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Property insurance: guarding you against disaster
There are different types of property covers you can apply for and these will save you from digging deep into your pocket incase your property is damaged
What you need to know:
Property insurance will save you from having to use your savings in case your property is damaged, writes Paul Tajuba.
The pain Margret Nabwire, went through after her three roomed house in Kisugu, a Kampala suburb was razed down in 2008 is still fresh.
Nabwire, a businesswoman in Kikuubo, who sells women garments, recalls how her neighbours called at 11am notifying her of a fire outbreak a few hours after she had left for work.
“I could not believe what I was hearing and later what I saw [the burning house]. I had left home in the morning when everything was fine but returned and found ashes,” Nabwire says.
The fire was started by her then eight-year-old son. The boy lit a candle that was left half used the previous night and left it burning resulting into torching the carpet that later spread to the house in a short time. “All the things in the house were burnt and we [with her husband] started buying everything afresh,” Nabwire recalls.
It took Nabwire close to two years to rebuild the house starting with the roof and the reconstruction of the weakened walls then later household items. Like Nabwire, many other Ugandans continue to lose lives and property, with no compensation that lead to gross loses to the owners.
Situation
The National Police Crime Report of 2013 indicates that 22 people died in 2012 from house fires while the number rose to 62 in 2013.
The report cited electrical short circuits as a result of overloading power supplies, poor wiring and substandard electrical materials, candles and charcoal stoves as the leading cause of the fires.
Candles and charcoal stove contributed to 90 cases in 2012 and the number shot up to 194 cases in 2013.
The report reads in part, “…residential structures continue to have the biggest number of fires with over 34 per cent followed by commercial structures at 16 per cent.”
But, unlike in developed countries where property insurance is compulsory for every house thus giving owners peace in case of a fire outbreak or other calamities, a few Ugandans have insured their property.
This, according to industry players, is costing property owners a lot of money in trying to rebuild their houses in case of a fire as majority Ugandans consider insurance a luxury.
However, if they had insured their houses, they would not suffer in case calamity razes their property to the ground.
Property insurance
According to Faith Ekudu, the public relations officer of the Uganda Insurers’ Association, insurance is the transfer of risk from yourself to a professional risk manager in return for a fee or consideration.
She explains that, “Once the contract has been signed, you would be referred to as the insured or policyholder, or the risk manager the insurer, and the fee/consideration the premium that you pay.”
But the type of insurance attached to property is property insurance. Pamela Abonyo, the head corporate communications, at National Insurance Corporation (NIC) Limited, explains property insurance as a contract.
“It is an insurance contract which involves small periodic payments in return for protection against uncertainties and potentially severe losses,” she says.
However, Ayub Mbidde, a landlord and a potential customer says buying property insurance is expensive and sometimes insurance companies do not want to compensate their clients in case their houses are damaged.
“It is something new but why would I pay money for insurance? I rather be careful at home and avoid fires because I may pay for insurance but fire does not happen and will they pay back my money?” Mbidde asks
Laboke however says property insurance premiums are affordable and dependent on value of the property.
How it works
Faith Ekudu, the public relations officer of the Uganda Insurers’ Association, says insurance can be purchased either directly from a licensed insurance company or through their agent or through an insurance broker. She explains, “An agent is employed by an insurance company to sell their products while a broker works primarily for the client, seeking out the best product available for them on the market. The broker therefore, sells insurance on behalf of a number of insurance companies.”
Why you need it
According to Faith Ekudu, the public relations officer of the Uganda Insurers’ Association, we all make plans hoping everything will go according to plan-however; the reality is that you can lose everything you have worked for in an instant. However, “Insurance offers the comfort of knowing that should anything happen, you will not need to pick from your hard earned savings to replace what you have lost.”
She explains that in case you need to get insurance, you can contact a licensed insurance company or a broker and let them know exactly what you are looking for.
Challenges
However, despite the different benefits of property insurance, Abonyo says it has been less attractive to majority Ugandans although NIC has offered it for 51 years.
“The uptake of the policy is low yet it is comprehensive. The biggest challenge is that the market assumes [property] insurance a luxury.”
Additionally, another industry player, Donato Laboke, the Lion Assurance Company marketing and strategy manager, says getting people to buy property insurance has proved to be hard throughout the 10 years the company has offered it.
“I should say there is a slow uptake of this product on [the] market; this is due to the general low awareness and knowledge on insurance, “Laboke says.
Property insurance takes the owners’ liability insurance in case of loss and damage caused to a house or its contents depending on the specifics of the insurance cover.
Both Abonyo and Laboke, agree that there is need for intensified marketing of the said insurance policy to make it attractive to landlords. Abonyo adds that despite the low market, they will continue to make it attractive by offering aircraft damage, earthquake and volcanic eruption, storm, tempest, flood, explosion, bursting or overflowing of water tanks apparatus or pipes, bush fire, subsidence and landslip, riot strike and malicious damage among others.
Types of property insurance cover
Comprehensive cover
Donato Laboke, the Lion Assurance Company marketing and strategy manager, says despite the low update, those insured are entitled to a Comprehensive Package cover that include the residential building, household contents including portable items such as laptops, mobile phones, LED screens, washing machines and compensation of domestic workers, among others.
He adds, “The house premiums (cost) are paid annually basing on the value of the property being insured upon which a percentage is applied. For example, a house worth Shs200m would pay just Shs200, 000 in premiums annually.’’
Fire Cover
Faith Ekudu, the public relations officer of the Uganda Insurers’ Association, says you can have a fire cover damage to buildings (residential and commercial) and contents therein (furniture, fitting, fixtures, stock and machinery
among others) resulting from fire or other causes of fire like explosions, lightning, malicious damage, riots and strikes, floods, earthquakes, landslides and volcanic eruptions among others. She adds, “It also covers escape of water which causes damage to buildings, damage to buildings by animals that don’t belong to the insured person and damage to buildings by objects failing from aeroplanes.”
Burglary cover
Ekudu explains that burglary covers theft as a result of forcible entry into the premises and forcible exit from the building as evidenced by physical marks such as broken padlocks or doors.
CLAIMING
•File documents. In case of any damage to your property, you should file all the requirements that will be listed on your insurance cover.
•Investigations. An insurer needs to make sure that the right person is making the claim and that the right person is being paid. For example, the insurer may ask for a letter of administration of the estate if a deceased policy holder has not left a will. The insurer also needs to check the validity of the claim, in order not to pay fraudulent claims. For example, an insurance company may ask for a police report to ascertain that an accident did occur or a death certificate to confirm
that a person did die.
•Payments. Once you have met all the requirements of the process and your claim is found to be genuine, the insurer will issue a discharge voucher,
which has the detail of the claim amount to be paid. If you are in agreement, you need to sign and return the voucher so that the insurer can process the payment. The industry claims processing guidelines require that all claims should be settled within 10 to 20 working days after the claims settlement voucher being returned. The time frame is largely dependent on the amount of the claim.
