Make sure your cover is watertight

Although DA leader Mmusi Maimane recently announced that the dreaded Day Zero drought situation will be moved forward to 2019, the water restrictions declared in 2016 remain in place, with personal use now limited to 50 litres per person per day. All these restrictions are undoubtedly having an adverse effect on residents, institutions, farmers and businesses, further impacted by the recent holiday season that added to the strain on resources.

So how does this affect your insurance policy?

As the drought continues, water shortage could significantly affect the function or effectiveness of water-dependent firefighting equipment and fire sprinkler systems.

Don’t get left high and dry.

This means that additional precautions, in line with the City of Cape Town’s principles of water conservation, need to be taken by policyholders to minimise the risk of loss or damage to property – a general policy condition in most insurance contracts. During these prevailing conditions, failure to take reasonable measures to safeguard property and lives could prejudice you in recovering from a loss and may also contravene workplace safety regulations.

Regarding sprinkler-protected property, the following applies:

Fire cover will respond during a period of intentional water cut-off, reduced water pressure or any form of water rationing by the authorities, as a result of the prevailing drought conditions that directly give rise to sprinkler systems not functioning, or being ineffective during an event. It is important to note that fire cover excludes the suspension of water supply due to, for example, non-payment of accounts.

As a policyholder, remember you are still responsible for the maintenance of the sprinkler system and for ensuring that it’s in good working order. Should the system be defective at the time of the loss, your claim may be rejected.
Also, you must keep records and proof of the last service and/or test of the system (on premises and elsewhere) because if, at the time of loss, the last date of service or the last test is out of cycle or out-dated, your claim may be rejected.

 

For servicing and testing, we encourage the closed-circuit option, as it does not require more or additional public water supply than already in the system.

In conclusion, please bear in mind that unfortunately, insurance policies in general due not cover business losses resulting from damage directly or indirectly caused by drought or shortage of water.

For any policy queries regarding the water crisis, please contact your broker.