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National Grid Failure exclusion

You would have seen in recent news articles that Insurance companies had to adopt a grid failure exclusion clause on policies in South Africa. But what does it mean to a policy holder and where does it leave you with a power surge?


The ongoing load shedding crisis in South Africa has attracted media attention, and it appears that insurance companies are starting to take notice.

In 2022, insurers began introducing exclusions related to grid failures, which have become more frequent and severe this year.


One major insurance company, started phasing out business interruption (BI) coverage that provided for non-physical damage extensions for losses caused by grid failures in March of last year. Other insurers were expected to follow suit.


By November 2022 an Insurance company had clarified that its personal and commercial policies explicitly excluded coverage for electricity grid failures, and had introduced new BI cover limits for public utilities and telecommunications.

Recently, the insurance company issued a communication to intermediaries regarding "fake information" circulating on social media about its insurance coverage for load shedding. The communication referred to the exclusions and commercial cover limits announced in November of last year.

The general exclusion for personal lines regarding grid failures states that losses or damages caused by a national interruption, failure, or suspension of the electricity grid of South Africa for any reason will not be covered, regardless of whether the utility supplier is unable to generate, transmit, or distribute electricity.


According to the insurance companies head of personal lines underwriting, the purpose of the grid failure exclusion is to provide absolute clarity that any damages related to such an event are not covered. The insurer wants to avoid any unknown consequences that could arise from a grid failure event.


In conclusion, the recent attention given to load shedding in South Africa has led to insurance companies taking action by introducing grid failure exclusions in their policies.


As a result, it is important for policyholders to review their insurance coverage and understand any exclusions that may apply in the event of a grid failure.


Speak to us if you need assistance reviewing your current insurance coverage. We can gladly assist in helping you navigate the complex world of insurance.



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