What is Home Insurance, Coverage of Home Insurance in Nigeria


Imagine coming back from your place of work only to see a building you strived hard to erect as shelter completely destroyed by fire or any other natural disaster, devastating right? Accidents are normal occurrences in our everyday life; That’s why this article is here at your disposal to educate you on how to equip yourself.

What is Home Insurance?

Home Insurance is a type of insurance that envelops both your house and the properties within the house against natural disasters like fire, flood, earthquake, storm, vandalism, explosion, lightening and other natural disasters.

With fire disaster becoming more popular in Nigerian, coupled with the recent increase in the rate of collapsed buildings in most parts of the country, it’s imperative to insure your house, whether new or old.

Coverage Of Homeowners Insurance

In the event of a disaster, your home insurance will cover the cost of repairs in your home both internal and externally disasters, and also legal responsibilities for damages. Although, the cost of destruction caused by mood swings or poor home maintenance is not included.

Home insurance policies have no fixed cost, as it is based on several factors like how much it will take to rebuild your house in the event that it is damaged or destroyed. It is also based on how much it will take to replace items that are inside your home.

Additionally, home insurance pays for the cost of other freestanding structures like
furniture, clothing, or home appliances.
Interestingly, home insurance also covers personal liability for damage and injuries
to third-party e.g. There is a package that covers the medical expenses of others
who sustain an injury on your property.

How Does Home Insurance Work?

The insurance plan is purchased just the way we subscribe monthly network plans
for our phones. An insurance plane called a premium is purchased for a particular duration based on the choice of the beneficiary (i.e. the person buying the premium) and policies stipulated by the insurance company.

A home insurance policy runs for a fixed period (termed policy) like 10 years or 20 years depending on other inclusive policies attached. However, It must be noted however that the more the coverage, the higher the premium.

Also, there are certain criteria to be considered by either the beneficiary or the insurance company before choosing, or issuing a premium. These criteria include:

Location Of The Property

The location of a building is one among the commonest factors that will determine the cost of buying a home insurance policy. Enugu, Imo, and Makurdi are few cities prone to erosion and flood in Nigeria.

Therefore, if you reside in a trouble area, taking out a home policy on your house will be higher compared to buying same in
Victoria Island in Lagos which is less prone to erosion. The less likelihood of your house getting damaged or destroyed, the less the home insurance premium.

It is therefore imperative for the individual to carry out his/her own evaluation to
know how much it will take to rebuild their house in the event of damage or
destruction.

Coverage

The cost of the policy is based on how much it will take to rebuild your house in the event that it is damaged or destroyed; It is also based on how much it will take to replace items that are inside your home. The
higher the items covered, the higher the premium.

Home Insurance Policy

Home insurance policies could either be a house holder policy, or a home owner policy which are two different things. The house owner policy only covers a private residence or a rented apartment considering the fact that one may have valuable things only inside the rented apartment and may not want to pay for the entire household.

A house holder policy is analogues to a “subset” of the house owner policy. On the other hand, a home owner policy (also referred to as a multi-line policy due to the fact that it includes property insurance and liability coverage) is much broader.

Under this premium policy, you may have your house damaged and destroyed due to fire which then extends to the houses of your neighbors, causing extensive damage. The insurance company is liable to pay for both your home and that of your neighbor under the home owner policy.

What is Mortgage

The term mortgage refers to a loan used to purchase or maintain a home, land, or
other types of real estate. An agreement is made by the borrower to pay the lender
over time, typically in a series of regular payments that are divided into principal
and interest.

The borrower presents a property which serves as collateral to secure the loan. A borrower must apply for a mortgage through their preferred lender and ensure they meet several requirements, including minimum credit scores and down payments.

Mortgage applications go through a rigorous underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.

Other Types Of Mortgage Includes:

  • Adjustable-Rate Mortgage (ARM)
  • Interest-Only Loans
  • Reverse Mortgages (etc)

How Mortgages Work

Individuals and businesses use mortgages to buy larger assets like a real estate without paying the entire purchase price upfront. The borrower repays the loan plus interest over a specified number of years until they completely become the owner of the property. If the borrower stops paying the mortgage, the lender can foreclose on the property.

For example, a residential homebuyer pledges their house to their lender, which then has a claim on the property. This ensures the lender’s interest in the property should the buyer default on their financial obligation. In the case of a foreclosure, the lender may evict the residents, sell the property, and use the money from the sale to pay off the mortgage debt.

List Of Homeowners Insurance Companies in Nigeria

Homeowners insurance provides financial protection for you and your family against
damages or natural disasters in your home. Having a policy that fits your needs can
give you peace of mind that your finances won’t be severely impacted if damage does occur.

Below Are Home insurance Companies Available in Nigeria.

  • Allianz Home Insurance
  • Zenith Insurance Plc
  • Einsurance.com.ng



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