Last Updated on: 17th October 2020, 09:19 pm
This post is a comprehensive guide for those that want to know about home insurance in Nigeria.
What Is Home Insurance?
People otherwise know home insurance as homeowners’ insurance. It is property insurance that offers protection (covering losses and damages) to the structure and contents of a house should there be any physical destruction or accidents in the home.
A home insurance policy provides coverage against loss or damage in the property caused by natural eventualities (storm, hurricane, etc.) and man-made calamities (burglary, fire, terrorism).
Understanding Home Insurance
These days, the incidence of calamities has been on the increase. Natural calamities like storms, earthquakes, torrents, are being experienced across the globe. When these occur, they damage not only trees, vehicles, and external properties but also damage several homes.
Recently, Hurricane Laura, one of the toughest hurricanes to be ever experienced in the United States, struck the Gulf Coast. It affected over 700,000 people and destroyed hundreds, if not thousands of homes were destroyed. People who did not insure their homes may end up losing one of their most prized possessions.
When you have an insurance policy covering your house it covers your house against all kinds of unforeseen calamities like hurricanes, floods, etc.
Apart from natural disasters, home insurance can also cover losses and damages because of theft, burglary, fire, riots, etc. Despite the safety equipment available in the market, one cannot completely overlook the chances of robbery or burglary, fire, and other hazards taking place.
Since your house is one of your most valuable possession, it becomes pertinent to protect it against losses and damages.
Is Home Insurance The Same As Home Warranty?
If you are wondering what the difference between home insurance and a home warranty is, here it is.
Although these two terms are similar, home insurance differs from a home warranty. If a registered company or business built your home, they could give you a warranty by mutual agreement.
The home warranty would be a contract that offers the opportunity for maintenance or replacement of the property systems and appliances. It could be appliances like the pools, water heaters, ovens, garages, or even parts of the building as stipulated in the contract.
Note that the home warranty contracts usually have an expiration time, usually 12 months. Also, the homeowner need not buy a home warranty.
Home insurance or homeowners’ insurance is a policy of insurance that gives you financial protection in the event where fire, storm, theft, flood, etc damages your home or property.
What Does Home Insurance in Nigeria Cover?
There are some salient features of home insurance. A standard home insurance plan should offer coverage for liabilities arising from damages or losses to a home or property because of natural disasters like storms, floods, lightning, etc., and man-made reasons like theft and burglary. Here are the key areas covered by home insurance.
1. Cover for Damages
This is the most fundamental component of a home insurance policy. A home or homeowners’ insurance policy covers a house or property against diverse damages. Home insurance protects the house and the contents of the house. It can also extend to protect the surrounding of the house.
2. Cover for the Building
The basic coverage that all home insurance packages should offer is a cover for the structure/building itself. This policy offers protection to the physical structure of the building/property against diverse hazards and liabilities. The protection offered also includes electrical appliances, heating, and air-conditioning, plumbing, etc.
3. Cover for Personal Property/Possession
Homeowners’ Insurance policies also offer coverage for the loss or damage to personal possessions/properties or the house contents. It could include furniture such as couches, beds, dining tables, and rugs, curtains, and other furnishings. Expensive assets in the building such as jewelry are most times covered.
4. Cover for Additional Structures
Asides providing coverage to the main building/structure, a home insurance policy could also cover additional structures around the house/property. These additional structures may or may not be attached to the primary structure. Some additional structures include the fence, the garages, the mailbox, the drainage, etc.
Note: According to Investopedia, standard homeowners’ insurance policies typically exclude acts of war or acts of God such as earthquakes or floods from the policy. A homeowner who lives in an area prone to these natural disasters may need to get special coverage to ensure it protects his or her property from floods or earthquakes. Nevertheless, most basic homeowners’ insurance policies cover events like hurricanes and tornadoes.
Benefits of Home Insurance
Owning a property is a significant investment that involves a lot of research, planning, and hard work. Owning a house without an insurance policy is not the best advice for homeowners. Although most people see home insurance as a waste of money, it is not true. With the increase in natural and man-made calamities, it is vital to find a home insurance company and invest in home insurance, to avoid a future financial setback. Here are 6 advantages of having a home/property insurance.
1. It Protects Your Home and Additional Structures
When you get an extensive home insurance policy, it guarantees you not just protection for the primary structure, but also protection for other components in the compound like the garage, fence, drainages, etc. Some home insurance packages even offer add-on coverages like furniture, electronics, furnishings, and assets like jewelry.
2. It Protects Your Home From Calamities (Natural And Man-Made)
Natural disasters are on the increase, and so are the man-made ones. Nobody wishes any calamity to befall him/her. However, these threats are inevitable and the best we can do is to prepare against incurring losses. A carefully outlined home insurance policy offers you coverage during threats like theft, burglary, fire, floods, earthquakes, etc.
3. Home Insurance Provides Financial Security and Replacement
When you insure your home, it guarantees your financial security. This also comes with the benefit of replacing your damaged properties/belongings, should there be an occurrence of any disaster!. Some insurance policies go as far as replacing the damaged or lost goods instead of merely issuing a monetary equivalent for your loss.
4. It Protects You From Lawsuits
We relate some lawsuits to property ownership, and it is not an ideal experience. Some home insurance policies can protect you and your family or company from such lawsuits. If you consider the average cost of fire insurance as compared to the benefits, you’ll know it is a good buy.
In the unfortunate incident where another property is damaged like with fire, your home insurance covers you. It can also extend to cover the medical expenses of persons injured in the property during a calamity.
5. It Provides Peace of Mind
When you insure your home, you feel at ease with little emotional pressure. The protection of your property is no longer your responsibility, the insurance company will take care of any losses or damages in the event of calamities. You can now channel your energy and emotions into doing something more productive.
6. It Gives You Access to Financial Support
If you intend to get a loan to construct, buy, or expand an existing structure, the bank may ask you to provide evidence that you’ve insured the house. If you are a passionate person who intends to take a loan to expand or diversify your business, then home insurance is a good buy.
Who Should Purchase Home Insurance?
So, you are wondering, who should have property insurance? Whether you own properties as an individual or as a corporate entity, it is advisable to purchase house insurance. You ensure that it covers you for incurred expenses in the event of a calamity.
4 Points to Bear in Mind While Insuring Your Home
Here are some great points you should have in mind when you are insuring your property.
1. Keep Accurate Records
Before and after getting house insurance, ensure that you maintain proof of all items insured to make claims when necessary.
2. Make Sure Your Structure Is Authorized
Before you build your structure, ensure that you verify with all necessary Government Agencies. Make your investment wise by ensuring that they allow your building.
3. Get And Preserve All Quotes Covering Building Cost
Ask for and preserve all quotes from the construction contractors. This may include the cost of putting up or expanding the structures. Also, make sure that you inform the insurance company of any structural changes during the insurance tenure.
4. Know What Your Home Insurance Covers
Ask the insurance company to explain the insurance covers they offer, the expenses, and the tenure. They should document the details, and you should have your copies handy.
Sometimes, a home insurance policy may be valid only for the major structure and not the appendages/additional structures. This will help you negotiate and understand the extent of coverage they will offer you in the event of a disaster.
Types of Home Insurance Policies
Home Insurance companies offer a vast array of policies to meet the unending requirements of home and property owners across all walks of life.
These homeowners’ insurance policies enable customers to understand the advantages of buying an insurance policy and encourages them to buy a plan that suits their specific requirements.
Here are the general home insurance policies offered across the world.
1. Building/Structural Home Insurance Policy
This is the most known and used category of a home insurance policy. It offers protection to your property in the event of misfortune or unexpected peril. Also, this policy could cover losses or damages to permanent fittings in your building like bathrooms, kitchens, basement, etc.
Depending on your insurance plan, this policy could extend to cover additional structures besides the major building such as garages, drainages, and other outdoor attachments.
2. Standard Fire and Special Perils Insurance Policy
In recent years, most insurance companies have adopted this policy, following the alarming rise of perils and fire incidents, and the devastating effect on people. The policy will typically offer you protection against risks and fire-related hazards.
This policy can extend to cover situations like volcanic eruption and earthquakes, and man-made activities like military operations (e.g. testing of bombs and missiles). This depends on the insurance company and the insurance plan you wish to purchase.
3. Theft and Burglary Insurance Policy
In the event of theft or any burglary operation that incurs losses or damages to insured property, the insurance policy would cover and provide for part or all of the cost equivalent of the loss.
4. Public Liability Coverage Policy
Although some people do not understand the worth of this policy, it is very crucial and helpful. Consider your home or office, for example, people will always come around either for work or leisure.
In an unexpected situation where any guest or third party sustains an injury or encounters any loss within your premises, this insurance policy comes into play and rescues you from the undue expenditure.
5. Personal Accident Policy
The homeowners’ insurance policy protects not just the property, but also you and your family. This implies that in the event of a physical injury or accident within the home or property, leading to permanent disability or death, you shall receive compensation under the insurance policy adopted.
6. Landlord Insurance Policy
Being a landlord is an enormous responsibility, as you need to maintain the structure periodically. Having a Landlord’s Insurance policy protects you from rent loss and public liability, in the event of an unfortunate peril.
7. Tenants Insurance
You may ponder over the advantage of having a tenants’ insurance. As a tenant, you live in a rented room or apartment. Despite not being the owner of the property, an insurance policy will cover you in case of losses or damages because of unexpected perils like theft, fire, robbery, or flood.
8. House Contents Insurance
Modern insurance policies offer customers an opportunity to insure the valuable content of their properties. These may include jewellery, electronics, artefacts, etc. In the event of losses or damages to these items because of fire, flood, theft, or other perils, the insurance policy offers a significant cover for the losses.
Eligibility Criteria to buy a House or Property Insurance
As important as home insurance is, not everybody knows what it entails to grab one. For you to be eligible to get a house or property insurance, you must fulfil most of the following criteria.
- You must be a resident of the country you are buying the insurance cover. You cannot own a property in the United States and apply for insurance in Scotland. It may not be workable.
- You must be the owner or a resident of the house/property to insure it. You will need to provide evidence or proof of ownership or residence of the property.
- You need to have a decent history of property maintenance. Insurance companies do not pluck money from the sky to pay customers. They conduct thorough checks and evaluations to ensure that the properties they insure meet the minimum standard of safety. This reduces the likelihood of insurance claims.
Tips for choosing a Home Insurance Policy
There are hundreds, if not thousands of home Insurance companies to choose from. A greater part of these companies prioritise customer satisfaction. This makes it reasonable to offer various policies based on the needs of the individuals.
We have listed some handy tips to reflect on while choosing an insurance company/plan over another.
1. Check the Insurance Coverage
You need to analyse the potential risks and hazards your home or property may be exposed to in the future. This makes it’ future. This makes it easier for you to make a choice. For example, if your property is in an area prone to flood, you should opt for a policy that will cover risks associated with a flood. You are free to ask for comparison charts to determine which company or plan best suits you.
2. Check the Pricing
Ensure that you understand the pricing plan of the insurance policy before opting in. You wouldn’t want to get into something you can’t afford in the long run. Ask for premium quotes and compare the prices to choose the most convenient.
3. Look at Claims Settlement Response and Ratio
Take some time to check the records of claims and settlements and the response turnaround time of the insurance providers. You should also check the renewal rates of these companies or plans. 80% – 90% renewal rate is encouraging.
If you cannot get a claim when required, then the very purpose of house insurance is defeated. It is therefore imperative to extend your research to annual reports and testimonials from trustworthy people. This will help you make better decisions.
4. Consider the Brand Equity of the Company
A good insurance company should have a positive brand value. They will reflect this in customer-friendly staff and treatment. You need to speak with an actual person and possibly visit their company to better confirm things yourself.
You should look for an insurance company with a proven track record of fair and timely settlements. Choose an Insurance company with an excellent reputation.
Inclusions in Home and Property Insurance
A good home insurance policy should cover the basic needs of the customer. These may include:
1. Home and Property Cover
This covers losses and damages to the structures and contents of the property.
2. Fire and Perils Cover–This includes:
Lightning and Thunder
Military Operations like testing of bombs and missiles
3. Burglary, Theft, and Vandalism Cover
This policy should cover your house or property in the event of vandalism or theft of precious items within the premises.
Exclusions from a Homeowners’ Insurance Policy
An insurance policy does not cover everything you could ever imagine. There are some exclusions which may include but are not limited to:
1. Losses or damages because of war or foreign invasion
2. Losses or damages because of wear, tear, and depreciation of a structure.
3. Loss of money (cash)
4. Losses or damages because of the movement of the earth. (they only include this in rare cases.)
5. Losses to uninsured contents of a property
Now that you understand what home insurance is, what home insurance covers, the advantages of homeowners’ insurance, and some key points to note while insuring your property, it is time to take action. A good home insurance policy will secure your asset from a mishap and reduce stress and tension levels.