PROPERTY INSURANCE IN NIGERIA

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PROPERTY INSURANCE IN NIGERIA

You’ve heard it said that everything in life is a risk. There’s a certain level of uncertainty that permeates human life thus making the best of us hopeful unrepentant gamblers that our work will determine our results, that starting a business will yield profits, and that our legally purchased properties will remain ours. However, this is not always the case as sometimes, our work may go unrewarded, our business may not yield profit, and the quiet use and enjoyment of our properties may be denied. Hence, the need for insurance. This piece will attempt to define Insurance and Property Insurance in particular, the types of property insurance policies obtainable in Nigeria.

WHAT IS INSURANCE

Insurance is a risk management contract or arrangement against financial losses. An insurance contract is entered into before a financial loss occurs, else it is not insurance. It is a future purchase of protection against unforeseen or perhaps anticipated incidents customary to business or endeavour. When a claim of insurance matures, the insurer pays the insured or anyone chosen to collect the agreed payment for the financial loss encountered. There are various types of insurance or insurance policies a person can buy. They range from life insurance to property insurance. However, this piece will focus on property insurance.

WHAT IS PROPERTY INSURANCE

Property insurance essentially shields property owners from financial losses on the property and/or the assets it houses, or those surrounding it. Property can simply be anything capable of being owned[1] While there’s little jurisprudential nature in support of insurance of intangible properties like intellectual property for example, legal literature is replete with the insurance of physical properties both animate and inanimate. Thus we have property insurance ranging from building insurance to car insurance, art insurance all the way down to mobile phone insurance. Essentially, when a person buys an insurance policy, they first of all pay, then continue making a periodic payment called premium. [1] See SECTION 1 OF the Criminal Code

PROPERTY INSURANCE POLICIES

It is important to state at this point that no insurance company offers something called ‘property insurance’. Property Insurance is categorised into different policies which cover different types of loss. Thus while some policies may provide coverage for a building itself, they may not provide coverage for other properties in it. In the same vein, some policies may cover damage caused by a natural disaster while others may not.

An insurance policy is a written contract between the insurer and the insured. Thus the contract reflects the agreement and specifications of the parties to the contract, and the insurer will only pay for the things described in the policy. Payment may either be calculated in actual cash value coverage or replacement cost coverage. While actual cash value coverage provides for the value of the lost property after deducting depreciation value, the replacement cost covers the full cost of repair or replacement of the property at the market or current value.

After the purchase of a policy, the insurer is required to pay a periodical payment called ‘premium’. Some companies also include ‘deductible’ in their policies. This is the amount the insured pays first when making a claim before the company pays its part. For example, if a person purchases a #5000 deductible on the auto insurance policy, and the cost of repairing a damaged car is #20,000, the insured must pay the deductible #5,000 first.

It is important to note that property insurance policies have a limit of liability usually enshrined in the contract of insurance. In other words, there is a threshold, a maximum monetary reimbursement that can be paid to an insured. For example, the Nigeria Deposit Insurance Corporation limit is currently a maximum of ₦500,000 for each depositor in respect of deposits held in each insured Deposit Money Bank (including Non-Interest Banks) and Primary Mortgage Bank and ₦200,000 for depositors in MFB in the same right and capacity. Where a bank folds up, the highest reimbursement that can be paid to a customer of such bank is 500,000[1] never mind that the money lost may be much more than that. [1]https://ndic.gov.ng/frequently-asked-questions/#:~:text=As%20a%20 deposit%20 insurer%2C%20the,of%20a%20 participating%20financial%20 institution.

Types of Property Insurance

The following are the common types of property insurance offered by insurance companies

Homeowners Insurance

Getting a home is one thing, furnishing it another, going further to insure it is that one thing that makes the difference when catastrophe hits. A homeowners insurance may well be the defining factor deciding whether a person becomes homeless or not. A homeowner’s insurance usually provides coverage not only for the building but for other properties and appliances in it. It may also cover for damage to a third party who gets injured on the property.

Renter’s Insurance

A landlord may essentially buy a homeowners policy for his/her property. However it will usually not cover the tenants belongings. A renter’s insurance is a means of making provision for this risk should any damage, or loss happen to the renter’s property.

Auto Insurance

This kind of insurance policy protects against car damage or replacements of auto parts. Also in cases where there is a collison, an auto insurance pays or caters substantially for the medical bills

Marine Insurance(Cargo)

Persons who ply the waters transporting their goods may also seek to cover the loss of such goods, and may therefore purchase this policy to cover for such loss.

Mobile Phone Insurance

A mobile phone that costs hundreds of thousands of naira can also be the subject of insurance. As long as such a policy is being offered by the insurance company. After all, it is better to be safe than sorry.

In conclusion, acquiring property is quite capital intensive, property insurance has proven a better way of protecting these kinds of investments. Making provision for risks though may seem like an additional capital burden, but in the long run, saves the insured a lot more trouble.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

TEL: 08065553671, 08024230080