COMPULSORY INSURANCE FOR COMMERCIAL PROPERTIES
Effective 1st August 2011, all Commercial Buildings including those under construction are required by Law to be insured under Compulsory Insurance for buildings.
The directive was issued by the National Insurance Commission – the regulatory authority of insurance businesses in Ghana to operationalize sections 183 and 184 of Ghana’s Insurance Act of 2006, Act 724.
1.1 What is Commercial Building?
Subsection (3) of Section 184 defines commercial building as “privately owned building to which members of the public have ingress and egress for the purpose of obtaining educational or medical services, engaging in a commercial activity for the purpose of recreation or transaction of business”.
Commercial buildings include Churches, Schools, Hospitals, Retail and Wholesale shops, Hotels and other Recreational Centers, Company Buildings and virtually, all buildings except those owned by the state and private residential properties.
2.0 THE LAW ON BUILDINGS UNDER CONSTRUCTION
Section 183(1) of the Insurance Act 2006, Act 724 states that “A person shall not construct or cause to be constructed a commercial building without insuring with a registered Insurer the liability in respect of construction risks caused by negligence or the negligence of servants, agents or consultants which may result in bodily injury or loss of life or damage to property of any workman on the site or of any member of the public”.
3.0 THE LAW ON COMPLETED BUILDINGS
Section 184 (1) of Insurance Act 2006 Act 724 also states that “Every commercial building shall be insured with an Insurer against the hazards of Collapse, Fire, Earthquake, Storm and Flood, and Insurance policy issued for it’’.
4.0 SCOPE OF COVER
This compulsory insurance covers the following risks:
• Fire and Allied Perils – this is the risk of damages that could be caused by fire, storm, flood, earthquake etc.
• Collapse of building including renovation and reconstruction risks associated with partial and total collapse of buildings
• Material damage and legal liabilities to third parties in respect of the following;
o personal injury to or death of third parties as a result of fire and allied perils as well as the hazards of collapse,
o accidental damage to properties not belonging to or in the charge of or under the control of the insured,
o the legal cost and expenses incurred by the insured with the consent of the company and / or of the legal cost and expenses recoverable from the insured by any claimant.
Limit of Cover for 3rd Party Legal Liability
By regulations, the minimum limits with option to buy additional cover under the compulsory public liability cover are:
♣ Bodily Injury - GH¢10,000 per event
♣ Property Damage - GH¢10,000 per event
♣ Annual Aggregate of - GH¢20,000
5.0 EVIDENCE OF INSURANCE
A Certificate of Insurance with security features will be issued by the insurance company as evidence of having complied with the law on compulsory insurance for commercial properties.
The certificate to be issued is expected to be displayed or produced for inspection by the relevant authority.
There would be periodic inspection by Fire Service, the Police and other relevant agencies to ensure compliance.
Section 183(2) of the Insurance Act 2006, Act 724 states that, “A person who contravenes subsection (1) commits an offence”.
It is therefore illegal not to have the appropriate insurance on your commercial property. You can be prosecuted under the law.
7.0 INSURANCE CERTIFICATE FOR MULTIPLE LOCATIONS
Where one policy is taken to cover buildings at multiple locations, compulsory fire certificates should be purchased for the various locations. All certificates acquired shall indicate the exact locations of the buildings.
8.0 WHO INSURES A COMMERCIAL BUILDING UNDER MULTIPLE TENANCIES
The law permits either owners or occupiers to insure. However, it is mainly the responsibility of the Landlord / Owner to insure the main building and the common areas. This will mean tenants may have to take a Stand Alone with Public Liability Cover in respect of the areas they occupy.
9.0 WHAT ARE THE OBJECTIVES OF THIS INSURANCE
The framers of this compulsory insurance seek to:
• Offer continuity to commercial entities which suffer loss or damage from fire, collapse and related risks.
• Ensure adequate compensation to third parties for damage to properties and for injuries or death.
• Provide complementary funding for fire fighting. In line with this objective, a levy of 1% on premiums payable shall be charged on all policies and forwarded to the Fire Maintenance Fund (FMF) which has been set up by the NIC. The FMF shall be used to support the effort of the Fire Service and other state agencies to fight fire in Ghana.
10. HOW DO I ACQUIRE THIS INSURANCE
This compulsory insurance is highly technical and has punitive consequences if they are not adequately acquired. You therefore need the services of a competent broker to help you arrange for this insurance. Kindly contact us and let’s assist you via the following:
Tele fax: 0302-254-649
Mobile: 0244-826-768 / 0264-111-830 /0244-796-862
M&G Insurance Brokers is Ghana’s first and oldest insurance brokers company. We will arrange to secure for you the best of cover that is complete with the provisions of the Law.
Our services to you shall cost you nothing but would ensure that, you secure the insurance at highly competitive premium.
We would also use our expertise to help you in an event of any claim.
M&G – THE DEPENDABLE BROKERAGE FIRM