Why Upmarket Homes Will Cost Less to Insure

Home insurance is fast gaining traction as uptake of mortgages for newly developed properties and loans for house purchases increase.

The increase has also been driven by the need to secure movable and valuable items found in rental houses such as laptops, jewellery among others.

Paschal Shikuku, the Jubilee Insurance underwriting manager in charge of non-motor business says one does not need to own a house to take a domestic insurance package that covers the house, its contents and an all-risks package.

“We have many valuable items in the house especially electronics such as mobile phones, laptops and modern television sets that are worth lots of money,” he says.

Mr Shikuku says if someone wants to take a home insurance cover, an assessor visits to determine the value of a house based on the ownership documents, construction design and location to determine the amount of premium to be paid annually.

“An upmarket house in a well-secured area would fetch lower premiums compared to houses in security-risk areas with a history for burglaries,’ he says.

While fire and burglary have been the main causes of claims, Mr Shikuku added that flooding, falling trees, motor accidents where a car loses control and hits the house as well as social unrest are now included as viable reasons to seek a claim from an underwriter.

But he warned that undisclosed valuables as well as new developments within the compound of the insured house are not included in the compensation list incase an accident or theft occurs.

“If you had built a property on riparian land and it is demolished, no one will compensate you as this was not part of anticipated dangers facing your property,” he says. New policy changes have also introduced cover for house workers that one can take up for their employees.

According to the Insurance Regulatory Authority (IRA), insuring a house would take up the buildings as constructed as well as outbuildings such as a servant’s quarter and carports while contents caters for furniture, fixtures and interior decorations all belonging to the insured or a member of the house.

IRA says the insured parties would also receive compensation incase of natural calamities, lightning, earthquakes of storms that result in destruction of the properties. Explosions, volcanic eruptions, landslip, or malicious damage caused by an outsider, accidents from falling aircraft, overflowing water and burst pipes are favourably considered by insurance companies as reasons for compensation.

But it warns that any loss or damage suffered as a result of forcible entry by government enforcement agencies in pursuit of terror and subversive suspects seeking to topple the State will not be compensated.

Properties being seized following lawful orders, or a government order will also not be compensated.

Premium rates start at 0.1 per cent of the house value but rise due to other factors such as location, quality of building and material used to construct the same.

“If the cover you seek is for a house worth Sh1 million, you would pay between Sh1,000 to Sh5,000 but for group covers taken by community members of gated communities are the cheaper since one would pay the minimum amount of Sh1,000 for a house worth Sh1 million,” Mr Shikuku says.

jkariuki@ke.nationmedia.com