Is your alternative energy investment insured against load shedding?

With load shedding making an unwelcome return and electricity tariffs continuing to rise, South African households are likely to keep investing in renewable power. Whether you are installing an alternative energy solution for the first time or expanding your existing setup, now is the time to review your insurance policy to make sure your equipment is covered. 

Households are investing in alternative power sources to manage rising costs and reduce their reliance on the national grid. New rules that will allow customers to be compensated for feeding excess power into the grid are likely to accelerate this trend.

However, alternative energy sources don’t come cheap, once you add up purchase and installation costs. That’s why it’s important to review your insurance cover to ensure expensive equipment such as solar panels, inverters, batteries, and generators is protected from the risk of steep financial losses.

Theft and fire risks – why insurance is non-negotiable

Criminals have noted the demand for batteries, solar panels, and generators. Household robbery levels are high and solar panels have become a prime target. Without the right cover, homeowners could face significant financial losses if their solar panels are stolen. Weather damage from storms and wind are also major hazards for rooftop solar. 

Fire risks are a growing concern. Inverters and lithium-ion batteries, if not installed correctly or properly ventilated, pose a serious fire hazard. Many insurers require compliance certificates and specific safety measures to ensure coverage in case of damage caused by overheating or electrical faults.

Many people assume their solar panels and inverters are automatically covered under their existing policies, but it’s not always that simple. Understanding whether your solar setup falls under buildings or contents insurance can make all the difference when it comes to claims.

Buildings vs. contents insurance – getting it right

To ensure that your alternative power solutions are properly covered, it’s essential to understand whether they fall under buildings or contents insurance:

Buildings insurance: If a power solution system is permanently affixed to the property, it should be covered under your buildings insurance. This includes solar panels, geysers, inverters, and batteries wired into the home’s electrical system. Similarly, if a generator is housed in a fixed enclosure, it is considered part of the property.

Contents insurance: Portable power sources such as standalone inverters, generators, and batteries that can be unplugged and moved should be covered under home contents insurance.

One common mistake homeowners make is underinsuring their solar equipment. It is important to insure solar panels, inverters, and batteries for their current replacement value – including installation and inflation – not just their original purchase price.

Load shedding and rising electricity costs are affecting all of us. If you’re fortunate enough to be able to invest in an alternative power solution, make sure it is properly insured to avoid nasty surprises in the event of a loss. 

* North is the co-founder of Naked Insurance.

PERSONAL FINANCE