R-rain insurance
Money Matters with Nimi

Insurance is still something that most people tend to ignore until they need it most, and sadly most Nigerians are not insured.

“Dear Lagosians, please bear with us. Today’s downpour has been heavier than normal as the state government had earlier warned. It has been raining since 5am in many areas and it hasn’t stopped.

The water level has risen incredibly so that the channels that are meant to discharge water from the roads & drainages are completely locked because of the high tide and because both the Atlantic Ocean and Lagoon that receive water from our channels have risen more than usual”

Tunji Bello
Commissioner for Environment

Last Sunday, heavy rainfall, crippled Lagos State, and within a few hours Nigeria’s commercial hub was paralyzed; roads were rendered impassable, as residents struggled to salvage their belongings. In some areas the flood swept away cars and buses. The rain, which started at about 5am in most parts of the state lasted well into the night, and continued into the next day flooding hundreds of homes across the state. Weather reports predict further rainfall.

We live in uncertain times. Violent floods and storms, volcanic eruptions, earthquakes, tsunamis, hurricanes…the list goes on; such disasters have one thing in common; they are “catastrophic risks” that rarely affect you in your lifetime, but if they do happen, the consequences can be devastating. Because such risks are so rare and unpredictable, often striking without warning, they can be badly underestimated. Yet just being prepared can save you from untold distress.

How fortunate we have been in Nigeria. Whenever disasters happen in other parts of the world, we say to ourselves, “Thank God it can’t happen here!” and continue with our complacency. Yet global climate change seems to have affected even our local weather, which has never been more unpredictable; heavy rains fall during the harmattan season and last year we had long dry spells in the thick of the rainy season with exceptionally hot weather climbing to scorching temperatures. The frightening rain we have experienced this past week is heavier and more prolonged than most of us can remember.

Is your home insured against flooding?

Insurance is still something that most people tend to ignore until they need it most. Indeed, according to a recent US survey, 2 out of every 3 homes are underinsured. In Nigeria the question isn’t about under-insurance, it is about how many Nigerians are insured in the first place.

Are you one of thousands of Nigerians who suffered damage to their property from the flooding following the incessant deluge of rain this past week? There is no better time to revisit the issue of insurance than when we have a live and practical situation that brings home the critical importance of insurance. It is a good time to assess how well you are protected against flooding and indeed other disasters. You will probably find that the insurance premium is a small price to pay for the peace of mind from having your belongings insured.

Read and understand the fine print

Many people struggle to understand the finer details of their insurance policies. The onus is on you to read the fine print and be aware of your policy limitations so that you know exactly what is and isn’t included before you sign off and pay for cover. It is all to do with the policy wording as in exceptional circumstances, rules may not apply.

Do you live in a flood prone area? While it might seem logical that homeowner’s insurance would cover risk from flood, fire and other disasters, this might not always be the case as standard policies may exclude some catastrophic risks such as flooding. If you know that you face an increased risk of flooding you can opt for additional coverage for such an eventuality. Of course the premiums may vary significantly, depending on whether your home is considered to be high or low risk of flooding.

Review your policy periodically

It is important to review your homeowner’s policy annually as it comes up for renewal. Don’t just forward the same premium you have been sending to your insurer each year. Whenever you make significant improvements to your property, inform your insurance company so that cover may be adjusted to reflect the new value. Your premiums will go up, but at least you won’t find yourself unable to replace some of your belongings in the event of a disaster.

Take an inventory of your belongings

Regardless of whether you purchase flood insurance, it is always a good idea to conduct a home inventory, particularly of expensive items. It is easy to underestimate the number and value of possessions, ranging from major electrical appliances, laptops, furniture, musical instruments, camera equipment to collections and other decorative objects. Estimate the value of your personal possessions at current prices.

Some people go as far as to photograph or make a video recording of their rooms and contents particularly significant individual items such as a piano or a rug. Keep receipts for major purchases as well as other records in a secure, waterproof place, preferably off-site with a trusted family member or friend, so that they are not destroyed if there is some damage at your home.

Whilst your insurance policy will not cover items of sentimental value that no amount of money can replace, such as family photographs and certificates of achievement, you can take some practical steps to preserve such items by scanning and saving such documents and photographs electronically.

Revisit your policy annually before renewal and adjust the values of significant items as appropriate to ensure that your belongings are adequately covered. The worst time to find out that you are underinsured is when you have tried to make a claim and find that you are not fully covered for the cost of repairs or replacement.

The rainy season is completely predictable and we all know that between April and September it will rain. In certain areas for as long as the issues of drainage are not properly resolved, there will be flooding. There is only so much that a government can do to protect life and property; the responsibility is yours to do all you can to protect yourself from such risk events. The overwhelming losses numerous Nigerian families have suffered should serve as a wake-up call for us. Insurance is a critical part of your financial life and you cannot afford to ignore it. If you haven’t already done so, call a reputable insurance company now.

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