Electricity Grid Failure Exclusion | Commercial and Personal Lines

Dear Client

As you are aware, South Africa has seen unprecedented levels of loadshedding and growing pressure to the electricity grid. As a result, we are seeing the majority of insurers updating policy wordings and covers to confirm that losses due to grid failure are not covered. It was never intended for short term insurance policies to cover grid failure. These changes have been necessitated by a requirement from reinsurers for the insurance companies to update the policy wordings in order to give clarity to you, the client, and to add this as a general exclusion to your policy, to clearly define the cover, and to explicitly exclude losses due to grid failure.

Your policy will not provide cover for any loss, damage (physical or financial), legal liability, cost, expense, business interruption or consequential loss of whatsoever nature, directly or indirectly caused by, contributed to by, resulting from, arising out of, or in connection with grid failure for whatsoever reason (inclusive of any electricity supplier’s action, decision or omission relating to the production, connection, supply, transmission or distribution of electricity).

This exclusion also applies to consequential (indirect) losses in respect of any public utilities that are affected by electricity grid failure, including but not limited to, the disruption of water, telecommunications, and sewerage systems. It also applies to other consequential losses, such as the deterioration of any food or other items. All own damage, and all consequential loss or damage, and/or contingent business interruption extensions are not covered if there is a grid failure.

This exclusion, for now, does not apply to loadshedding (defined below) which remains covered subject to the terms and conditions in your policy. However, insurers will no longer cover spoiling (deterioration) of food due to loadshedding, or electrical grid failure of a power-supply authority on a national, regional, municipal, local and/or private level.

Electricity Grid Failure

is an interruption to or suspension of electricity supply, in any manner, from whatsoever source, and for any reason (including damage and any inability and/or failure on the part of the supplier), which affects an entire municipality (including local, district, regional or any other level that is created by law) or province or the country at substantially the same time, including any interruption, power surge or suspension at the reconnection or reinstatement of electricity supply.

Electricity Grid Failure

is the intentional, total, or partial, withholding of electricity supply (from any source) by any party other than the insured, implemented in phases, which does not affect a municipality (including local,  district, regional or any other level that is created by law) or province or the country at substantially the same time. It is generally to prevent the failure of the entire system when the demand strains the capacity of the system. This is implemented in phases.

It is important that you are clear on the conditions of your policy, as some covers may be subject to these requirements being met at all times. For example, theft covers of the policy may have security requirements, such as alarm systems. It must be noted that there is no cover in place if these requirements are not met in any way, whether directly or indirectly due to electricity grid failure, loadshedding or any other reason. These conditions must be met at all times in order to ensure that your cover is not compromised in any way. Please note that until such time that either your policy schedule or policy wording has been updated to include this extension, this letter will form part of your policy terms and conditions from 1 April 2023.

Should you have any queries or wish to discuss your policy, please do not hesitate to contact us.