As South Africa is plunged into darkness due to the latest round of loadshedding, insurance expert, Christelle Colman warns this could have severe implications for households and businesses. She urged South Africans to take out insurance to protect themselves or if they already have insurance, to familiarise themselves with the wording in their policies to make sure that are covered in the event of a power outage.
South Africa has suffered rolling blackouts across the country in the past week after Eskom lost additional generating capacity following a cyclone in neighbouring Mozambique. Eskom was forced to step up loadshedding to stage 4 on 16 March when it removed 4000 megawatts from the grid to replenish water and diesel supplies at units designed to generate additional power.
“Insurance is there to ensure that customers are able to replace their assets should the need arise but it is also critical to have the correct cover in place and that all the necessary precautions are being taken to protect valuable assets,” says Colman of Old Mutual Insure . “All policies are different, so it is essential that each person takes the necessary steps to reduce their risk of financial loss resulting from blackouts. This includes making sure that you have both the correct insurance cover in place for your needs, as well as adequate cover to insure the value of your assets.”
While Old Mutual Insure’s data shows that there has yet to be a large increase in the number of overall claims due to the recent loadshedding, experience shows that most loadshedding claims have previously been for items that may not necessarily be covered by an insurance policy in all circumstances. Claims are typically for things like the deterioration of food; the spoiling of refrigerated stock in trade; and damage to appliances or sensitive equipment due to a sudden power surge.
“While we have the deepest sympathy for South Africans dealing with the implications of loadshedding there must be a realisation that each insurance policy is designed for a different set of circumstances,” says Colman. “Consumers must take the time to go through their policies to find out if they are covered for all the eventualities that could impact their unique circumstances during rolling blackouts.”
Here are Colman’s tips to help people take proactive steps to mitigate the risk of damage or loss as a result of power outages:
Unplug appliances and sensitive equipment: It is always a good idea to unplug appliances or any other sensitive equipment or electronic devices that may be vulnerable to power surges. The list of items that could be affected include cell phones, laptops, desktop computers, servers and LCD screens, all of which could be badly damaged when the power comes back on due to a spike in electricity flow. It is advisable that commercial clients install inverters to power critical equipment such as cash registers and point of sale equipment as well as UPS protection or surge protection on sensitive electronic equipment.
Beware your generator: It is critical that generators are never used inside a home or enclosed workplace area as the emissions can cause asphyxiation. The heat from the generator or a faulty connection to your home’s power supply can also cause fire damage, which would not be covered as this would likely be deemed as negligence. Ensure that generators are installed by qualified electricians and that they issue you with an electrical compliance certificate. Generators that switch on automatically can also pose an increased risk and must be carefully managed.
Test your alarm system: During load shedding, alarm power packs and batteries may wear out faster, resulting in reduced functionality. This may also cause alarm systems to produce false alarm signals or even to malfunction altogether. Many insurance policies require that you perform an annual or bi-annual alarm system check, which must be logged by your security company to ensure that it is in proper working order and that the battery is still functional. Failure to do so could impact your claim. You should also ensure that all alarm peripherals have fresh batteries if a wireless alarm system is being used.
Install reserve power: To ensure that electric fencing and gates still work during load shedding, reserve batteries should be installed and maintained. While reserve batteries generally last for six to eight hours when the power goes out, load shedding dramatically decreases a battery’s lifespan, so it is incredibly important that these are tested or replaced, especially if the policyholder is planning to go away or shut down over a holiday period. Backup batteries are particularly important for commercial premises as their alarm systems typically require more power which necessitates the use of heavy-duty batteries. Clients with stock that requires continuous cold storage should consider installing back-up generators with an automated system that informs them of a power outage so that mitigating steps can be taken.
Secure your premises: In the event that the power goes out, homeowners and commercial building owners are advised to ensure that their properties are locked up and adequately secured to reduce the risk of opportunistic theft.
Be vigilant: Because the load shedding timetables are open to the public, criminals may see blackouts as an opportune time to undertake illegal activities. As such, extra vigilance is required, particularly when arriving at or leaving one’s home or commercial premises during the evening. Keep a torch in your car should you arrive home in the dark and need to open your perimeter security gate manually.
Light up your premises: Using solar power or battery-operated lighting to light up your premises can reduce the chance of opportunistic crime occurring. However, be sure to keep all such items fully charged.
Review your insurance policies: Policyholders need to review the wording in their policies to see what is covered in the event of loss or damage to the contents of a home or building during a blackout. Policyholders are advised to speak to their insurance brokers about any additional cover that may be needed.
Follow the load shedding schedule: Rather switch off sensitive equipment in a managed and planned way, particularly if you know that your area is likely to experience load shedding at a particular time. Some equipment that uses heat in the manufacturing process (e.g. plastic extrusion) can be damaged if not switched off properly.
Be positive and hang in there: As Colman explains: “We have been through this before, so we know what the risks are and how to mitigate them. All we need to do now is buckle down and execute to mitigate the impact on our lives and businesses.”