South African Insurers No Longer Covering Grid Failure

The continued poor state of South Africa’s national energy supply – namely, increased levels of load shedding over the last year and an increase in insurance claims associated with them – has led to local insurers now making exclusions to their policies regarding damages caused by a possible national electricity grid failure.

This historical move has generated quite a buzz among the South African non-life insurance sector during the first half of 2023. This is off the back of moves last year from the country’s main insurers to limit their exposures to electricity supply related claims, by introducing higher excesses or outright exclusions on power surge claims.

If you live in South Africa, we don’t need to tell you how bad the energy situation is. Here are some quick statistics to put it in perspective: South Africa experienced over 150 days of load shedding in 2022, up from 75 in 2021 and 54 in 2020 – and in April 2023, the country had already experienced as much load shedding (hours) as almost the entirety of 2022.

As power surge claims become more difficult to insure (and on advice from their reinsurance partners and international underwriters) South African insurers have adjusted their policies to take into account the possibility of national grid failure in the country. 

South Africa experienced over 150 days of load shedding in 2022 (image source:

To paint the picture of the reasoning behind these adjustments, the prospect of collapse of the grid would likely mean that each and every sector of the economy would claim for damages. If this were to happen, and insurers had to carry the losses, this could lead to the collapse of the entire local insurance industry. In other words, by adjusting their policies accordingly, it allows these same insurers to continue to still cover their clients for other risks. 

There are some consequences of this to consumers that are now crucial to be understood and to be taken into consideration. 

What does this mean for you? 

First of all, it’s important to understand that this does not necessarily mean we are going to experience a national grid failure in the country. How insurance companies work is that they cover based on the prospect of potential risk. As grid failure can no longer be considered an “unforeseen event”, insurers now find it necessary to exclude cover. Prior to this, the collapse of the grid is something that had not been previously contemplated to any great extent by the local insurance sector.

These national grid failure exclusions extend to commercial and personal lines contracts with the likes of Discovery, Santam, Momentum, and MUA. Some of the variables being adjusted are; shrinking of their cover through higher excesses; lower sums being insured; and outright exclusions. Some insurers will still cover damages caused by load shedding – such as damaged devices or car accidents – while others are taking a more hardline approach in excluding all electricity-related damage, whether national or municipal. 

Important terms to understand:

  • A ‘grid failure’ means a sudden loss in the generation of electricity that happens too quickly for any manual intervention. 
  • Power surge coverage’ is separate from ‘grid failure exclusion’.
  • It is important to distinguish between ‘load shedding’ – the scheduled switching on and off of municipal power supply – and a ‘power surge’ – an unexpected spike in the voltage supplied to an electrical circuit.
  • The main concern from insurers is around the high risk of significant ‘power surges’ once the grid is restored, causing direct damage to appliances and property on an uninsurable scale.

Policy Updates per Insurance Company

Here are some key takeaways from these latest policy updates.

*Please note, the below is only meant to serve as a general guideline for educational purposes and should not be taken as a comprehensive guide, nor should it be considered legal advice. Before making any major decisions regarding your insurance policies, it is advisable to read the full insurance documentation provided by your insurer or consult with a professional. 


Cover for loss, damage, or consequential loss caused by a blackout or scheduled lack of power supply for more than 12 consecutive hours, is excluded (*referring to a partial or full grid failure where the electricity supplier is unable to provide power at all.)

What is still covered:

  • They cover clients up to the amount stated in the BLA (Benefit Limit Annexure) for the value of their fridge and freezer contents where this is accidentally spoiled due to a change in temperature. 
  • Clients automatically have embedded cover for power surge under the buildings and household contents sections of their plan. 
  • Buildings cover for power surge is up to the sum insured, with cover for household contents up to the sum insured on the Purple Plan and limited on Essential and Classic.


Grid failure is now a general exclusion on both the Executive and Personal policies. Any loss, damage, death, injury, cost, or expense caused directly or indirectly by grid failure is not covered, regardless of policy provisions.

What is still covered:

  • Power surge cover limits remain unchanged i.e. on MUA Executive policies, power surge cover is limited to the sum insured, and on MUA Personal policies, clients automatically receive R5,000 power surge cover as part of the “Accidental damage” automatic extension.
  • For MUA Executive policyholders, the cover for spoilage of food and drink changes from 25% of the sum insured to a flat amount of R75,000. The current limit of R5,000 for MUA Personal policyholders remains unchanged.

Budget Insurance

Loss or damage as a result of grid failure has never been stipulated as an insured event, but from April their terms and conditions were updated to explicitly indicate the exclusion of grid failure from cover. 

What is still covered:

While grid failure itself is not covered, normal insured events, as stated in your terms and conditions, are covered. (For example, if you are involved in a vehicle accident due to a traffic light not working – as a result of grid failure – your vehicle cover will still apply.)


Santam implemented a general electricity grid failure exclusion on all policies from 1 June, aiming to limit exposure to systemic events and responding to the increased risk of potential grid failure due to frequent and severe load-shedding. 

  • Personal policies have a compulsory excess of R2,500 for power surge, mechanical, electrical, or electronic damage claims. Commercial policies have a minimum compulsory excess of 10% of the claim amount, subject to a minimum of R5,000 for power surge damage claims.
  • Power surge damage resulting from switching on electricity after load shedding or grid failure/interruption are excluded from coverage. The Accidental Damage section of cover for commercial policies will no longer provide cover for power surge damage.
  • Personal policies no longer cover any damage caused directly or indirectly by electricity grid failure or interruption. Coverage for the contents of refrigerators and freezers during load shedding or electricity grid failure/interruption is explicitly excluded. Power surge damage is also excluded.
  • For commercial policies, any damage resulting from electricity grid failure or interruption is generally excluded, except for specific provisions under the Business Interruption section for elective extensions to other premises. Power surge damage is also excluded.

 What is still covered:

The exceptions for commercial policies include coverage for public telecommunications and public utilities, subject to the condition that the electricity grid failure or interruption occurs within a single municipal area.


Hollard Insurance has introduced a new “Electricity Grid Failure” exclusion in their policies, which includes grid failure on a municipal, provincial, and national level (applies to both national and localized grid failures). This exclusion means that any loss or damage arising from grid failure is not covered by the policy – this includes damages from power surges resulting from the recovery after a grid failure. Consequential losses, such as disruptions to water, telecommunications, sewage systems, and food deterioration, are also not covered.

What is still covered:

Load shedding, however, is still covered by the policy. Load shedding is defined as the intentional withholding of electricity supply in phases, excluding the simultaneous impact on a municipality, province, or country.


Outsurance’s policy excludes coverage for any loss, damage, or liability caused by a total or partial interruption, interference, failure, or suspension of electricity supply or restoration thereof.

What is still covered:

  • This exclusion does not apply to power surge events resulting from load shedding. Damage to insured property caused by a power surge following scheduled load shedding will still be covered.
  • However, a higher excess on load-shedding-related claims has been implemented and the installation of surge protection devices to mitigate damages is recommended.

Power surges can cause damage to appliances. (Image source:


Momentum Insure does not cover grid failure itself, but continues to cover the impact of grid failure, such as damages resulting from accidents caused by non-working traffic lights during blackouts.

The power surge cover under the Buildings and/or Contents sections of our clients’ policies was amended in May: 

  • For Select and Priceless policies, the maximum amount payable towards power surge claims is limited to R 10 000 under the Contents section and R10 000 under the Buildings section for any one event. The standard excess applies to all power surge claims, including 55+, will be R3 000 per incident/claim event.
  • For Envoy policies, the maximum amount payable towards power surge claims will be limited to R 20 000 under the Contents section and R20 000 under the Buildings section for any one event. The standard excess applies to all power surge claims, including 55+, will be R3 000 per incident/claim event.
  • Premiums payable are not affected for all policies – but clients have the option to increase the default cover with extended power surge cover at an additional premium. 

South African Special Risk Insurance Association (Sasria)

Sasria will not provide cover for any loss, damage, cost or expense, directly or indirectly caused by, arising out of, in any way or to any extent contributed to by, or in connection with electricity grid failure (this includes damage to property caused during riots and protests in the event of an electricity grid collapse). 

What can you do? What action should you take now?

While grid failure remains more of a possibility than an immediate threat, it’s important to be prepared and stay informed in order to protect yourself against risk. 

It’s important to take the time to understand the terms of your current household and car insurance and exactly what it does and does not cover, with these latest insurance policy changes. Insurers typically word their policies in a specific way, using confusing legal jargon and terms. Do not assume that every policy will have the same provision or carry the same meaning. 

Consult with a professional Financial Advisor, like TVC Wealth and Health Managers, and we can help you decipher the fine print. We make it our job to help you minimize or mitigate the impact of possible risk of a national grid failure on yourself, your property, assets, or business. 

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