Load shedding vs Grid Failure

Insurance Edition

Load shedding, grid failure and insurance

So far in 2023, South Africa has experienced record levels of load shedding, used to reduce demand on the grid. While load shedding has become a regular occurrence in South Africa, grid failure is a much more serious event and has been the topic of discussion recently. Read more on the difference between load shedding and grid failure as well as its effects on insurance coverage.

What is load shedding?

Load shedding is a controlled reduction in power supply. It is used to prevent the grid from failing completely. When load shedding is implemented, certain areas of the country are intentionally blacked out for a period of time. This helps to balance the demand for power with the available supply.

What is grid failure?

Grid failure is a complete collapse of the electrical grid. This can happen due to a number of factors, including natural disasters, cyberattacks, or equipment failures. When the grid fails, there is no power available to any part of the country.

How does grid failure and load shedding affect insurance coverage?

The impact of grid failure and load shedding on insurance coverage depends on the specific policy. In general, personal and commercial insurance policies do not cover damage caused by grid failure, which includes any theft, property damage, stock loss or business interruption cover. It is still critical to have insurance coverage as most policies may cover damage caused by power surges, which can occur during load shedding.

What you, as an insurance broker, need to know?

Advise your clients to understand the difference between grid failure and load shedding. Your clients should also be aware that damage caused by grid failure are not typically covered by insurance. However, some policies may cover damage caused by power surges.

Howdie works closely with a number of insurers in South Africa, and these are some important points to consider:

    • The definition of grid failure and load shedding can vary from policy to policy.
    • Some policies may cover damage caused by grid failure, but this is typically only if the damage is caused by a specific event, such as a cyberattack.
    • The amount of cover that is available for damage caused by power surges also varies from policy to policy.
    • It is important to read the terms and conditions of a policy carefully to understand what is covered and what is not, and ensure your client knows this too.

By being aware of these issues, our brokers can help their clients to make more informed decisions about their insurance options.

What can individuals and businesses do to protect themselves?

There are several things that individuals and businesses can do to protect themselves from the financial impact of grid failure and load shedding. These include:

    • Having a backup generator or solar power solution. Ensure that these additions to your home or business have been added to your insurance policy. This will ensure your sum insured is up to date and prevent any delays if the need to claim arises.
    • Investing in surge protection. This can help prevent expensive electronics or machinery from damage caused by power surges. A type 2 surge arrestor, which is installed by an accredited electrician into your household DB board is the most common type of arrestor. Certain industries may require a type 2 arrestor suitable for a 3 phase supply of electricity. Any installation should be followed by a Certificate of Compliance provided by the accredited electrician.
    • Maintaining a disaster recovery plan. This is essential for businesses of all sizes, as it can help to ensure that they can recover quickly from a disaster and minimize the impact on your operations including downtime and financial losses.


Grid failure and load shedding are serious risks that South Africans face. It is important to understand the difference between these two events and to know how they affect insurance coverage. By ensuring clients know the specific steps to protect themselves, individuals and businesses can reduce the financial impact of these events.

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