- Daily, houses in Nigeria are being built and completed without being insured. Insuring your house in Nigeria isn’t very common.
- Insurance companies are covered in dust and cobwebs from misuse. It is probably only in big cities like Lagos and Abuja that people actually know what they ought to do with insurance companies.
- It is the aim of this article to enlighten you on how to insure your houses in Nigeria.
Chaos
A bright and sunny Tuesday and the location was Massey Street, Lagos Island. Time was 3pm and the Kafo kids were enjoying themselves when suddenly a huge sound from nowhere pierced the serene environment. Then it happened; the collapse of their 26 year old four storey building.
Tears flowed freely the next day as NEMA officials pulled out the dead body of a three year old child who had suffocated under the rubble of the collapsed structure.
The building itself was not insured against such unforeseen calamity and the Lagos state government had to level down the entire structure to avoid further damage to adjourning buildings. There was no compensation for the dead, wounded and for properties worth more than N20 million that got destroyed in the collapsed building.
Lots of tragedies occur in Nigeria without any form of relief. Buildings collapse, houses and markets get gobbled by fire and so many victims have a hard time getting on their feet all because they didn’t think insurance was worth the trouble. It is, please.
Collapsed buildings in Lagos state as well as other parts of the country is a common occurrence, with Lagos state occupying the first position as that with the highest incidence of collapsed buildings in Nigeria.
Sadly, more than 95% of these collapsed structures were neither insured nor the properties covered by any form of insurance policy. It is not only a worrying trend, but an area that needs serious solution.
Why is the house not insured?
Building a new house is not only capital intensive but a laudable project that comes with house warming celebrations and lots of funfair. The reason behind all these is largely due to the fact that building a new house from scratch is not easy and the few who achieve it are regarded as successful men or women as the case may be.
The huge amount of money that goes into acquiring a plot of land, and eventually building a structure runs into millions of Naira –some as high as N60 million, depending on the type of house built. Having spent such huge sums in completing a structure, it is only wise to insure that structure.
Sadly, the insurance industry in Nigeria is nothing to write home about as they are yet to actually convince every home owner to key into the need for insuring their houses against one form of natural disaster or the other. To be honest however, property insurance is a must for every home owner, considering the numerous advantages and the fact that it’s unwise to leave your investment unprotected.
What you should know…
Home Insurance is the insurance that covers both your house and the property within the house against natural disasters like fire, flood, earthquake, storm, vandalism, explosion, lightening and other unknown natural disasters. It may not be so popular among Nigerians, but the recent increase in the rate of building collapse in most parts of Nigeria and the monumental damage to homes by floods and other natural disasters call for an urgent need to insure your house, new or old.
The cost of the policy is not fixed, as it is based on several factors like how much it will take to rebuild your house in the event that it is damaged or destroyed. It is also based on how much it will take to replace items that are inside your home.
The less likelihood of your house getting damaged or destroyed, the less the home insurance premium.
It is therefore imperative for the individual to carry out his/her own evaluation to know how much it will take to rebuild their house in the event of damage or destruction.
The location of a building is a clear factor that will determine the cost of buying a home insurance policy. Enugu, Imo and Auchi are few cities prone to erosion in Nigeria. Therefore, if you reside in a trouble area, taking out a home policy on your house will be higher compared to buying same in Victoria Island in Lagos which is less prone to erosion.
A home insurance policy is a termed policy, meaning that it runs for a fixed set period of say 10 years or 20 years depending on other inclusive policies attached. You must confirm from your insurance company before buying one, to avoid erroneous assumptions.
An added advantage of your home insurance policy is the fact that it covers the replacement value. Do check the policy properly before endorsing it to ensure that smaller items like your fence, gate, electric/water supply system, bathroom, kitchen and other interiors are covered in the policy. It must be noted however that the more the coverage, the higher the premium policy, so be prepared for it.
Clarification
There is a difference between a house holder policy and a home owner policy. The house owner policy only covers a private residence or a rented apartment. Some will say, “Insurance for rented apartment?” Why can’t one have a house holder policy, considering the fact that you may have valuable things inside your rented apartment.
On the other hand, a home owner policy (also referred to as a multi line policy due to the fact that it includes property insurance and liability coverage) is much broader. Under this premium policy, you may have your house damaged and destroyed due to fire which then extends to the houses of your neighbors, causing extensive damage. The insurance company is liable to pay for both your home and that of your neighbor under the home owner policy.
The flexibility of a home insurance policy can be highlighted with the presence of an Actual cash value whose coverage involves covering the house and the value of its contents after deducting appreciation. Current value of the property is usually paid in the event of damage or destruction rather than the original value. Lots of home owners usually opt for this option due to its diversified nature.
The Guaranteed replacement cost which forms the second valuation and claim under a home insurance policy requires that the insurance company pays whatever is the cost to repair or rebuild your home even if it’s more than the policy limit you have selected during the opening of the home insurance policy. Note however, that the guaranteed replacement cost is usually not more than 25% higher than the limit of policy.
A home owner, Mr. Felix Atsenyinku, who is also a business mogul and entrepreneur from Delta state shared the story about how he deliberated day and night over making a choice of the insurance company to use in insuring his property. “It took me a couple of weeks before I was able to make a choice about the insurance company to use for my new twin apartments. This was after extensive consultations with my lawyer, friends and business partners.”
To be honest, the task of making this important decision is very difficult, as there are presently hundreds of registered and approved insurance companies scattered all over Nigeria, jostling for home owners to join them. It is in the interest of the home owner to choose wisely when it comes to the issue of which insurance company he/she wants to sign up with.
Components present to insure your house
Integrity, trustworthiness and a good track record of fast payment of claims must be put into consideration. It is not enough to be faithfully making monthly contribution to your home insurance premium and then at the end of the day, get abandoned by your insurance company when disaster strikes your home.
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