Insurance

Insure your Home in Nigeria – How Much does Insurance Cost and Cover?

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This is a guide on how to insure your new and existing house in Nigeria. Insurance is something normal in other climes while in Nigeria it is just something done to fulfil certain expectations. However, on a daily basis, houses in Nigeria are being built and completed without being insured. Insuring your house in Nigeria is not very common.

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 adjoining buildings. There was no compensation for the dead, wounded and for properties worth millions that got destroyed in the collapsed building.

There are lots of tragedies that occur in Nigeria without any form of relief or succor to those affected directly. Buildings collapse, houses and markets get razed down by fire and so many victims have a hard time getting back on their feet all because they did not think insurance was worth the trouble.

Collapsed buildings in Lagos state as well as other parts of the country is a very common occurrence, with Lagos state occupying the first position as that with the highest incidence of collapsed buildings in Nigeria.

Sadly, a disturbing 95% of these collapsed structures were neither insured nor were the properties covered by any form of insurance policy. It is not only a worrisome trend, but an area that needs serious solutions. It is a wake-up call to get your properties insured.

Why is Your House not Insured?

Truly speaking, no matter how wealthy a person is, 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 very 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. However, after having to spend such huge sums in completing a structure, it is only safe and wise to insure that structure, in a bid to guard against unforeseen losses in future.

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, accident or the other. However, property insurance is a must for every home owner, considering the numerous advantages and the fact that it is unwise to leave your investment unprotected.

What you should know…

Home Insurance is the type of insurance that covers both your house and the properties within the house against natural disasters like fire, flood, earthquake, storm, vandalism, explosions, lightening and other unknown natural disasters. It may not be so popular among Nigerians, but with the recent surge in the rate of building collapse in some parts of Nigeria and the monumental loss, damage to homes by floods and other natural disasters call for an urgent need to insure your house, new or old.

The cost of insurance is not fixed, it is negotiable, as it is based on several factors like how much it will take to reconstruct your house in the event that it is damaged or destroyed. It is also dependent on how much it will take to replace items that are inside your home or within the premises.

The lesser the risk of your house getting damaged or destroyed, the lesser the price of home insurance premium. It is therefore very necessary for the individual to carry out his/her own evaluation to know how much it will cost to rebuild their house in the event of damage or destruction.

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The location of a building is a clear factor that will determine the cost of buying a home insurance policy. Places like, Enugu, Imo, Bayelsa and Auchi are few cities very prone to erosion in Nigeria. Therefore, if you reside in a trouble prone area, taking out a home policy on your house will be higher compared to buying same facility in Victoria Island in Abuja, Lagos which is less prone to erosion and flood.

A home insurance is a termed policy, meaning that it runs for an agreed period of time, say 10 years or 20 years depending on other inclusive policies attached to it. You must make sure to confirm from your insurance company before buying one, to avoid erroneous and unguided assumptions.

An advantage of your home insurance policy is the fact that it covers the largely the replacement value of the property. Do well to check the policy properly and carefully, before endorsing it to ensure that smaller items like your fence, gate, electric/water supply system, bathroom, kitchen and other interiors are under coverage in the policy. It must be noted however, that the more the coverage, the higher the premium policy, so brace up for it.

Clarification

There is a clear 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,“ why should I get Insurance for rented apartment?” Why can I not 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 known as a multi-line policy due to the fact that property insurance and liability coverage is inclusive) is much broader. Frankly speaking, under this premium policy, you may have your house damaged and destroyed due to fire which in turn extends to the houses of your neighbours, causing extensive damages. The insurance company is therefore, liable to pay for both your home and that of your neighbour under the home owner policy.

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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 and depreciation. Current value of the property is usually paid in the event of damage or destruction rather than its original value. Many home owners usually opt for this option due to its diversity.

The Guaranteed replacement cost which forms the second valuation and claim under a home insurance policy requires that the insurance company should pay whatever is the cost to repair or rebuild your home even if it is more than the policy limit you had chosen during the opening of the home insurance policy. Worthy of note however, is the fact that the guaranteed replacement cost is usually not more than 25% higher than the limit of policy.

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A home owner, Mr. Daniel Emenike for example, who doubles as a business expert and entrepreneur from Lagos state shared the story about how he thought day and night over making a choice of the insurance company to use in insuring his property. In his words, “It took me a couple of weeks before I was able to make a choice about the insurance company to use for my new duplex. This was after extensive consultations with my lawyer, friends and business partners.”

Furthermore, and to be honest, the task of making this important decision is very difficult and very tasking, as there are presently hundreds of registered and approved insurance companies scattered all over the length and breadth of Nigeria, jostling for home owners to sign up with them. It is therefore in the interest of the home owner to choose wisely when it comes to the issue of which insurance company he/she wants to deal with.

Components present to insure your house

In as much as one wants to get the very best hands to manage the unforeseen risks of their property, integrity, trustworthiness and a good track record of fast payment of claims must be put into proper 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 a huge disappointment by your insurance company when disaster strikes your home. It is usually frustrating.

Home Insurance in Nigeria: How it Works

Generally, in Nigeria, home insurance covers personal items that are usually present in the home. These include TV, computers, phones, documents, etc.

Typically, you might not insure these items as a single cover. Except the sellers or manufacturers cover them directly.

So if you want to insure your TV, it will fall under Home Insurance. Depending on the company, you’ll have to protect at least two or three items in the house for home insurance to be activated. This type of insurance can also cover accidents that may happen in the home. Read more about home insurance in Nigeria from the related posts.

Home Insurance Coverage in Nigeria

  1. Liability for third party losses
  2. Cover on items you take out and about, whether you’re at home or on holiday
  3. Death
  4. Bodily Injury
  5. Fire
  6. Burglary & Theft
  7. Environmental damage (rain, lightning, and wind)

What does an Insurance Policy Cover in Nigeria?

Although you can customize your home insurance policy, it offers some standard elements. A typical home insurance policy covers your belonging and home structure. They generally come as “package policies”.

This simply means that its coverage includes both damage to your property and legal responsibilities for damages to others. Below are some damages a home insurance covers:

1. Internal and external damage to your house

Accidents do happen with notice. In the event of a disaster, your home insurance will cover the cost of repairs in your home. However, the cost of destruction caused by headaches or poor home maintenance is not included.

You may need to insure other freestanding structures. Additionally, home insurance pays for the cost of furniture, clothing, or home appliances.

2. Personal liability for damage and injuries to third-party

The Personal liability is another package your home insurance covers. Basically, liability coverage protects you from lawsuits that people file against you. This package covers the medical expenses of others who sustain an injury on your property.

Also, standard home insurance covers the costs of items you take around, whether out are on holiday.

Related: Between Home Equity Loan vs HELOC: Which is Best for Covering Expenses?

How Much is House Insurance in Nigeria?

The cost of Insurance in Nigeria depends on the Insurance company you choose to insure your property with. However, it is usually a 0.25% of the worth of the property.

Cheap Home Insurance – How Cheap?

At this point I know you’re wondering, “how cheap is this cheap home owners insurance?” make a move to find out for yourself.

Well, it’s dead cheap home insurance. That is if you make the right choice.

How cheap?

In Nigeria, as a home owner, you pay only 0.25 percent of the insured sum as the insurance premium. Wonderful right?

As can be seen in the example above, you only have to pay N25,000 Nigerian Naira per annum to get a cover of 10 million Naira for your property.

That is really cheap.

My Advice?

You can visit any insurance broker of your choice and Request a quote. From there your can access this cheap home owners insurance right away by filling the simple form below.

You will agree that nobody prays for fire, flood or earthquake. But these things happen. And they can happen to anyone. What will you do if it happens to you?

So, secure your home with a token right now. It’s the wise thing to do. Lastly, please, stay safe out there and keep dangerous equipments out of the reach of children.