Insurance companies are informing their clients that they cannot insure them against the consequence of any collapse of the national electricity grid either nationally or locally and that should this occur, any claim made by a policyholder for resultant damages will not be entertained by the insurer. All property owners need to be aware of what this means in terms of their building insurance policy.
Grid Failure exclusions in community scheme insurance policies have been around for some time but in the past couple of months more and more insurers are advising their clients that with the ever-increasing levels of load shedding, that countrywide or Eskom /Municipal Grid failure causing the interruption of power supply to a scheme and possible resultant damage will not be covered by the scheme’s insurance policy.
Wording in the insurance policy covering a grid failure exclusion could include that notwithstanding any provision of the insurance policy, including any exclusion, extension or any provision which would otherwise override a general exclusion, the scheme’s insurance policy will forthwith not cover any legal liability, loss, damage, claim, cost, expense or other sum of any nature, including any consequential loss in terms of any section of this policy, that is directly or indirectly caused by, attributable to, in consequence of, arising out of or resulting from an Electricity Grid Failure or Interruption.
Electricity Grid Failure or Interruption means any occurrence howsoever caused, which results in the widespread interruption, withholding, suspension, blackout and/ or failure of electricity supply to users at a national, provincial, regional, or municipal level at the same approximate time.
Not even the South African Special Risk Insurance Association (Sasria) can cover individuals and businesses in the event of a grid failure or grid collapse. While grid failure itself is not covered, normal insured events, as stated in the scheme’s insurance policy terms and conditions, are still covered. For example, if you are involved in a vehicle accident due to a traffic light not working as a result of grid failure your vehicle insurance cover will still apply.
Scheme Executives are advised to contact their scheme’s insurance brokers to get a greater understanding of the implications of this change to their scheme’s insurance policy wording.
