When it comes to ensuring building safety, many new and existing home owners usually install electric fencing, CCTV cameras, alarms, quality electric cables and wiring, invest in the best quality building materials, hire top notch builders and so on. However, not all safety measures can ensure that a property is secure from accidental damages like earthquakes such as the in the image bellow (photo credit: Reuters), fire outbreak, theft, explosion and even social unrest.
In the grand scheme of things, getting home insurance for your property is essential. After all, a home is one of your most valuable possessions. You eat, sleep, share some of your cherished memories and store a good number of your expensive belongings in your home.
Home insurance is a type of insurance policy that covers a private residence. This cover provides support to home owners by ensuring that the policy holder is compensated in cases where there is loss and/or damage to a residence and other assets in the property. There are home insurance policies that cover just the building, some cover the contents and there are others that cover both the building and it's contents. In instances where an insurance policy only covers the building of a property or home, the policy covers the following; the walls, floors, windows and also permanent fixtures and fittings such as baths, toilets, ceiling fans, chandeliers, built in wardrobes and shelves, fitted kitchens among a host of others. The home insurance policy structured to protect the contents of a home on the other hand, will frequently include: furniture, jewellery, computers, home appliances and other personal belongings.
Benefits of Home Insurance:
Home insurance gives property owners something to fall back on, to provide economic protection with regard to the risks that comes with owning a home such as burglary, a fire outbreak, storms, floods, hurricane, volcanic eruptions, lightning and other unforeseen events and accidents. For example, many homes in Accra witness serious flooding each year, quite a number of these victims have had their expensive and cherished belongings ruined as a result of heavy rainfall. Having insurance may not necessarily restore property and possessions to the exact state as before the loss or damage but can provide adequate compensation which is most often needed at such a time.
Having said that, some home insurance policies cover personal properties. Thus in an event where jewellery, furniture, electronic gadgets and other personal items are stolen or damaged by a covered loss, the insurance company can provide home owners with the required reimbursement.
Home insurance usually protects home owners in terms of repairs and replacement of any damage caused by occurrences listed in the policy. Depending on the terms, attached and detached structures on the property that are damaged or destroyed may also be covered.
In some cases, home insurance may cover the financial burden resulting from a guest or visitor being accidentally injured on one’s private property.
During situations where a home owner is unable to live in their house as result of a fire outbreak, flood or other perils stated in an insurance policy. The insurance company may assist in the payment of temporary living costs including hotel, guest house or other short term accommodation bills whilst repairs to the property are being carried out.
Home insurance most importantly provides home owners with some level of peace of mind as they are assured that a level of cover for an amount of compensation to be used to rebuild a home would be paid out should the unexpected occur. Thereby allowing them to enjoy living in their home without any stress or worry.
In Ghana, it is not compulsory for home owners to have home insurance cover for their property. Regardless, there are many insurance companies that offer different types of home insurance policies to suit the preference of diverse property owners. On the other hand, with regards to commercial properties, it is mandatory for owners to get fire insurance cover for their buildings unlike private properties. The Insurance Act 2006 (Act 724), in Ghana, requires that all commercial buildings and those under construction are insured against the risk of collapse, earthquake, floods, storms and fire. Per Sections 183 and 184 of the Act, a private commercial building under the law is defined as: “Privately owned building to which members of the public visit for the purpose of obtaining educational or medical service, engaging in a commercial activity for the purpose of recreation or transaction of business.”
A certificate of insurance with security cover information listed is usually issued as evidence of the insurance policy, and property owners are to display this certificate or be able to produce them for inspection by authorities.
In spite of the fact that, tenants of private properties in Ghana are not legally required to take out home insurance, some insurance companies also offer renter’s insurance, which covers a renter’s property. Even if the landlord has already insured the property, the landlord’s insurance would not cover the tenant’s personal property. Thus, it is beneficial for the tenant to insure their own property in case of loss or damage.
Unfortunately, not many people insure their houses in Ghana. Motor (Car) Insurance tops the list as one of the most patronised insurance policies in Ghana and this is presumably due to the fact that, it is illegal to own a vehicle without insurance. The National Insurance Commission (NIC) in Ghana recently revealed that, it has recorded over 78,000 newly insured vehicles as of February 17, 2020, just six weeks since the organisation implemented the Motor Insurance Database (MID).
With regards to home insurance, there is a fraction of Ghanaians who opt for home insurance policies because they are either trying to acquire a bank loan or their mortgage requires that their property is insured.
To confirm our thoughts, we spoke to Jude Boahin, a Branch Manager at Quality Insurance Company (a private owned insurance company in Ghana) where we asked him a few questions about home insurance in Ghana.
From your work experience, do you think many Ghanaians are choosing to insure their Homes?
“I would say that, gradually people are opting for Home Insurance”
What do you think may be the reason?
“This is due to the fact that, there is increasing awareness of it. There is also mortgaging arrangements which require financiers to secure invested capital. Plus, some businessmen and women are using their properties to source funds from banks and that is a requirement”
This definitely confirms our thoughts.
In your opinion, what insurance policy should young home owners go for and why?
“It would have to be Comprehensive Home Insurance Policy. This policy covers fire allied perils and personal accident.”
Types of Home Insurance In Ghana
Depending on your preference, budget, value of your property and others, insurance companies provide home owners with different policy options to choose from when it comes to insuring a house against uncertainties. In Ghana, the most common types of home insurance policies offered are;
Fire insurance is a type of property insurance that provides payment for the loss or damage to a structure destroyed as a result of a fire outbreak and other allied perils. It may also offer additional living expenses as a result of uninhabitable conditions as well as compensation for damage to personal property and nearby structures. A fire insurance policy may often include additional coverage against explosions, smoke and water damage due to a fire. Note, arson is not currently covered in insurance policies.
In the latter part of 2019, it was reported that Ghana lost a whopping GHS19 million to fire outbreaks between January and September last year. According to the Ghana National Fire Service (GNFS), this was due to 4,476 fire outbreak events recorded within the stated period. These outbreaks apparently claimed 271 lives and left 1,714 people with varying degrees of injury. Causes of the fire outbreaks were categorised as domestic, industrial, vehicular, institutional, electrical, commercial and bush fire. As stated earlier, fire insurance is mandatory to commercial properties but not to personal home owners.
Burglary / Theft Insurance
Burglary Insurance provides home owners cover to be compensated in case theft occurs. In Ghana, many home owners install burglarproof windows, doors, fences and other security systems, unfortunately these are not always successful. The nation may be a peaceful and politically stable one but unfortunately, there are some persons who try to disrupt this stability. Burglary Insurance provides cover in case the unexpected happens. Theft or Burglary Insurance is a type of insurance policy that will indemnify the policy holder against loss or damage to property by violent entry into or out of the premises or an attempted thereat.
Burglary insurance usually applies to both private residences and commercial properties. Private premises insurance usually covers personal belongings and household goods. With every insurance policy there are exceptions. Most, if not all insurance companies will not cover loss or damage caused by someone who is lawfully on the premises, for example a visiting relative or friend or loss or damage that occurs while the residence is left unoccupied or without a caretaker for an extended period of time.
Fire & Burglary Insurance
Fire and theft / burglary home insurance policies combine terms of both fire insurance and burglary insurance. Thus, property owners covered by this type of insurance policy will receive compensation in situations where there is loss or damage to a private residence or personal item due to a fire outbreak, lightning strikes, explosions, attempted or actual break in and other allied perils.
Comprehensive Home owners Insurance Policy
This insurance policy may require home owners to pay a a higher amount as yearly or monthly premium compared to the other policies stated earlier, but the comprehensive home owner’s insurance policy definitely comes with its own benefits. As previously mentioned, the policy covers different uncertainties. Comparing a wide number of insurance companies in Ghana this policy may cover the following:
1. Personal Accident
Most comprehensive home owner’s insurance policies usually cover personal accident. This means that any bodily injury that independently of any other cause results in temporary disablement or permanent disability, death and medical expenses caused to the policy holder and or spouse and or children living within the property will be adequately compensated.
The comprehensive home owner’s insurance policy insures the private property against loss or damage caused by a fire. As detailed previously, with most companies this includes explosions, lightning, storm, hurricane, flooding, earthquake, volcanic eruption and others.
3. Personal Liability for Damage or Injuries
In a situation where the policy holder is liable for a damage or loss suffered by third parties, depending on the insurance company’s terms, a compensation would be paid to the relevant third party under this policy.
This personal liability cover can assist in the payment of medical bills, repair costs, legal fees as a result of death or injury inflicted to any person who is not a member of the policy holder’s residence or even an employee. It also applies to any accidental damage or loss of property within the limits of the private residence that belongs to the insured home owner or a member of that household.
Just like the independent burglary insurance policy, majority of Comprehensive Home Owner’s Insurance policies reimburse an insurance policy holder against loss or damage to a property by violent entry into or out of the private residence or an attempt thereat.
5. Additional Living Expenses
During mishaps where home owners are unable to live in their property as a result of a fire outbreak, floods, storms or other allied perils, a vast number of home owners insurance policies require that the policy holder be paid an amount equivalent to the actual cost of renting an alternatively reasonable accommodation for the period needed for reinstatement. Depending on the insurance company, the maximum acceptable period of reinstatement may be 12 months/1 year.
Home Insurance Requirements
If you are wondering what you will need in order to insure your home, well here are a few things most insurance companies in Ghana require from home owners:
Market Value of Your Home
When you decide to insure your private residence / home it is very important to have a fair idea of what your property would cost on the housing market. This will help you and most importantly, the insurer to calculate the amount or premium you are required to pay.
Bear in mind the risk associated with your property
In Accra for instance, there are a number of neighbourhoods that have a reputation of being flood prone areas such as Awudome, Abossey Okai, Adabraka, Asylum Down among others and earthquake zones such as McCarthy Hills, Gbawe and Weija. Thus, taking this into consideration, home owners can conveniently decide which insurance policy will suit their home best.
Know the value of your contents
When insuring the contents of your home, including furniture, jewellery, paintings and other expensive personal belongings, it is important that you have an accurate idea of the value of these items. Just as you need to know the market value of your property, being aware of the value of your contents / personal effects will influence your insurance premium.
Time and Paperwork
Majority of insurance companies require you to complete some forms in order to get an accurate idea of valuation and details of your home. In most cases, an insurer will also visit your home after you have done the paperwork in order to take pictures of your building and or its contents to put on file.
Some property owners tend to increase the market value of their homes and personal effects in order to claim large sums in case they need to make an insurance claim. Bear in mind that increasing the market value of your building and contents will result in you paying a higher premium. Hence, it is advisable to be truthful when going in for a home insurance policy.
Cons of Home Insurance in Ghana:
Although there are many benefits and different types of insurance policies in Ghana, there are also a few down sides.
1. Delay in Insurance Claim Payment
Some insurance companies tend to delay payments when policy holders make a claim. There have been scenarios where an unfortunate incident such as a fire, flood or storm has caused major damage to an insured property and the owners urgently need reimbursement. Some insurance companies are known to take a long time (often longer than the duration needed for further investigation and analysing) to issue any pay-out to the home owner.
2. Persuasive Insurers
Not all insurance policies are good policies, as with insurance companies. It is very important that home owners do thorough research before insuring with a company. Some insurers, marketers and insurance brokers tend to be very convincing but mislead home owners into choosing policies and companies that may not be right for them.
Regardless, the pros definitely outweigh the cons and it is up to home owners to decide on whether a home insurance policy will be good for their property.