Insurance is a topic not too many people are familiar with in Nigeria. It also seems to be streamlined to a certain class of people in the society. However, it is a very important step to take as risks are unavoidable in life.
Insurance is a legal agreement between two parties, the “insurer” and the “insured”. In this agreement, risk or loss is transferred from the insured to the insurer in exchange for payment. This means that the individual makes payment to the insurance company in order to receive financial protection against losses.
There are insurance policies that also serve as a guide to the legal agreement so that there is no foul play from any of the parties involved. Different kinds of insurance exist such as health insurance, car insurance, home insurance and so on. In this article, we will be looking specifically at home insurance.
What is Home Insurance?
Home Insurance is a type of insurance that covers your house and different properties within the house that could be lost to various risk factors such as theft, fire, natural disasters and so on.
How does Home Insurance work in Nigeria?
Home Insurance is not so popular in this part of the world as in other countries, especially the western world. Different insurance companies in Nigeria function with different styles and there is no fixed cost of policy. It depends on various factors like the cost of rebuilding your house or the cost of replacing the properties within it. The location of your house could also contribute to this. So it is important for you to carry out proper evaluation of your property before buying insurance.
A home insurance policy in Nigeria is fixed for a certain period of time ranging from 10 to 20 years depending on the agreement. Payment is to be made to the insurance company at intervals agreed upon. You have to also ensure that the insurance company has a track record of integrity and trustworthiness. In choosing an insurance company, these are some of the factors to be considered.
How to get an Insurance
Home insurance is a necessity that should not be treated with levity. Considering the high amount of funds that are channeled into building houses, it is only safe to insure the house against any future damage.
To get insurance, you have to first decide on the insurance company you want to use. You should carry out thorough research and consult the expertise of professionals like your lawyer before taking such a decision.
You also have to evaluate the house in order to know how much would be required to pay for its insurance so you are not overcharged. You can also employ the services of a professional to do that. After all this, you can then approach the insurance company you have chosen to get the necessary documents required to get started.
Cost of Insurance in Nigeria
There is no fixed price for the cost of insurance in Nigeria. The cost depends on varying factors such as the value of the house, its location and the likelihood for it to be affected by risk factors.
For instance, houses located in areas prone to erosion or flooding would cost more than houses located in other places. Houses located in high brow areas of the city too could have a higher insurance policy than others
Requirements for NHF in Nigeria
The National Housing Fund is a housing scheme created by the federal government to meet the housing needs of Nigerians. It was established by the NHF Act of 1992. The Act states that employees and business owners are required to contribute 2.5% of their monthly basic salary to the National Housing Fund through the Federal Mortgage Bank of Nigeria (“FMBN”). The scheme is aimed at providing affordable and easy access to housing loans for Nigerians.
There are certain requirements to apply for the National Housing Fund loan. The applicant must have contributed to the fund for six months and above. He must also apply with the necessary documents to any duly registered and accredited primary mortgage bank. The documents required for this application include;
- Completed application form
- Photocopy of title documents
- Current valuation report on the proposed house to be purchased
- 3 years tax clearance certificate
- Evidence of NHF participation which should be a minimum of 6 months
- Copy of payslips for the previous 3 months
- Equity contribution
What is the mode of repayment?
NHF loans are repaid on a monthly basis from the monthly salaries/income of beneficiaries.
The real estate industry is one that has to become more acquainted with the insurance industry in order to secure investments. MKH offers professional advice on how to secure your investments and make profit as well. For more information on how to get started, you can contact us here.