Explore the essential insurance considerations for homeowners and businesses investing in alternative energy sources like solar power, and learn how to protect your investments against power outages and surges. File photo.
Eskom is proposing a 36% power tariff hike for 2025, which means South Africans could soon see a steep rise in electricity costs, impacting budgets. Despite surpassing 200 days without load shedding, many home- and business owners are still seeking alternative energy sources to keep costs down and ensure consistent electricity supply.
Solar power remains a popular choice in this regard, promising lower long-term energy costs, but there are insurance implications to consider. This is according to Karen Rimmer, head of distribution at PSG Insure, who says: “The installation of solar panels, though initially expensive, adds value to a property, and your insurance policy should be updated to reflect this.”
· Homeowners should ensure that their property values are adjusted in line with the installation cost, as underinsuring could result in significant shortfalls if a claim is to be made. It’s also crucial to use a qualified and compliant installation company. This will ensure all regulations are met and reduce the risk of malfunction, aiding a successful claim should an issue arise.
· For businesses, these adjustments are equally important. Installing solar panels can be a considerable investment, adding substantial value to the premises. Any new addition like this should be communicated to your insurance adviser, who can accurately reflect these improvements in your policy to safeguard your alternative energy investment. Rimmer advises that it’s important that your power supply plans be factored into your business processes, to ensure that all your staff know how to operate and maintain new devices.
“In addition, solar panels are being increasingly targeted by criminals, according to the SAPS, fuelling a lucrative black market and a key reminder to insure your solar panels. It’s important to take preventative measures with anti-theft mechanisms and to consider additional security enhancements,” says Rimmer.
Is additional cover for other alternative power sources necessary?
Inverters, battery packs, generators, and solar systems can be life savers during power outages, but they need to be factored into your policy to avoid unexpected costs. As Rimmer suggests, “Confirm with your insurance adviser about what level of cover you need, alongside the risk management requirements, such as warranties and proof of compliance with installation standards.”
What about power surges?
A power surge is a sudden, significant increase in voltage that can damage appliances. “If you live in an area where load reduction is prominent, power surge protection including insurance is advisable. Some parts of South Africa are experiencing load reduction, where power is paused for a limited time in specific areas, even though load shedding isn’t like we experienced last year.”
Policies previously automatically covered power surges up to a certain limit, but this is no longer standard. Today, surge cover generally incurs an additional premium. Ensuring your insurance adviser helps you review and understand these options can protect against unexpected repair costs from surges or power inconsistencies.
Fires are a common concern when there is a power surge, which is why it’s important to have your property fully insured from the structure to the contents inside.
“Load shedding and grid failure, not as threatening as they once were, are not covered by insurance, which makes the long-term benefits of alternative energy undeniable. However, these installations must be correctly insured to protect your investment. Consultation with your insurance adviser thus becomes essential,” Rimmer concludes.
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