HOUSE INSURANCE IN NIGERIA

 

INTRODUCTION 

  In general, insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. 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.

House Insurance Policies in Nigeria

The public building liability insurance, is one of the five compulsory insurances stipulated by the insurance Act 2003 but which has been dormant without implementation. Yet, cases of collapse buildings and destruction of lives and properties for which it is meant to protect occur every day.

When you sign up for a policy in Nigeria, your insurer will charge you a premium. This is the amount you pay for the policy or the total cost of your insurance – as we have established. In Nigeria, an insurance company would require you to pay the premium in instalments; either monthly or semi-annually.

How to insure your new house in Nigeria

Home insurance 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.

2 types of house insurance in Nigeria

Home insurance – A house is the biggest investment most Nigerians make, so it is important that it is insured. You can pay a bit extra to obtain guaranteed replacement coverage, which mandates that the insurer will replace your home if it is destroyed. If you only specify a certain amount of coverage, you could end up paying the difference if it doesn’t meet all your replacement expenses.

Homeowner’s insurance – This helps protects your movable assets including devices like laptops and mobile phones. Items covered under this policy are covered if they are damaged or stolen even outside your home/premises.

HOME OWNERS' INSURANCE GUIDE

Homeowners insurance (also known as home insurance) isn't a luxury; it's a necessity. And not just because it protects your home and possessions against damage or theft. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price) and won't make a loan or finance a residential real estate transaction without proof of it.

 You don't even have to own your home to need insurance; many landlords require their tenants to maintain renter's insurance coverage. But whether it's required or not, it's smart to have this kind of protection. We'll walk you through the basics of homeowners insurance policies.

KEY TAKEAWAYS

Homeowners insurance policies generally cover destruction and damage to a residence's interior and exterior, the loss or theft of possessions, and personal liability for harm to others.

Three basic levels of coverage exist: actual cash value, replacement cost, and extended replacement cost/value.

Policy rates are largely determined by the insurer's risk that you'll file a claim; they assess this risk based on past claim history associated with the home, the neighborhood, and the home's condition.

In shopping for a policy, get quotes from at least five companies, and definitely check with any insurer you already work with—current clients often get better deals.

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