Energy experts concerned about El Nino summer: Are your air conditioners and appliances covered?

Australian energy experts are worried that heatwaves this summer could push the nation’s power grid to the limit. With many of us relying on air conditioners to stay cool, can we be confident that our household appliances are covered by insurance if disaster strikes? 

Hot summer to increase energy demand

Speaking at the Australian Financial Review Energy & Climate Summit, several energy industry experts have flagged the increased risk of blackouts this summer as Australia’s aging power network struggles to deal with increased demand from air conditioners in households and businesses under heatwave conditions.

Former Snowy Hydro CEO, Paul Broad, said that “the lights are going to go out” when hot conditions return after three mild summers, adding that politicians were not listening to the warnings about the risks around supply, and the industry was not speaking up enough.

According to Zoe Whitton, managing director and head of impact at climate change advisory firm Pollination, Australians may not only need to brace for blackouts, but also poor air quality because of bushfires:

“You don’t just need your candles, you also need your air purifier for when the electricity is on and stuff is burning.”

During the summer months, the Australian Energy Market Operator (AEMO) will need to ensure that enough supply is available in Australia’s power grid to cope with increased demand from households and businesses running their air conditioners, which includes being prepared for unexpected outages from coal-fired power stations.

According to Matthew Warren, principal of energy advisory service Boardroom Energy, there was no “Plan B” as coal power generators deteriorate:

“So it’s kind of a pretty fragile state we’re in and we’re rolling into ... we haven’t had a proper El Nino heatwave for five years, and we have a lot less generation and older generation going into this one.”

Are appliances covered by home and contents insurance?

If this summer proves as hot and dry as forecast, many Australians may be spending more time huddled around the air conditioner. But if these appliances and more are damaged by power surges, bushfires, or related events, will you be covered under your home insurance policy?

Built-in air conditioners, such as split systems or HVAC central air systems, will often be counted as part of your home’s domestic fixtures for the purpose of home insurance. This means that if they are damaged by an insured event, you should be able to claim the cost of repairing or replacing these systems with your insurer. Other built-in appliances, such as some dishwashers and wall ovens, may also be covered.

However, if you’re relying on a portable air conditioner, cooling fan, or air purifier to manage your home’s climate and air quality, these may be counted as part of your home’s contents for the purpose of insurance. This means you’ll need a combined home and contents policy or a contents-only policy to make a claim.  

Keep in mind that exceptions and exclusions may apply in some cases. For example, an insurer may decline a claim if the fault is due to a lack of basic maintenance. This may be a good reason to regularly clean your air conditioner’s filters and inspect outdoor units for signs of damage or wear and tear – plus, this may be able to help you enjoy improved efficiency from your appliances.

You may also want to check your insurer’s PDS to confirm that motor damage, motor burnout, or fusion cover is included in the policy. This means you can be confident about making a claim if your air conditioner or similar appliance burns out due to a power surge, lightning strike, or other electrical fault. In some cases, this may be an optional extra that you may need to pay a higher premium to access.

Also keep in mind that insurers may have maximum limits on the coverage for individual items as part of a contents insurance policy. While this often applies to electronics such as high-end computers and home theatres, a quality portable air conditioner could also hit the insurer’s maximum limit, meaning you may be out of pocket if it needs to be repaired or replaced. You could consider adding extra coverage to your policy for your home’s high-value contents, or even consider taking out a separate policy altogether for these items. Keep in mind that this will likely cost you extra in premiums. 

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