Going off the grid? How it affects your insurance

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Lizo Mnguni | Spokesperson | Old Mutual Insure | mail me |


By now you would be hard-pressed to find a South African who is not familiar with the terms Stage 1-6 of load shedding, or even the tongue-in-cheek, Eish-kom. All of these are used to describe the instability of the national power grid.

While we have come to accept the unfortunate reality of power supply interruptions, reports suggest that load shedding Stage 2 or 3 could be guaranteed for the next two years. In this scenario, we are in for a bumpy ride.

Many people are investing in alternative power supplies like inverters, generators, Uninterrupted Power Supply (UPS) batteries, and even solar power to keep the lights on, which has now become even more attractive given the government’s recent introduction of a solar panel tax incentive for individuals.

Insuring at the correct value

Many financial institutions are offering finance for solar power, which makes it more easily accessible. If policyholders install such a system, we require that they inform us. The sum insured needs to be adequate.

Many policyholders often do not insure them at the correct value, which means that if they experience a loss, they would not be able to replace it with the new replacement value of the item insured. A movable power solution must be covered under the contents section of a policy, and fixed or non-movable solutions (like a UPS) must be insured under the building policy.

A trend that the insurer is seeing is an increase in fire claims, likely either from heat emanating from the system, or incorrect installations.

While the policyholder is entitled to use an installer of their choice, ensure that the installer has experience and qualifications. We recommend that all policyholders undertake the necessary due diligence and research before hiring an installer. Our requirement is that – as per regulations – electrical installations must be done by a qualified electrician, who must issue a Certificate of Compliance.

I also advise against using your insurance policy like a maintenance contract. You may have both household contents and buildings cover under your insurance policy, but this does not mean that you would be able to claim for solar panels that no longer store as much energy as they previously did when they were brand new, given a demise in batteries. This would be classed as ‘wear and tear’ and not qualify as an insured loss event.

Risk of hail

It is important to be mindful that if you have solar panels fitted, and you live in an area where there is a risk of hail, your need for insurance may be greater than what you previously considered it to be.

If you live in an area prone to hailstorms, think about whether you have adequate buildings insurance cover in place, as any loss event to your solar panels would likely be covered by this policy. If you had no cover in place previously, now is the time to consider it.

Tips for policyholders who are looking to invest in a solar panel:

  • Ensure installation is done by someone qualified. Electrical installations must be done by a qualified electrician, who must issue a Certificate of Compliance.
  • Insure your solar panel under the correct policy. While it is likely to be a permanent fixture to your home (buildings insurance policy), if you intend to move with it one day, it will need to be insured under your contents section. Speak to your broker to clarify.
  • If you live in an area that suffers from weather events, like hailstorms, double check that your solar panels are included for this in your current policy.
  • Only claim if your solar panel suffers damage from a sudden and unforeseen event. Claims for wear and tear will be rejected as maintenance is your responsibility.
  • If you have an inverter in an enclosed area like your garage, make sure you take the steps necessary to protect it from overheating. If you experience damage to your property due to overheating from the system, it is unlikely that your insurance policy will cover this event.

 



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