Implications of Power Outages on Your Household Insurance
The writing is certainly on the wall as South Africa gears itself for potential load shedding during the approaching winter months. While this has many implications, one of the most concerning is the fact that power outages compromise safety and security. In an extended outage, the battery back-up on security equipment such as electric fences, alarm systems, security cameras and outdoor motion passives may well run out before power is restored. Should you experience a burglary or robbery during this time, you could find yourself holding the short end of the stick if your insurance coverage terms don’t specifically provide for circumstances that are beyond your control.
According to Mandy Barrett of insurance brokerage and risk advisors, Aon South Africa, recent media reports have suggested that consumers may find their claims rejected by insurers if their alarms are not functional and they experience a burglary or break in during a power outage.
"This may well be the case on some insurance programmes, especially where the policyholder has not interrogated the implications of the terms and conditions of their cover. This is where the true value of having a professional broker in your corner comes to bear. A professional broker can add tremendous value in the advice process and guide you towards a thorough understanding of the terms and conditions of your cover, making sure that you are not compromised or prejudiced by unreasonable limitations on the cover. A broker would always point out terms in a policy that applies onerous or unreasonable limitations. Unfortunately though, most people only discover the pitfalls of the D-I-Y approach to insurance at claims stage, when it’s too late,” says Mandy.
As part of your preparations for a potential power crisis this winter, it’s essential to check with your insurer exactly what your policy covers you for should you have a claim as a result of a power failure. If you are unsure, engage the services of a professional broker who is equipped to guide you through the process and the jargon.
"Granted, insurers will provide specific conditions to their cover when it comes to security measures for your home or property, and more specifically regarding the alarm system. For example, the alarm will need to be in full working order and in many instances, linked to an armed response company,” explains Mandy.
"Your policy may very well specify that if your home is left unattended, that the alarm has to be armed. Under normal circumstances, if these conditions are not adhered to and a burglary takes place, the client may be subjected to additional compulsory excess payments, claim rejection or the settlement being dramatically reduced. But the key term here is ‘normal circumstances’. This condition should not be applicable if the alarm malfunctions due to a defect or circumstances unknown or beyond the control of the insured – such as an extended power outage. A good broker will be looking out for you in such circumstances,” explains Mandy.
The value of having an independent insurance broker to provide transparent and skilled advice cannot be emphasised enough. When it comes to bespoke insurance designed for your unique needs, a broker is qualified to provide advice, factual information, interpretation and proposals with high levels of competence and transparency. Giving advice incorporates the exercise of judgement and interpretation for a client’s unique circumstances. It is independent of product or provider influence, unlike direct models where policy covers are commoditised and often do not provide the flexibility needed to cater for the client’s unique risk profile.
"The broker’s role is to examine your circumstances in detail and to impartially recommend covers that will meet your specific needs. Choice, simplicity of wording and customisation will ensure that your assets are covered correctly and that you are not prejudiced for something you have no control over. Good advice is always a great investment,” concludes Mandy.
