During his 2022/2023 budget speech, Minister of Finance Mr Enoch Godongwana, announced a solar tax incentive for the period 1 March 2023 to 29 February 2024, where one can claim a 25% credit on the cost of solar panel expenses up to a maximum of R15 000 per person.
This initiative may see an increase in the number of solar installations, as South Africans continue to experience the negative effects of loadshedding.
When consumers install solar panels, they need to be aware of the effects that this may have on their short-term insurance policies, especially in respect of the homeowner’s insurance benefit. Short-term insurance companies will generally require policyholders to inform them about additions of any off-grid and electricity backup systems, inclusive of solar panels, to ensure that any future claims are covered.
Short-term insurance brokers and Financial Services Providers (‘FSP’) should also comply with the relevant provisions of the General Code of Conduct for Authorised Financial Services Providers and Representatives (‘the general Code’) in this regard. At the initial meeting with the consumer, an FSP is required to conduct a needs analysis to ensure that a recommendation can be made that is appropriate to the client’s needs and circumstances (section 8 of the Code). Homeowners insurance, also known as building insurance, includes the building structure and other structures such boundary walls, swimming pools, and solar panels. One must ensure that the cover amount also includes structures such as solar panels.
In respect of existing clients, it is vital that any additions and extensions such as solar panels are brought to the attention of the FSP and or insurer, so that the required amendments can be made to the insured value of the homeowners cover. However, just as important, is that FSP’s who receive an ongoing commission must also provide ongoing advice at least once every 12 months. The provision of a revised policy schedule on the policy anniversary with a cover letter, is notconsidered as providing appropriate advice, as it neglects the needs analysis aspect that will ensure that any changes are identified and provided for. The FSP’s duty to ensure the policy remains appropriate is important to note.
A further important consideration is the minimum requirements of various insurers. Insurers will generally require the solar panels to be installed by a reputable certified provider. There may even be insurers that require electrical installations to be certified by a qualified electrician, and to issue a Certificate of Compliance. Section 7 of the Code requires FSP’s to disclose these important and material disclosures to their clients. Their clients should be placed in a position to make an informed decision and ensure that they are provided the opportunity to comply with any special terms.
Consumers are urged to be aware of these implications and to seek advice from their registered FSP to ensure that proper coverage is in place.
Should you believe that you have been financially prejudiced because of the financial service rendered to you, kindly visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may call our Client Care Centre on (012) 762 5000 or Sharecall 086 066 3274 for assistance in submitting a complaint.
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