NAICOM Begins Enforcement of Compulsory Public Building Insurance: Is Your Building Compliant?

May 25, 2017

Fourteen years after its enactment, the National Insurance Commission (NAICOM), in partnership with the Federal Fire Service and the Nigeria Insurers Association (NIA), on Wednesday, March 29, 2017, announced plans to commence full enforcement of the compulsory public building insurance, in accordance with Section 65 (1) of the Insurance Act, 2003.

The Act makes it obligatory for all public buildings to be insured with a registered insurer, by their owners, against the dangers of collapse, fire, earthquake, storm and flood. The insurance policy also covers the legal liabilities of an owner or occupier of premises in respect to loss of or damage to property, bodily injury or death suffered by any user of the premises and third parties, also known as Occupier’s Liability Insurance. Defaulters of this directive will be committing an offence and are liable on conviction to a fine of not more than N100, 000 or imprisonment for one year, or both.

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The rationale for this legislation is premised on the reality that a public building, like any other infrastructure, is at the risk of sudden accident, which may compromise the integrity of the structure or completely result in its destruction. Such incidents may include a fire outbreak, sudden collapse as a result of structural failure, natural disaster such as storm, heavy-duty vehicle accidentally ramming into the building etc. With a high number of visitors to such infrastructure, any of these incidents is likely to result in huge human casualties, many of whom may never be adequately compensated.

Even with this in mind, only a few of the estimated 10 million public buildings in Nigeria are insured, thus putting the lives of innocent people at risk. For instance, statistics from the Federal Fire Service revealed that between 2012 and 2015, Nigeria lost over N5.95 billion worth of properties to different fire incidents that ravaged different parts of the country. In Lagos alone, five major fire incidents led to the loss of more than 150 lives.

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So, besides being on the right side of the law, here are the reasons why you need to be compliant with this key legal regulation:

  1. For human safety

Taking out insurance for a building you have developed for public use, such as schools, religious centers, shopping malls, banking hall, hospitals, entertainment centers etc, is a testament to how much you take into cognizance the safety and wellbeing of the workers and intended visitors to the building. With such proactive step, the occupiers of the building are assured of a significant compensation in the event of an unfortunate incident from the insurer.

  1. It’s a wise investment decision

It is almost impossible to comprehend that the N5.9 billion lost to fire incidents from 2012-2015 in Nigeria are monies that bought only useless ashes for the investors. With nothing to show for such huge expenditure, they will have to strive again to look for same amount in order to repair/replace the burnt properties. It must have been a heart-breaking experience for such investors. But, with insurance, the insurer would have borne the responsibility of either repairing/ replacing the affected properties or paying same as compensation to the investors.

  1. It is mandatory and applies to you

According to Section 65 (2) of the Insurance Act, 2003, “Public building”, includes a tenement house, hostel, a building occupied by a tenant, lodger or licensee and any building to which members of the public have access to for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business. Consequently, this would include buildings such as hotels, hospitals, restaurants, cinemas, schools, banks, shopping malls, etc.

Therefore, this compulsory insurance applies to all owners (landlords) and occupiers (tenants) of public premises. As a tenant who intends to use the rental space for a venture that will attract public patronage, it makes sense to take occupier liability insurance to protect your brand from legal action due to potentially costly personal injury or property damage claims; as you are accountable to third parties that come into contact with your business. This could mean anything from a client or member of the public slipping on a wet floor on your business premises to damages to property suffered in the case of huge disasters like fire. You must also ask your landlord to provide evidence of insurance in your tenancy agreement to ensure that you are adequately protected.

As a business owner, you may also want to consider the Leadway Property Insurance products, categorized under ‘Fire & Allied Peril’, designed to protect you against loss or material damage to property caused by fire and certain associated risks. The policy covers your building, furniture, equipment and electronics against material damage caused by fire, lightning strike or certain explosions caused by the industrial use of the premises. This policy covers loss or damage to properties as a result of fire, lightning; escape of water from any tank, apparatus or burst pipes, industrial explosion and other special perils.

For the Small & Medium Scale business owner, the L-BOSS (Leadway Business Owner Support Scheme) is designed to help protect your business against various risks, which include but are not limited to occupier’s liability cover against legal suits relating to injury or loss suffered by visitors to your premises and material damage to your business premises and their contents (e.g. computers, items belonging to customers), including motor vehicle insurance cover against fire, lightning, limited explosion, earthquake, volcanic eruption,  malicious damage, strike, riot, flood, storm, impact and burglary cover (burglary cover applies to contents only), which extend to all your business premises.

For more information on how you can be compliant with the provisions of the Insurance Act of 2003, and how you can access the various Leadway insurance policies, please call Leadway Assurance on our customer care lines (01) 2800700, (01)2800701 and 08129997070 or send an email to for more details.

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