Tag Archives: Fire and Special Perils


Flood damage to properties in Lagos state.

The protection against flood damage is an integral part of any Fire & Special Peril Insurance Policy, Material Damage Insurance Policy and a Home Insurance Policy on a building and or its content.

This is often not amplified unlike the fire risk probably due to the fact that fire tends to create a more vivid image of danger and urgency than flood. Therefore many policy holders do not know that they can recover under their policy should they suffer a flood damage. Continue reading YOU DON’T NEED A SEPERATE FLOOD INSURANCE COVER!



Mr. XYZ took up a comprehensive motor insurance cover on his brand new car which he got for N7,500,000.00. Since the insurance premium payable would be based on the value of the vehicle, he decided to reduce the value to N3,000,000.00  so that he would not have to pay so much in premium.

Some months after, his car was involved in a ghastly accident and the cost of repairs was about N2,500,000.00. In settling his loss, his insurance company, having weighed the amount he was claiming to the sum insured, opted to treat the claim on a Constructive Total Loss(CTL) basis. By this option, it means that the insurer decided that based on their records, the vehicle was beyond economic repairs. Mr. XYZ was offered the sum of N2,800,000.00 (after all deductibles) in settlement of the claim.

Mr. XYZ found himself in a fix. The amount he was offered was not even up to half of the value of the car but he couldn’t afford to repair the car himself. However, accepting his insurer’s offer would require that he forfeits the damaged car to them in line with the conditions of the insurance policy.

You obviously cannot eat you cake and have it back. Continue reading EATING YOUR CAKE AND HAVING IT BACK



It is a general belief among the insuring public that the purpose of taking up an insurance cover is to be returned to the position previously enjoyed before the occurrence of a loss event. In my years of experience I have found this to be largely a theoretical truth as in actual fact, there are many factors that could prevent full indemnification.

Many of these factors are the application of clauses and policy conditions that only becomes known to you (the insured) at the point of claim. Continue reading WHY YOUR FIRE INSURANCE POLICY MAY NOT PROVIDE FULL INDEMNITY



A claim is the occurrence of an insured peril, upon which the liability of an insurance policy is engaged.

An insurance contract is a promise by one party to indemnify the other upon the occurrence of a predetermined event. As an insured, having fulfilled your portion of the contract, you have an absolute and incontestable right to your claim (indemnification).

In our previous discussions, we have critically examined what could result to a claim under Fire & Special Peril Insurance. You may read them up here (Fire Insurance Part 1) & (Fire Insurance Part 2).

What do you do in the event of a loss

  1. Immediately notify your insurance company. As soon as is it is possible, contact your insurer to notify them of the loss. A telephone call, text message or email will suffice.
  2.  Obtain a fire brigade’s report: Especially in the event of a major fire. Fire fighters, apart from combating fire are sometimes able to trace its origin. This is necessary for the documentation of your claim.
  3. Obtain a police investigation report: This is important where the damage was caused by a negligent third party which could be either an impact or malicious damage.
  4. Property damaged by third part vehicle: In addition to (3) above, you are to obtain the negligent 3rd party’s letter of undertaking accepting responsibility for the damage and also collect copies of the vehicle particulars (especially the motor insurance certificate of the vehicle).
  5. Take adequate snapshots of the damaged scene showing the extent of the damage.
  6. Obtain a bill of quantity or estimate of repairs and purchase invoice of items damaged.
  7. Take reasonable measures humanly possible to reduce the extent of the damage.

What is claimable under Fire & Special Peril Insurance?


  1. Reinstatement of the damaged property:  this is usually in monetary terms as it is cheaper than actual reinstatement (insurers effecting repairs themselves)
  2. Debris removal following fire, flood or earthquake is covered

    Cost of debris removal: however, such amount is subject to the provisions of the policy.

  3. Cost incurred in the course of combating the spread of the insured peril be it fire, flood, explosion.
  4. Expenses incurred in complying with standards laid down by relevant authorities while reinstating the damaged premises.
  5. Damage to properties by fire fighters while combating spread of fire from adjacent premises.
  6. Damage to property by the police force in an attempt to restore order following an uprising.

Some policy provisions that determines the degree of your indemnification are;

  1. Under-insurance; This means that the sum insured (or value placed) on the subject matter of insurance is inadequate. It therefore implies that the premium the insured paid at the inception of the cover is not commensurate to the risk and the insurer has been placed in a disadvantaged position.
  2. Poor moral hazard: a hazard is a condition or situation that creates or increases the chance of the operation of an insured risk. Poor moral hazard refers to human behaviors that could fuel an insured peril. Examples of poor moral hazard includes poor housekeeping, improper storing of flammable materials etc.4c0289f01c398_ws151_jpeg
  3. Others are the operation of specific policy clauses which would be the subject of our next discussion.

Thank you for reading. We would like to have your view and also know if this post has been of any benefit to you. Kindly leave a comment.


We started a new discussion last week on Fire insurance and we pointed out that what is operational in the Nigeria insurance market is a standardized cover referred to as Fire & Special Peril Insurance. This encompasses other perils that were hitherto subject to request and payment of additional premiums.

We will continue our discussion by looking at this additional perils and the extent of their covers while not boring you with technical details. Continue reading UNDERSTANDING THE EXTENDED PROTECTION FIRE INSURANCE POLICY PROVIDES