has access to your facilities during blackouts. Not only will this reduce the risk of the theft occurring, but it will also make the claims process a lot easier.
- Spoiled stock:
Business owners need to be well informed about cover for perishables and stock in cold storage. Back-up power with automated systems that notify business operators of a power outage, should be implemented to mitigate risk.
- Damage to electronics and machinery:
Surges can cause damage to electronic equipment and machinery. Power surge cover is offered as an extension to the material damage policy, and for this reason, business interruption does not apply in the event of losses stemming from power surges. If your business relies heavily on electrical equipment to function, then you could face increased power surge risks. If your equipment is insured under a fire policy, then the indemnity is restricted to the power surge limit, but if electronic equipment is insured under an electronic equipment policy, then you’ll enjoy full power surge cover.
- Fire risks:
A generator with a faulty connection can be a hazard and can therefore affect your claim in the event of a fire, as this will likely be deemed as negligence. Generators that switch on automatically can also pose a risk and need to be carefully managed. Generators should only be installed by qualified electricians who will provide you with an electrical compliance certificate.
Business interruption cover generally excludes interruptions brought on by intentional planned power outages by power generation suppliers. Business owners who depend on good lighting to perform intricate work (i.e. dentists), should proactively plan for alternative power generation to alleviate business interruption. However, if they are left in the dark, business owners can claim full loss of profits if they are insured under an electronic breakdown or full loss of profits policy.
These are just some of the risks individuals and business owners face during a blackout. It is imperative to consult with an expert advisor to assist with insurance cover and for the development of effective risk management to ensure policies provide for the best possible cover.
For trusted advice and assistance that you can rely on, speak to your Indwe advisor today. Phone 0860 13 13 14 or visit www.indwe.co.za.
Indwe is an authorised Financial Services Provider. FSP: 3425
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