Fire insurance claims climb as drought tightens its hold

Prevent fire outbreaks at your property.
Prevent fire outbreaks at your property.

South Africa’s deepening drought and water crisis, spurred by the El Nino phenomenon is a stark reminder of just how vulnerable we are to the whims of mother nature.

Water restrictions across the country have left crop fields fallow, landscaped gardens have withered away in the heat.

Poor rains are forecast for South Africa until at least March 2016 exacerbated by the El Nino weather pattern, further stressing parched conditions and water shortages – and heightening runaway fire risks.

One of the biggest concerns is the increased fire risk. The probability of fire damage to property, contents, equipment, vehicles and machinery is much higher in dry seasons. This is worsened by the very real risk of not having sufficient water available to extinguish fires, especially where water shedding measures have been implemented in areas such as Kwa-Zulu Natal.

“With the current dry conditions, all it takes is a spark or a carelessly thrown cigarette butt and a little wind to create the perfect conditions for an inferno,” explains Mandy Barrett of insurance brokerage and risk advisors, Aon South Africa.

Trimming of trees and vegetation and the removal of dead branches and other flammable matter that are near to your home or buildings is an essential precaution.

Water cuts also bring an array of risks to be considered.

Swimming pool and fish pond pumps and even irrigation pumps are at risk of burning out if safety mechanisms fail in the absence of water. A geyser can also pose a potential fire hazard. Standard geysers contain vacuum breakers and an anti-syphon loop that will prevent the geyser from running dry, but if the geyser is an older installation or was not correctly installed, the thermostat could burn out and create a fire hazard.

If you’re uncertain, switch the geyser off at the mains and have it evaluated by a qualified plumber to check that all the necessary safety measures are in place,” urges Mandy.

On the flip side of the drought, regions such as Gauteng are also at risk of hail damage when the rains do eventually come – freak hailstorms in the last three years caused severe property and vehicle damage, collectively costing the insurance industry a staggering R2.5billion in losses.

“We have already seen intense thunderstorms building over Gauteng, and the forecast is that we may get some rain relief in the next few days.

“The likelihood of these storms being accompanied by hail is there, highlighting just how vulnerable we are to climate change and radical weather patterns. We have gone through the extremes of fire, flood and severe drought, and all of this is impacting on how consumers should be managing and mitigating their risks. We still see a trend towards underinsurance.

“It’s essential to review the terms and levels of your insurance cover to ensure you are not financially compromised in a worst case scenario,” says Mandy.

“Many households have reduced their sums insured in a bid to try and cope with skyrocketing living costs. What many forget to factor into this decision is that you may have to replace all your household content and possibly even the entire structure of your home in the event of a catastrophic event.

“If you are under-insured in this regard, you may find yourself in a situation where you are only paid partially for a loss at claims stage. Insurers call it the ‘average formula’ which means that if your property is under-insured by 40% for example, then you may only be paid out for 60% of your claim, regardless of whether it is a partial or total loss.

“Many people also insure their home for the value that they purchased the property for years ago, or at the current market value, rather than the actual replacement cost. The cost to replace your home, at today’s building prices, could have appreciated well beyond your insurance cover,” Mandy explains.

In the face of South Africa’s growing exposure to natural catastrophes and the impact of extreme weather conditions, the advice and experience of a professional broker could prove to be invaluable in evaluating your exposures.

“A professional broker will be able to facilitate the making of a well-managed insurance programme that accounts for your unique needs and risk profile while matching your available budget.

“Your broker will confirm exactly what you are covered for and whether any exclusions or special conditions exist on your policy – an area that most people neglect to study, or fail to understand the implications of such conditions.

“A broker can ensure that you are in good hands in the event of a catastrophe and ensure that you are not financially compromised come claims time,” concludes Mandy.

Latest News