Warning about solar power systems in South Africa
South African insurers have different coverage conditions for home solar power systems, which may include expensive sign-offs by two types of engineers and registration with a client’s relevant power utility.
The Consumer Goods and Services Ombud recently warned that there has been a rise in complaints about defective solar systems, battery, and generator installations.
Among the major problems has been a surge in so-called “fly-by-night” operators that installed alternative energy systems without the necessary expertise or qualifications.
Standard Bank Insurance products head Dr Hardy Ncube warned that unqualified installers may impact insurance claims if something goes wrong with the installation.
Ncube stressed that insurers do not cover faulty equipment, defective design, or a non-compliant installation and the damage these elements may cause to an insured home.
The major problem is that there is currently no generally agreed-upon standards for these installations to comply with the grid code.
Eskom will only approve a system if its design has been approved by a registered professional electrical engineer and the system has undergone an embedded generation compliance test.
This is in addition to several other criteria, such as installing a smart bidirectional meter.
The Electrical Contractors’ Association of South Africa (Ecasa) disputes the requirement of engineer sign-off and argues that a Master Electrician or Installation Electrician has adequate training and expertise to install and give the stamp of technical approval.
Not all municipalities have established small-scale embedded generation (SSEG) policies and registration procedures, complicating the issue further.
That has caused even more confusion for households and businesses who want to comply with their distributor’s requirements.
MyBroadband asked several other major insurance companies about their coverage conditions for solar power systems.
While solar panel fires are rare, they can occur due to faulty installations or low-quality equipment.
CoC a must
Outsurance chief client relations officer Natasha Kawulesar said the insurer’s comprehensive buildings policy covered all listed events, including theft and Acts of Nature, if a home solar system has a CoC from a qualified electrician.
Outsurance does not currently require registering the system with the relevant power distributor as a condition for cover.
Santam’s head of personal underwriting, Marius Kemp, told MyBroadband that the insurer also mostly considers a CoC sufficient for a valid claim.
However, an engineer may need to provide additional compliance documentation for a large number of solar panels installed on a standard residential building roof.
“In all cases, it is advised that the system is installed in accordance with the appropriate building regulations applicable and be registered with the relevant authority applicable to that location,” Kemp said.
Kemp said that Santam may regard non-registration of the system as “material to the proximate cause” of the loss or damage. In simple terms, it may result in a claim being denied.
“In terms of the general condition ‘Duty of care’, applicable to the entire policy contract, it may come into play and negatively impact such a claim,” Santam said.
Hail damage is an example of an Act of Nature that is generally covered as part of a building’s insurance policy.
Naked Insurance co-founder Ernest North said the insurer’s customers must ensure their solar power systems are installed correctly and safely.
“A valid electrical CoC is sufficient to confirm that the system has been installed correctly and meets required safety standards.”
However, North said Naked would also assess whether the homeowner took reasonable steps to ensure the system’s safety and proper maintenance.
He explained although Naked “generally” won’t decline a claim because a system was not registered with the relevant utility, the insurer nonetheless encouraged customers to do so where possible.
“We understand that many municipalities are still finalising their registration procedures, and delays in approvals are common,” he said.
He also cautioned that a common mistake homeowners made was 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,” North said.
“If you live in a sectional title unit, your body corporate or managing agent usually buys an insurance policy on behalf of all owners to cover the buildings.”
“In such a case, you should ask them to increase the sum insured for your unit’s building cover to explicitly cover your alternative energy valuables.”
Civil engineer approval for certain systems
While it did not respond to our queries, Auto & General recently published an article explaining its requirements.
Auto & General also requires a valid electrical certificate of compliance (CoC) issued by a qualified and registered electrician.
It emphasised that solar panel and inverter CoCs are more specialised than standard electrical CoCs and typically comprise nine pages.
Auto & General also said that South African National Standards (SANS) “mandate” that roof-mounted solar panel installations be inspected and approved by a qualified civil engineer.
However, this requirement may not be relevant to claims for electrical or fire damage caused by the system.
“Failure to provide a civil engineer’s report may result in claim rejections for roof collapses or wind-related damage to the solar panels,” Auto & General said.
The insurer does not necessarily require registration with the relevant power distributor to approve a claim.
In cases where a distributor has an SSEG registration process, the details it requires may help assess a system’s value and potential risk, resulting in appropriate coverage and premium calculations.
All the insurers seemed to agree that an electrical engineer was not needed to sign off on the system.
That said, it is currently disputed whether an electrician is qualified to sign off on generation compliance test reports, which are necessary for embedded generation CoCs.
