According to a recent article release on Sunday 4^th April 2021 in Sunday World, the headlines read “SA Could be plunged into total darkness”. Click here to see full article.

This relates to Eskom losing a court battle to stop a foreign-based multinational software corporation , Oracle Corporation, from withdrawing its crucial services over a dispute relating to billions of Rands owed by the power utility.

Without a proper supply of electricity from Eskom, almost the whole of South Africa will be in darkness and come to a standstill, potentially endangering the life, personal safety, or health of the whole or part of the population, according to court papers.

Energy expert Ted Blom said the developments pointed to Eskom management’s “incompetence”.

A Blackout is a total crash of the power grid to an imbalance between power generation and power consumption, as hospital patients in Venuzuela found out early in 2019 during a five-day nationwide blackout leaving an estimated 26 people dead. Unprepared for the sudden loss of power, back-up generators in some hospitals failed, while others only had enough energy to keep a few of the most vital wards functioning.

In January 2008 Eskom controversially introduced “Load Shedding”, planned rolling blackouts based on a rotating schedule, in periods where short supply threatens the integrity of the grid. We have all become accustomed to the new way of life, some companies and individuals have already adapted by been pro -active by installing generators, solar panels and Uninterrupted power supplies to their business premises or home’s, but a Total Black out is very different.

“Are South Africans prepared for blackouts that could potentially last days”?

From an insurance point of view have you ever stopped to think how a Total Blackout could affect you and your business?

* If you don’t have a gas stove at home, what backup plan do you have in which to prepare meals.
* If you have an office with staff, what outcome would be met without the use of computers and access to the internet.
* If you manufacture products, you will experience an interruption in your turnover due to no output over a few days, unless you have massive generators with plenty of fuel.
* Not to mention businesses and homes that are vulnerable to theft/burglary due to the alarms system not been functional. (if a policy condition)

We have been asked the question “Does my insurance policy cover me against Total Blackouts?”, so let’s take a look at the Business Interruption section of a typical business policy as well as the extension “Public Utilities”, and what it covers – to help clear up any confusion.



If you have selected the Business Interruption section , it covers the following defined events:
“Loss following interruption of or interference with the business in consequent of damage occurring during the period of insurance at the premises, attached to the Fire, buildings combined, office contents or any other material damage section of the policy, but only in respect of perils insured under the Fire section (termed damage).”
The Trigger is a Fire, lightning, storm, flood, explosion etc, which is an insured peril, therefore it will be covered.

There are two extensions which typically cover the failure of the public supply of electricity to the insured’s premises supplied by Eskom.

They are:

* Public Utilities – Insured perils
This extension covers the loss consequent upon damage by Fire or allied perils to property of a public authority providing water, gas and electricity to the insured premises.
e.g Eskom has a Fire and can’t produce electricity for a few days/weeks which prevents production.
The trigger is a Fire, which is an insured peril, therefore it will be covered.

* Public Utilities – extended cover
The interruption is the same as the previous point except insured peril is replaced with damage.
e.g Eskom has cables stolen and electricity supply is interrupted for a few days/weeks which prevents production.
The trigger is damage to the cables, which is an insured peril, therefore it will be covered.

However, Rolling Blackouts resulting from Eskom’s incompetence, mismanagement, failure to maintain infrastructure or inadequate planning is not an insured peril in terms of the Business Interruption section of a business policy.
The mere withholding of electricity by the authorities is excluded.
In the event of load shedding ocuring merely as a result of the fact that there is insufficient capacity at the electricity generation unit, no cover will be in place.
There is no trigger, therefore the policy will not respond and there is no cover.

If Load shedding continues and if Blackouts are looming, it’s time for each policyholder to start implementing measures NOW, in which to prepare for the dark days ahead, should total blackouts become the new norm.