Will your insurance cover loss and damage due to civil unrest?

While there are warnings about civil unrest after the elections on 29 May, consumers have to ensure their insurance covers them for loss and damage that could ensue. Do we still remember the lessons and losses of the civil unrest in July 2021?

Even as we celebrate 30 years of democracy and will soon head to the polls again, South Africa remains challenged from a socio-economic perspective, with low economic growth, high unemployment and rampant inequality.

Karen Rimmer, head of distribution at PSG Insure, warns a knock-on impact is that the risk of strikes, riots and other forms of unrest unfortunately cannot be ignored.

“These risks are not covered by commercial insurers, but by the South African Special Risk Insurance Association (Sasria), a public enterprise listed under schedule 3B of the Public Finance Management Act. However, consumers must remember that Sasria’s cover is not automatically included in your policy but must be specifically added.”

The spate of riots and looting that broke out in parts of KwaZulu-Natal and Gauteng during 2021 cost the country billions of rands. Much of the destruction was suffered by individuals whose homes were damaged and businesses that reported large-scale stock losses and vandalism.

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Similar examples of the impact of these kinds of incidents have been seen in the Western Cape, where periodic cases of unrest in the city centre brought extensive damage to the businesses in streets and nearby surrounding areas.

Therefore, Rimmer says being insured against these types of events is vital, not only for individuals, but especially for businesses, as they tend to be more exposed to these risks, especially where looting is involved. 

What kind of insurance cover does Sasria provide?

“Sasria currently provides insurance cover for specialist risks that include politically motivated malicious acts, riots, civil commotion, public disorder, strikes and acts of terrorism. In addition, Sasria offers an extension for security costs incurred to prevent imminent danger should there be any riots, civil commotion or public disorder within a 10km radius which puts your property in danger.”

Exclusions from this cover include any material or financial losses caused or contributed to by acts of terrorism that are of a nuclear, chemical or biological nature. Sasria only covers assets up to a limit of R500 million and excludes any consequential or indirect loss or damage, Rimmer says.

ALSO READ: SA on brink of another July 2021 civil unrest, Sasria CEO predicts

Individuals as well as businesses can apply for Sasria cover, with most local insurers acting as agents of Sasria and offering their clients this cover as an extension of their existing insurance policies. Rimmer says the experience of PSG Insure has been that businesses are relatively more vulnerable to losses relating to civil unrest, especially where looting or rioting is involved.

Rimmer believes that without this cover, businesses are at risk of severe financial losses and having to replace or repair their property and goods out of their own pockets. “Having this kind of pre-emptive safeguard in place can therefore provide a much-needed buffer when the unexpected occurs.”

Cover for business

Although the coverage under the Sasria extension will be tailored to reflect each client’s needs, Rimmer points out that Sasria provides cover for businesses in several key categories that include material damage, which covers damage to assets such as property, containers and equipment. Where businesses handle large volumes of cash, Sasria will also cover the loss of cash or cheques.

The product also covers all goods in transit on South African soil, whether on land, air or sea and Sasria cover also includes motor cover for commercial fleets as well as trailers and buses.

ALSO READ: Sasria already gearing up to pay out protest-related claims

Due to the high probability that a business that experience a serious loss will also be faced with the cost of business interruption, this can also be covered under the Sasria extension.

Although the South African government remains the sole shareholder of Sasria, the cover is not automatically provided, Rimmer says.

Buy Sasria cover through your insurer

“You must buy cover as part of a policy from an insurer that provides coverage for their assets, including property and/or property contents. The only exception to this condition is that a client can obtain motor cover from Sasria without having the vehicle insured under its own, separate policy.”

The premium for this cover is collected by the insurance company that issues the Sasria-specific terms and conditions that apply. The premium will also therefore be determined by the value of the assets that are covered by the underlying policy.

In the event of a claim, Rimmer says, any client who buys this extension will claim via the relevant insurance provider, who will process this on behalf of Sasria.

“It is therefore important to be aware of the availability of this kind of cover because it is provided as an extension rather than a standard part of a personal or commercial insurance policy. Your financial adviser will be able to assist you in choosing the appropriate level of Sasria cover.”