South Africa’s ongoing power crisis continues with seemingly no end in sight and there is a possibility of sustained load shedding for the next two years. Load shedding poses a significant short term insurance risk for many consumers.

One of the most common effects of load shedding on household appliances are power surges. These sudden spikes in voltage can damage or destroy appliances, particularly sensitive electronics like televisions, computers and air conditioners. Load shedding and /or blackouts are not in themselves an insurable risk under an insurance contract. However, damage to household contents caused by power surges is an insurable risk. Some insurers include this cover automatically under household contents cover, and others offer it as an optional add-on. Some insurers may require the installation of surge protectors to qualify for cover. Consumers are urged to confirm their specific cover with their insurers.

Section 8(1)(c) of the General Code of Conduct for Authorised Financial Service Providers and Representatives (‘the Code’) provides that a Financial Service Provider (‘FSP’) must make a recommendation that is appropriate to the client’s needs. FSP’s should ensure that both prospective and existing clients are appropriately advised in respect of power surges.

In addition, Section 7(1)(c)(vii) of the Code requires that an FSP make concise details of any special terms, exclusions of cover, or instances in which cover will not be provided. FSPs should inform you if the product recommended has specific exclusions or requirements for power surges.

Consumers are further urged to confirm the cover limit applicable to household appliances and the replacement value. You may have to provide the value of your appliances to your insurer on an annual basis. The FSP should provide you with the appropriate advice in this regard.

There are other risk factors as well, such as a fire caused by appliances and theft taking place due to the alarm being off. Does the policy provide for any exclusions in this regard. Does the policy require fire alarms, fire extinguishers or surge protectors? Review your policy annually with your FSP to ensure you are adequately covered.

Article credit Load shedding and household cover (fanews.co.za)