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Grid Failure/Grid Interruptions Exclusions: A Breakdown

With load shedding continuing to be a problem in South Africa, insurers have had to take drastic measures. Major insurers like Santam and Camargue have introduced exclusions on losses due to grid interruption and grid collapse (before getting started, it is important to state that load shedding is planned power interruption, grid failure/interruption is unforeseen). Other insurers, no doubt, will follow suit.

What does this mean?

- You will not be insured for grid failure or interruption regardless of whether you suffer direct or indirect losses

o Unless this loss is specifically insured under business interruption (e.g., telephonic communications)

o Fridge/freezer contents are being excluded from policy wordings

- Clients (both commercial and personal lines) will likely have to pay an excess when claiming for power surge losses/damages (e.g., electronic damage)

o Power surges will no longer be covered under accidental damage

Further Clarifications:

1. Fridge/freezer contents going off due to load shedding has explicitly been removed from Santam’s policy wordings

2. Additional premiums will not cover power surge excesses

3. Power surge excesses will apply to clients of all ages

4. Power surge excesses will not be removed should the client install surge protectors

5. Power surge cover has been removed from the Accidental Damage section of policies

6. Grid failure will be excluded from cover

Why are insurers making these changes?

The risk of grid failure can no longer be ignored by insurers. Should insurance companies need to pay for such a catastrophic event they would not be able to pay other claims, may face solvency issues and may not meet a return on investment. In other words, it would not be financially feasible to keep on paying for these claims. Additionally power surge claims have increased by over 200% over the last three years and insurers cannot keep up.

The light at the end of the tunnel:

To clarify, load shedding has never been an insured peril in and of itself. Insurers will still be covering fridge/freezer contents should it occur for non-load-shedding related purposes e.g., accidental damage to a plug socket that goes unnoticed. The same applies to power surges that occur outside the event of power interruptions e.g., should a power surge result out of a lightning strike you will have cover. There are products on the market that can protect you against power surges and grid failure. In fact, the government has recently implemented rebates for installations of solar. You can read our article here:

We understand that it is a scary time and that these exclusions may seem unfair. Feel free to contact us should you have any questions, comments, or concerns. We are here to help protect you!

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