Grid Failure



Has your insurance provider notified you that they will not be covering damages or losses resulting from electricity grid failure? It’s important to understand what this means and how it could impact your insurance cover.  

According to Santam, during the last 12 months power surge claims have increased by around 60%. It’s vital to keep yourself informed about changes to your policy terms and conditions, and to know your rights as a customer and what is covered or excluded so there are no surprises if you do suffer losses due to South Africa’s electricity challenges.

Our latest blog post explores what grid failure exclusions mean for your insurance, scenarios where you may still have coverage, and steps you can take to limit risks.


Grid Failure


Loadshedding vs Grid Collapse – What You Should Know

Economists have predicted 2023 will be the darkest year yet in South Africa as Eskom continues to grapple with insufficient generation capacity. This means more frequent blackouts and a potentially heightened risk of grid collapse across the country.

Naturally, South Africans are concerned about how this may impact their insurance coverage for property damage and other unforeseen incidents. Some insurance companies have now explicitly added “electricity grid failure” as an exclusion in certain policies.

To understand how this exclusion might affect your insurance cover, we first need to understand the difference between loadshedding, grid collapse, and power surges:



This refers to the intentional shutting off of power supply to selected areas or circuits. It is done by the power utility as a load management technique when there is insufficient generating capacity to meet the demand. Loadshedding results in rotating blackouts for certain areas and is meant to be temporary. It happens when there is a shortage of power generation versus demand.


Grid Collapse

This refers to a complete breakdown of the power transmission grid, leading to a widespread and prolonged loss of power supply across large areas. It happens when there is a major technical fault or disruption in the grid that causes the grid to cease functioning. A grid collapse results in a large-scale blackout and can take hours or days to repair.


Power Surges

This refers to temporary spikes in voltage levels on the power grid. They can damage electrical equipment and appliances. Power surges happen due to issues like transmission line faults, transformer overloads or lightning strikes. They lead to excessively high voltages for a short duration.


Grid Failure


Insurance Implications of Grid Failure

Insurance companies argue that grid failure is not a sudden or unforeseen event, which forms the basis of any insurance policy. While it may seem like they are canceling your coverage, that is not entirely true because that coverage was never actually provided. They are simply updating their terms and conditions to make that clearer.

Does this mean you have no coverage if anything happens during a grid failure? Not exactly. If you suffer damage or loss directly resulting from grid failure, you will not be covered. However, if you claim for damages not directly linked to grid failure (i.e. regular insured events as stated in your policy terms and conditions), you should still have coverage.

For example, if you have a car accident because traffic lights were out due to grid failure, you would normally still be covered. However, if your home is burgled during a power cut and your alarm system fails to activate, your cover might not be valid. It is essential to ensure that alarm systems are in good working condition and the back-up battery is fully functional to provide power to the system in the event of load shedding. 

In another example, if you experience loadshedding and power is not restored when it was supposed to, causing the contents of the fridge/freezer to spoil, would this be covered? Yes, as the cause of loss is failure to restore electricity, not scheduled loadshedding.

There are a range of circumstances that could apply to insurance claims and power interruptions, so it is best to check what your individual policy provides cover for.


How Can We Help?

While the future remains uncertain, taking prudent precautions and working closely with your insurance providers is the responsible thing to do. 

Contact us for more information on your personal or business insurance, and how loadshedding or grid failure might impact your specific insurance policies.

Alternatively, request a quote and our team will get back to you with our recommendations.