What Property Insurance Cover in Nigeria (2024)
What does property insurance cover in Nigeria?
For most Nigerians, their home or business premises represent one of their biggest investments and assets.
However, having a roof over your head or a place to operate your business from is just the start. What happens if there’s a fire, flood, or burglary that damages or destroys your property?
That’s where property insurance comes in – to protect your valuable investment against a wide range of potential risks and disasters.
In this article, we’ll explore what property insurance typically covers in Nigeria, what it doesn’t cover, and why it’s so important to have this type of coverage, whether you’re a homeowner or a business owner.
WHAT DOES PROPERTY INSURANCE COVER IN NIGERIA?
At its core, property insurance provides financial protection for physical assets like buildings, contents, equipment, and stock against specified insured events like fire, floods, storms, theft, vandalism, and other risks.
For homeowners, a typical property insurance policy in Nigeria will cover:
THE BUILDING ITSELF
This includes the physical structure – the walls, roof, windows, permanent fixtures and fittings. If your home is damaged or destroyed by an insured event like fire or a fallen tree, property insurance will pay out to repair or rebuild it.
CONTENTS & PERSONAL BELONGINGS
This covers your furniture, appliances, electronics, clothing, and other personal possessions inside the home against losses from perils like fire, flood, theft, etc. Most insurers provide optional additional coverage for high-value items like jewelry, artwork, etc.
ALTERNATIVE ACCOMMODATION
If an insured event renders your home temporarily uninhabitable, property insurance will pay for reasonable alternative accommodation costs while repairs are being done.
PERSONAL LIABILITY
This covers your legal liability if someone is injured or their property is damaged due to an accident at your home, up to the policy limit.
For business owners, commercial property insurance typically includes:
THE PHYSICAL BUILDING/PREMISES
Whether you own or lease the building your business operates from, insurance covers the cost of repairing or rebuilding it if damaged by an insured peril.
BUSINESS EQUIPMENT & STOCK
This covers things like machinery, tools, computers, office equipment, furniture, raw materials, finished goods inventory and other business assets/stock against losses from fire, theft, vandalism and other named perils.
BUSINESS INTERRUPTION
If your business is temporarily unable to operate due to an insured event damaging the premises, this coverage reimburses you for loss of profits/income during the downtime until operations are restored.
PUBLIC & PRODUCT LIABILITY
This protects your business against claims of bodily injury, property damage, or other losses caused to a third party by your business operations, products or employees.
WHAT PROPERTY INSURANCE TYPICALLY DOESN’T COVER
While property insurance provides wide-ranging coverage, there are also some key exclusions that are generally not covered under a standard policy:
- Damage from wear and tear, maintenance issues or gradual deterioration
- Damage from pest/rodent infestations
- Poor construction or design faults
- Damage from earth movements like sinkholes or erosion
- Damage from acts of war or government action
- Damage due to your own negligence
Flooding is another key exclusion under most basic property insurance policies in Nigeria, requiring additional separate flood coverage.
WHY DO YOU NEED PROPERTY INSURANCE?
The costs of repairing or rebuilding buildings, replacing damaged contents/equipment, covering legal liabilities and business interruption losses can easily run into the millions of Naira. Without adequate property insurance, these unexpected expenses could prove financially crippling.
Property insurance provides vital financial protection for homeowners, landlords, and businesses against the risk of catastrophic losses due to fires, storms, theft, liability claims and other covered perils. It allows you to repair, rebuild and recover from insured disasters without suffering devastating out-of-pocket costs.
While no one wants to dwell on worst-case scenarios, having the right property insurance coverage gives you invaluable peace of mind knowing your most valuable assets are protected. You can sleep soundly at night, assured that if the worst does happen, your insurer has your back.
FREQUENTLY ASKED QUESTIONS
Here are some frequently asked questions that people often ask about what property insurance covers in Nigeria:
IS PROPERTY INSURANCE REQUIRED BY LAW IN NIGERIA?
Property insurance is not legally mandated for homeowners in Nigeria, however it is usually required by mortgage lenders if you have a home loan. For businesses operating commercial premises, most landlords require you to have adequate property insurance coverage.
HOW MUCH DOES PROPERTY INSURANCE COST IN NIGERIA?
Premiums can vary significantly based on the property’s value, location, age, construction type, coverages required and your claims history. However, expect to pay between 0.5% – 1.5% of the property’s insured value per year for basic building and contents coverage.
DOES PROPERTY INSURANCE COVER DAMAGE FROM TERRORISM/CIVIL UNREST?
Most standard property policies exclude cover for damage arising from riots, civil commotion, labor unrest or terrorist activities. However, many insurers offer this as an optional add-on at extra cost.
WHAT IS THE DIFFERENCE BETWEEN HOMEOWNERS AND LANDLORD INSURANCE?
Homeowners insurance covers your personal possessions as well as the building itself if you live in the insured property. Landlord insurance only covers the physical building and liabilities related to rental activities, not your personal contents.
HOW CAN I REDUCE THE COST OF MY PROPERTY INSURANCE?
Installing burglar alarms, fire/smoke detectors, using fire-resistant building materials and having no recent claims can help lower your property insurance costs. Also, increasing your policy deductible reduces premiums.
CONCLUSION
At the end of the day, having property insurance is just plain common sense for anyone in Nigeria who owns a home or business premises.
Sure, the upfront premiums may seem like an unwanted expense when money is tight. But imagine how much worse it would be to lose everything you’ve worked so hard for to a fire, flood, or burglary without any insurance coverage?
Property insurance gives you the precious peace of mind that even if disaster strikes, you’ll be able to get back on your feet again without going completely broke from the costs of repairing or rebuilding. Don’t take that gamble by going unprotected!
