Adapting to load shedding: how to insure your backup generators and solar systems

Load shedding has made alternative energy systems a must-have for many households and businesses.

What began in 2007 as a series of rolling blackouts to relieve pressure on the national grid, has become a part of the reality of living in South Africa today. Experts’ predictions that load shedding is likely to persist for several more years have prompted many households and business owners to invest in backup generators and solar systems. However, this kind of machinery and equipment comes with a hefty price tag, and should therefore be adequately insured against a number of risks.

While there is currently no one-size-fits-all solution to insuring alternative energy solutions, insurers generally distinguish between systems for personal use and those used for commercial purposes. The exact cover required will depend on the type of system you have installed.

Insurance for household systems
Portable generators for households will be included as part of a Personal All Risk policy, whereas a fitted or stationary generator will be insured under the Buildings/Homeowners section. Likewise, solar systems and inverters may be included in the sum insured under the Buildings/Homeowners section.

Insurers may also allow for a policy extension that covers any damage caused by a power surge. Here it is important for the insured to select the correct extension for accidental damage cover.

Insurance for systems used for commercial purposes
Portable generators used for commercial purposes will be insured under the Business All Risk section. Insurance for fitted generators will be included in the Fire and Buildings sections combined or as part of the Homeowners section. In the case of commercial solar systems and inverters, the value of these products must be included in the sum insured under the Fire and Buildings sections combined or the Homeowners section.

Alternatively, these products can also be specified in the Business All Risk section, which will make reference to the specifications and type of product concerned. It is important for business owners to ensure that the amount of automatic cover for a power surge is sufficient and referenced within the relevant policy section.

Compliance aspects to consider regarding installation and maintenance
Any standby or backup generator as well as a solar system or an inverter installed for personal or commercial use must comply with the South African National Standard (SANS). SANS also sets out a number of conditions regarding the maintenance of generators of various kinds, as well as solar-powered systems and inverters. The proper, legally compliant installation and maintenance of these systems will have a bearing on any future insurance claims.

Installation of both backup generators and solar systems must be carried out by a qualified electrician, who will be able to perform the mandatory checks to ensure that the area in which the product is installed is structurally sound and compliant with South African building standards.

For example, when installing a solar system, the electrician will be required to perform several mandatory checks including ensuring that the roof structure is able to support the solar system and that installation is executed in a way that will not accelerate the deterioration of the roof.

Clients are advised to check that the relevant service provider is suitably accredited before committing to a large capital outlay. Certain insurers also require that clients be supplied with a Certificate of Compliance (CoC) upon successful completion of the job.

Due to the complexities surrounding insuring alternative energy systems, as well as the various legislative requirements when it comes to their installation and upkeep, advisers can play a key role in helping clients make informed decisions. Clients need to have a comprehensive understanding of the type of cover they need for their particular system, as well as any exclusions that may apply.

Load shedding has made alternative energy systems a must-have for many households and businesses. However, it is important for clients to understand the requirements before installing such systems and which compliance boxes need to be ticked to manage their risk exposure and safeguard their asset from damage or destruction. Not adhering to installation and maintenance requirements may have expensive consequences in the long run.