Smart Tip on insuring generators and inverters

Loadshedding causes disruptions to daily life, as individuals and businesses alike depend on electricity to complete their daily activities. To minimise interruptions, many businesses acquired generators and inverters to use during loadshedding.

In this article, we share some tips to help clients understand how to insure their generators and inverters correctly. We also include a reminder of the cover provided for loadshedding risks.

How to correctly insure generators and inverters

Generators

• Generators should be insured under the Fire or Portable possessions section depending on whether they are fixed or portable.
• They must be installed by an accredited service provider (such as a Red Seal electrician) and must comply with all relevant standards and regulations.
• A certificate of compliance must be provided to confirm that the generator was installed correctly.
• Clients must store their generators in an area that is protected against weather conditions and is at least 5 meters away from the office building. The area must also be well ventilated to accommodate the carbon monoxide emitted.
• Clients must comply with the legal limit for the storage of petrol or diesel based on the size of the generator. Excess fuel must be stored in a separate area away from the generator.
• Employees must be trained on how to use the generator.
• The generator must not be run for longer than its capacity can handle.
• Consequential loss is excluded if the above is not adhered to.

Inverters:

• If the inverter is kept inside the building, it can be covered under the Fire, Office contents or Portable possessions section, depending on the insured's requirements.
• It must comply with SANS 10313- and 10142-approved requirements for protection against lightning and power surge. It must also be installed and maintained in line with the manufacturer's instructions.
• If the inverter is kept in an outbuilding, such as a garage, it must be installed by a professional installer (such as a Red Seal electrician) who is accredited to install such systems.
• Power surge units must be installed in the distribution board.
• A copy of installation certificate is required.
• The building sum insured must be adequate if the inverter is a permanent fixture to the building.

Cover provided for loadshedding risks

Standard commercial insurance policies usually do not cover business interruptions because of a lawful authority that supplies water, gas or electricity withholding or restricting the supply, unless such withholding or restriction is directly attributed to property damage of such authority. Therefore, business interruption due to loadshedding is not covered. However, insured perils stated in the policy wording would still be covered. For example, if the restoration of electricity following loadshedding leads to a power surge, then the resulting losses from the power surge would be covered.

The Discovery Business Insurance Plan provides cover for power surge under the following sections:

• Under the Electronic equipment section, power surge is covered up to the sum insured.
• As part of the embedded cover extensions, the plan provides R25,000 cover for power surge under the Fire, Buildings combined and Office contents sections. Clients have the option to increase their power surge cover limit for these sections up to R2 million at an additional premium.

What businesses can do to mitigate losses

It is important for business owners to understand how electricity affects their business. This will help them take appropriate steps to mitigate potential losses to their business due to events such as loadshedding.

• To avoid deterioration of stock and wastage, businesses should consider buying stock in smaller quantities and use these as needed.
• Smaller businesses that operate in the same location can contribute together to buy a shared generator to supply electricity to all their businesses during loadshedding.
• Businesses should also consider using alternative sources of energy, such as solar power.

Make sure your clients know how to insure their generators and inverters correctly and be better prepared to deal with loadshedding.