10 Things You Need To Know About Flood Insurance

Floating House

It’s the rainy season again and the roads are flooded… again! If you’re lucky, it’s just the roads leading to your house that you have to expertly navigate, avoiding all the hidden potholes you’ve memorized, steering clear of the gutters and avoiding VGC at all cost. If on the other hand, this season invokes misery and dread because the sound of heavy rain has you frantically rearranging your downstairs furniture in the middle of the night, you should really consider buying flood insurance. Truth be told, you don’t have to live in a flood prone area to need flood insurance. As Lagos and other major cities get more congested and sea levels keep rising, the risk to your property increases.

You Can’t Just Buy Flood Insurance

As of today anyway, you can’t buy a standalone flood insurance product in Nigeria. It has to be bundled with or come as an extension of a home insurance policy. If you are buying a home insurance policy, be sure to confirm that it includes flood insurance. If you live near a body of water, also confirm which type of flood is covered.

There Are Three Types Of Flooding

There are three types of flooding, namely, flash flooding, riverine flooding and actions of sea (sea surge) and they all have different implications for your home insurance policy. The standard cover is flash flood which is caused by excessive rainfall. The other two are self-explanatory and need to be expressly included in your contract to be covered.

The Cost Will Depend On Where You Live

Insurance premiums in Nigeria are generally tariff based, meaning that individual circumstances are not always taken into account when quoting. In the case of flood however, certain areas are so prone to flooding that insurers will either reject your proposal out right or load the price for the additional risk. Areas like our beloved Victoria Garden City for example will attract significant loading of premiums.

It Can Compensate You For Damage To The Contents Of Your Home

When buying flood insurance, you will have to list the contents of your home that you want covered. Be very specific and include the room e.g. “Master Bedroom” and cost of purchase (or an estimate). Simply writing “electronics” and putting a value of N1 million will only cause unnecessary friction if you do have a claim.

If You Buy Flood Insurance But Your Landlord Doesn’t, You Might Still Be Out Of Pocket

That’s right. If you are renting a property and you buy flood insurance, diligently itemizing all the items you want covered but your landlord fails to insure his/her building against flood, you will be compensated for your contents but you may not be very comfortable living with the damage done to the uninsured building. If your landlord is also the stubborn type, you may have to pay for repair to electrical points, doors and repainting.

You Can Get Money For A Temporary Alternative Accommodation

If your home becomes uninhabitable as a result of an insured flooding incident, the policy will pay for alternative accommodation for you and your family. How much and for how long vary from insurer to insurer but generally, it’s not more than 5 days.

You May Not Be Covered If You Leave Your Home Unoccupied For More Than 30 Days

It can happen. If say, you spend your weekdays in Abuja and only spend weekends in your flat in Lagos and you miss a few weekends maybe because you took your well-deserved 4 week vacation in Europe, leaving your flat unoccupied for over 30 days may mean that your flood insurance will lapse. The rationale is that the severity of the damage will increase if the flood it is not discovered and attended too quickly. Always inform your insurer when leaving your home for an extended period.

The Pair Or Set Clause

This clause is probably best explained with an example. Say your house gets flooded and the outside unit of your split unit air conditioner gets submerged and damaged. If the inside unit is undamaged (because it is hanging above the water line), the policy will not pay for the repair or replacement of the whole set, it will only cover the damaged item. The same applies to any item that comes in a pair or set. Yes, even your shoes.

Bursting Or Overflow Of Tank Or Pipe

Not technically part of a flood extension, but this cover comes very often as standard with a home insurance policy. Burst pipes and overflowing tanks are common occurrences in a home and damage caused by the water to either the building or the contents can be covered as long as they are expressly listed in the policy.

You Can Buy Flood Insurance for Your Car

Flood insurance is typically not included in a standard comprehensive car insurance policy but you can request for it. The price is about 1% of the value of the car depending on your insurer but it’s worth having. Whether your car is submerged and damaged by water while it’s stationary or sustains damage while being driven on a flooded street, you will be covered under this extension.

Enough Talk, Time For Action

No matter how religious you are, you can’t pray the rain away, neither can you break the laws of physics. The peace of mind that comes from owning an insurance contract cannot be described with words. You need to experience it for yourself. Reach out to the nearest insurance company to  buy a policy that covers flood so that the next time you hear a loud clap of thunder, while others have elevated hear rates, you are rest assured.

It’s important to always read your insurance contract. Nigerian insurers unfortunately still write in King James English so you may have to refer it to a lawyer friend to translate. If you are unhappy with anything written in there though, you have 14 days to cancel it and get your money back 100%.

You can reach also out to me on twitter @TalkingMoneyNG and I would be happy to make recommendations on what you need.

Insurance distribution professional, passionate about personal financial management. Host blogger at www.talkingmoney.com.ng.
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