5. Global Gazette

BEWARE REJECTED CLAIMS DUE TO LOADSHEDDING December 12, 2014 Dominic Uys ERM, Main article



shutterstock_155515529In addition to the frustration and inconvenience South Africans are experiencing due to loadshedding, insurers, brokers and UMAs warn that homeowners are under increased risk of falling victim to burglaries as a result of loadshedding.

Christelle Fourie, managing director of MUA Insurance Acceptances adds that homeowners should take extra steps to ensure that their homes are fully protected, especially during a blackout.

Eskom recently confirmed that South Africa will face ongoing loadshedding until March, and Fourie notes that alarm systems and back-ups need to be tested on a regular basis.

Fourie says that the loadshedding time tables are well known and criminals can target certain risks as a result. “To reduce the risk of a home burglary and possible claim repudiations, policyholders should have their alarm systems tested on a regular basis.”

“If a theft takes place because the alarm was faulty or the back-up battery was flat then the claim is likely to be repudiated, so it is vital to test the system regularly. Should the power go out and the alarm system was in working order, however, this should not affect a claim against a burglary during a blackout,” she adds.

Savvy brokers should ensure that their homeowner clients are aware of these intricacies.

Mandy Barrett, marketing and sales manager at Aon South Africa, adds that a professional broker can add tremendous value in the advice process and guide homeowners towards a thorough understanding of the terms and conditions of their cover, pointing 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 Barrett.

Fourie recommends that homeowners reduce security risks during a power outage, including: reviewing insurance policies to see what is covered in the event of loss or damage to the home or its contents during a blackout; testing the alarm system regularly and having the alarm company service the system on a bi-annual basis; installing backup batteries for fences and gates, that generally last for six to eight hours; and securing the home to reduce the risk of burglary in the event that the alarm battery system fails.

The South African Insurance Association (SAIA) has also advised that homeowners consider the insurance products available to address the potential risks associated with loadshedding for both businesses and individuals. These include cover for damage brought on by power surges; loss through theft or burglary; damage to machinery and equipment; and business loss of profit following machinery breakdown.

“Make sure that you adhere to the specific conditions that insurers include to their cover, to successfully navigate the risks that come with load shedding, especially in your absence.  As an example, your policy may very well specify that the alarm has to be armed if your home is left unattended,” imparts Barrett.

“If these conditions are not adhered to under normal circumstances 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,” Barrett concludes.

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