Year in year out, building collapse is becoming a reoccurring phenomenon and a great source of concern for citizens and government alike in Nigeria, especially in Lagos. These devastating incidents have led to the loss of hundreds of lives, sources of livelihood and billions of naira in investments.
Between 1974 and 2021, statistics show that a whopping 461 buildings have collapsed in Nigeria, with over 1,090 deaths recorded. Over the years, Lagos has topped the chart with 295 incidents. In November 2021 alone, Lagos recorded three building collapses, with the 21-storey building under construction in high-brow Ikoyi being the most devastating headliner. Other cases involved were a two-storey building in the Lekki axis and a one-story building in Badagry.
Several reasons have been adduced for the frequent collapse of building structures, including the use of substandard building materials, failure of regulatory agencies in monitoring and enforcing building standard rules, and the lack of due diligence by professionals, to mention a few.
While these explanations are tenable, the sad reality is that most collapsed buildings do not have the compulsory insurance for public buildings or under-construction structures above two floors. This fact implies that initial investments in these projects have been terminally lost, and those who lost loved ones at the sites were never compensated. This kind of outcome should be unacceptable in Nigeria.
So indeed, it has become necessary to end this scourge, and this is where insurance comes in. This edition of “Insuring Happiness” highlights how insurance can help end the scourge of building collapse in Nigeria and help upturn losses should the worst happen.
1. With insurance, due diligence becomes pertinent
It is no longer news that one of the many reasons for building collapse is the sheer negligence of building owners and failure of the professionals to follow due diligence in ensuring the strictest adherence to industry standards and best practices.
According to sections 64 and 65 of the Insurance Act 2003, “existing buildings and those under construction with more than two floors must be insured against risk caused by negligence.” And to procure insurance, detailed disclosure of material information towards an insurable risk – this time a building project – is a condition precedent for enforcing a contract, and a breach could terminate the insurance contract.
In order words, adherence to the compulsory requirement of having an insurance contract in place would oblige the contractors to be circumspect about commitment to building standards and best practices.
Read also: Lessons from collapsed buildings: Compulsory structural engineering, insurance
2. Insurance ensures regulatory compliance
With insurance being a risk management tool and a legally binding contract, insurers are strongly averse to cutting corners or circumventing regulatory provisions.
For example, following the collapse of the 21-storey building, the Lagos State Building Control Agency (LASBCA) revealed that the number of floors approved for construction was fifteen; however, the contractors allegedly attempted to build twenty-one floors edifice. In addition, the building materials used were believed to be substandard and inferior and that it is the failure to adhere to these requirements that may have triggered the collapse.
According to chapter 59, section 74 of Lagos State’s Urban and Regional Planning and Development Law of 2010; “in the event of the collapse of any property or structure due to negligence on the part of the owner, or the developer, such property shall be forfeited to the state government.” With the knowledge of this law, no insurer would go to sleep on adherence to building codes and standards, knowing fully well that such conduct would threaten their insurance contract.
3. Insurance helps mitigate financial loss should the worst happen
When all other risk mitigations fail, the financial risk must remain uncompromised. Should a building, unfortunately, collapses despite adherence to best practices, the investments already sunk into the destroyed structure must not be allowed to go to waste. Similarly, the cost of treating the casualties must not be passed to the victims’ families. The beneficiaries of those who lost breadwinners or loved ones must not be allowed to mourn without compensation.
For context, the collapse of the high-rise luxury flats in Lagos resulted in a death toll of forty-four, and several others were left with different degrees of injuries. It remains unclear if their surviving families received compensation.
Likewise, investors who have made huge payments as the cheapest unit was reported to have been sold for $1.2million are uncertain if they have lost all their investment. These concerns would ideally have been addressed by an insurer or a group of insurers.
Understanding that the worst can still happen, despite strictly adhering to regulator’s approvals and consent, Leadway Assurance, one of Nigeria’s leading insurance company provides Builders Liability cover for buildings under construction which ensures owners of the building get reimbursed for the losses incurred in the event of accidental damage to the property.
Beyond indemnifying building owners for their loss and ensuring a gradual step toward recovery, the Leadway Builder’s Liability insurance also covers the cost of medical bills for those injured at the site, whilst families who lost their relatives would get compensation.
To find out more about accessing this policy, please visit https://www.leadway.com/call-me/ or call the Leadway Assurance customer care helpline on 01-2800-700. You can also send an email to [email protected] for professional advisory or request a call back by visiting www.leadway.com/call-me.
