There is a comforting ritual when you finish a house in Nigeria. You call an insurance broker. You pay a premium\u2014usually around 0.25% of the property value. You receive a certificate. You feel safe.<\/p>\n\n\n\n
You believe that if the house burns down or gets robbed, the insurance company will write you a check.<\/p>\n\n\n\n
In many cases, this belief is wrong.<\/p>\n\n\n\n
Insurance in Nigeria is not a scam, but it is highly literal. It is a contract of specific words, not general intentions. If you do not understand three specific clauses in that contract, you are effectively donating money to the insurance company every year.<\/p>\n\n\n\n
The first and most dangerous clause for the diaspora owner is the Vacancy Clause<\/strong> (or Unoccupied Buildings Condition).<\/p>\n\n\n\n In the UK or US, if you leave your house empty for 30 days, your cover might be reduced. In Nigeria, the standard policy often suspends coverage entirely after 30 consecutive days of vacancy unless you have explicitly negotiated otherwise.<\/p>\n\n\n\n You paid for 12 months of coverage, but you only effectively had coverage for the 2 weeks you were in the country.<\/p>\n\n\n\n The second trap is mathematical. It is called the Condition of Average<\/strong>.<\/p>\n\n\n\n Let\u2019s say you built your house for N100 million. To save money on the premium, you tell the insurance company the house is worth N50 million. You think, “If I have a small fire that costs N5 million to fix, I am covered because N5 million is less than N50 million.”<\/em><\/p>\n\n\n\n This is incorrect. Because you insured the house for 50% of its value, the insurer will only pay 50% of any<\/em> claim.<\/p>\n\n\n\n By under-insuring, you have unwittingly become a co-insurer of your own risk. In a high-inflation environment like Nigeria, where building costs double every few years, most houses are chronically under-insured. If you haven’t updated your valuation since 2020, you are likely insured for only 30% of your replacement cost.<\/p>\n\n\n\n This is a linguistic trap. Most standard policies cover Burglary<\/strong>, not Theft.<\/p>\n\n\n\n If you give your key to a cousin, or if a cleaner leaves the back door open, and someone walks in and takes your TV, that is Theft. It is not Burglary. There was no violence.<\/p>\n\n\n\n The insurer will deny this claim. They will classify it as “negligence” or “larceny,” which is often excluded from standard Fire & Special Perils policies unless you buy a specific “All Risks” extension.<\/p>\n\n\n\n Finally, check the “SRCC” clause (Strike, Riot, and Civil Commotion). Standard policies often exclude damage caused by political unrest or terrorism. During the EndSARS protests in 2020, many property owners discovered this the hard way. Their shops or homes were vandalized, but the insurers cited the “Civil Commotion” exclusion. To be covered for this, you must pay an extra premium for an SRCC extension. If you don’t see “SRCC” on your certificate, you are not covered for a riot.<\/p>\n\n\n\n Insurance works, but only if you design it. You cannot buy “off the shelf.”<\/p>\n\n\n\n 1. How do I prove “Replacement Value” in a fluctuating economy?<\/strong> You need a professional valuation from a Quantity Surveyor or Estate Surveyor every 2 years. Do not guess. If you guess low, the Average Clause will hurt you. If you guess high, you are wasting premium money.<\/p>\n\n\n\n 2. Does insurance cover “Force Majeure” (Acts of God)?<\/strong> Yes, usually. “Storm, Flood, and Tempest” are standard perils. However, you must prove that the event was actually a storm. If your roof leaks because it was old and rusty (wear and tear), that is not a storm claim. That is maintenance failure. Insurers do not cover lack of maintenance.<\/p>\n\n\n\n 3. What if I can\u2019t travel to Nigeria to file a claim?<\/strong> This is where having a management company (like Danforce) is critical. The insurer will demand a police report, photos of the damage, and a completed claim form within 48-72 hours. If you are in London trying to coordinate this by phone, you will miss the deadline. We handle the documentation on the ground.<\/p>\n\n\n\n 4. Can I insure a building that is still under construction?<\/strong> Yes. This is called “Contractors’ All Risk” (CAR) insurance. It covers the structure while<\/em> it is being built. If a wall collapses during construction or materials are stolen from the site, CAR covers it. Once the house is finished, you switch to a “Fire & Special Perils” policy.<\/p>\n\n\n\n 5. Is the premium worth it?<\/strong> At ~0.25% of value, yes. For a N100m house, the premium is N250,000. One thunderstorm blowing off your roof costs N2 million to fix. The math favors insurance, provided<\/em> you have the right clauses.<\/p>\n\n\n\n\n
The “Average” Clause<\/strong><\/h3>\n\n\n\n
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The “Burglary” vs. “Theft” Distinction<\/strong><\/h3>\n\n\n\n
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The Political Violence Exclusion<\/strong><\/h3>\n\n\n\n
The Verdict<\/strong><\/h3>\n\n\n\n
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Frequently Asked Questions<\/strong><\/h3>\n\n\n\n