Fire here, fire there! It has now become an annual ritual. Most of the markets in Ghana experience fires – which include Odawna Market, Katamanto Market, Koforidua Market, Kumasi Central Market and many others. Most traders lose their properties due to fire damage. A survey was conducted on the number of fire incidents and causes of fire from the year 2000 to 2013 by Addai EK et al.
Mr. Twum Barima, who evaluated the causes of fire in the Kumasi central market, enumerated the several causes below: fluctuations in our power system; cooking with naked fire; overloading electrical appliances; improper and old wiring systems; illegal tapping of electricity from the national grid; use of substandard electrical materials; and use of defective generators. These causes still with us. This means there’s a possibility of fire outbreak in our markets at any point in time.
What are we learning from this? Should traders always depend on government for assistance and support? Does government always have to intervene and help traders in such distressful situation? What can traders learn from this? Can insurance be a better solution?
Insurance is a risk transfer mechanism. When you cannot avoid or mitigate a possible risk, transfer becomes the best option. Insurance also brings the opportunity of risk-sharing. The traders who face similar risks pay premium, but not all of them will suffer a loss in the same period.
Do you know that you can insure your building, contents and stocks-in-trade against fire damage? Do you even know that it is compulsory for private commercial buildings to be insured? Fire can be very destructive and has caused a lot of injury, death and property damage. This is why the Insurance Act, 2006 (Act 724) Section 183 and 184, has made it compulsory for all owners and/occupiers of Private Commercial Buildings – and even buildings under construction – to obtain the Compulsory Fire Insurance Policy. The Act states:
- Every commercial building shall be insured with an insurer against the hazards of collapse, fire, earthquake, storm and flood, and an insurance policy issued for it.
- The insurance policy shall cover the legal liabilities of an owner or occupier of the premises in respect of loss of, or damage to property; bodily injury or death suffered by any user of the premises, and third parties.
- For the purposes of this section, ‘commercial building’ means a privately-owned building to which members of the public have ingress and egress for the purpose of obtaining educational or medical service, or engaging in a commercial activity for the purpose of recreation or transaction of business.
Fire and allied perils insurance policy
The standard fire material damage insurance policy covers the property or the interest at the time of its destruction or the amount of such damage; or at its option reinstate or replace such property or any part thereof from damage as a result of Fire, Lightning and Limited or domestic Explosion.
The allied perils section includes damage as a result of impact. The impact could be by any road vehicle, horses, cattle or animals not belonging to or under the control of the Insured, his family, agent or servant, and is covered.
The allied perils also include destruction of or damage to the property by Hurricane, Cyclone, Tornado, Typhoon or Windstorm, whether or not accompanied by rain.
Destruction of or damage to the property or overflowing by the bursting of water pipes apparatus and the like is also considered under the fire and allied perils policy.
Flood destruction of or damage to the property insured through inundation by tidal waters or by waters overflowing or escaping from rivers, lake, canals, reservoirs or similar bodies of water, or from public water mains, drains or sewers are also covered under the allied perils.
Destruction of or damage to the property insured by volcanic earthquake or volcanic eruption is also considered under the fire and allied perils insurance cover.
Destruction of or damage to the insured property directly caused by collapse of the insured building. Collapse for the purpose of this extension shall mean the sudden falling down or caving-in or flattening into a mass of rubble of a building or part of a building.
Riot and Strike Endorsement
The act of any person taking part together with others in any disturbance of the public peace and causing destruction and damage to property.
Loss of or damage to the property insured directly caused by the malicious act of any person (whether or not such act is committed in the course of a disturbance of the public peace)
Civil Commotion Extension
Destruction or damage (by Fire or otherwise, including Explosion) of or to the property insured directly caused by Civil Commotion or persons taking part in Labour Disturbances, or malicious persons acting on behalf of or in connection with any Political Organisation.
The above gives us more than the basic cover we need in Ghana to protect our properties and our liability toward others. Most importantly, this policy can also be extended to cover injury and/or death to third parties and damage to properties belonging to third parties. The insurance premium compared to motor insurance is very low. This makes it very difficult to understand why we people do not insure.
On the other hand, MMDCEs can organise insurance for the traders and levy them to pay gradually. And since it is compulsory for private commercial building owners or occupants to insure against their liabilities toward third parties who come into their building or premises, the MMDCE’s should make this a requirement before people are allowed to operate their businesses.
I believe that Ghana Beyond Aid will be very successful when the populace first decides to go beyond aid. Insurance can be our best support in times of distress. Just talk to your insurer/insurance broker or get an insurance advisor to assist you.
The writer is a Chartered Insurer and an Associate of the Chartered Insurance Institute of United Kingdom and also Ghana (ACII-UK, ACIIG), and holds MPhil in Enterprise Risk Management and Business Consulting from Kwame Nkrumah University of Science and Technology. Attained Bachelor’s degree from University of Ghana, Legon and has Applied Insurance studies, Diploma and Advanced Diploma (AAIS & AIS) from Ghana Insurance College / Malta Insurance Training Institute.
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Insurance Act 2006 Act 724
Addai EK, et al., Trend of Fire Outbreaks in Ghana and Ways to Prevent These Incidents, Safety and Health at Work (2016), http://dx.doi.org/10.1016/j.shaw.2016.02.004