Two principles to help you know whether to insure your alternative energy sources under buildings or home contents insurance.
As the power situation in South Africa continues to disrupt the way we work and live, more and more people are considering alternative ways to keep the lights on. Things like generators, solar panels, Tesla Powerwalls, inverters and other batteries are being added to shopping carts. And they don’t come cheap – these alternative energy sources can rack up quite the bill. It begs the question of how to insure your new power devices so that you are properly covered in case something bad happens.
To help you make sure you have covered your alternative power sources sufficiently, we’ve broken down the main principles to think about when insuring these valuables.
Anything that becomes a permanent part of the home is generally insured under building insurance
Simply put, if you install something that becomes a “permanent” fixture to your home, then it should be added to your building insurance.
Here are a couple examples of where your alternative power source should be insured under your building insurance:
- Your generator has its own “enclosure”/shed: If you’ve built a specific little “home” for your generator, it is now part of the house (a permanent fixture) and its value should be included in your overall sum insured.
- You’ve installed a solar system/panels: If you’ve installed a solar system/panels/geyser, it’s unlikely to ever be removed so it naturally falls under building insurance.
- The inverter and/or batteries are hooked up to your solar system/panels: If your batteries/inverter are connected to an installed solar system, their value should be bundled with the value of the solar system and added to your sum insured.
Anything that can be taken with you if you had to move homes, is generally insured under contents insurance
Anything that can be unplugged and taken with you if you had to move can be insured under a contents insurance policy.
Here are a couple of alternative power sources that can be insured under contents insurance:
- Portable inverter
- Portable generator
- Batteries
- Uninterrupted power supply (UPS)
How much should I insure my alternative power sources for?
It’s best to insure your alternative power sources for what it would cost to replace them as new today. Most insurers insure your items as “new for old”. For example, if you bought an inverter three years ago, you would insure it for what it would cost if you had to buy it new today – not what it cost you three years ago and not what a three-year-old (i.e. second-hand) inverter would cost. This is known as replacement value.
If you insure your alternative power sources for less than what they’re worth, you might not get the insurance payout you were expecting if you ever had to claim. This is known as underinsurance and it’s something you want to avoid as far as possible.
What will I need to contribute if I make a claim?
If you ever have to claim, you will need to pay your excess. Think of it as your contribution to the claim – your insurer will cover the rest.
What is my insurer not likely to cover?
If your alternative power sources weren’t installed by someone who’s certified to do so
To cover your alternative power sources, most insurers require that you have them properly installed by a qualified electrician/technician. This is so that municipal bylaws are complied with.
Gradual deterioration
Loss or damage caused by wear and tear or exposure to natural forces would usually not be covered.
Anything that as a rule would be covered under a warranty or guarantee
This will still apply even if your warranty or service plan has expired. Your alternative power sources generally come with a warranty to cover any manufacturing faults. It’s best to check this before buying anything.
What happens if I live in a sectional title and the body corporate insures the building?
If you own a sectional title unit, the body corporate or the managing agent usually buys a single insurance policy, on behalf of all owners, to cover their buildings. In this case, if you have added any permanent fittings to your unit like solar panels, the recommended route is to notify your managing agent/body corporate. Tell them that they should increase the sum insured of your unit's building cover to explicitly cover your alternative energy valuables.
What if I rent a free-standing property and want to install a solar system/“permanent” power source?
This scenario is very unusual but if you’re in a long-term rental agreement and want to install solar panels/generators, you will first have to get permission from the owner. When it comes to insuring the items/fixtures, the owner will have to add the value to their building’s sum insured. The reason is that the alternative power sources, which are fixed to the house and unlikely to be uninstalled, have increased the value of the property and fall under the owner’s policy. You have effectively gifted the items to the owner and increased the value of their property. But you should make sure they insure it, because if something bad happens, you, the long-term tenant, don’t want to be left without the use of the items you spent your hard-earned money on.
What if I have rented my renewable energy system?
Increasingly, renewable energy providers are willing to let you rent systems. They install it and you rent it from them for a couple of years. If this is a route you are going, you should ask the company whether they insure the equipment or if you are required to cover it under your own policy (or your landlord’s).
Load shedding is affecting all of us one way or another. If you’re in a fortunate enough position to be able to install an alternative power source, be sure to cover it properly. You wouldn’t want to invest a lot of money only to have something bad happen and it not be covered!
