The Importance of insuring against Fire for Home and Business Owners

By Stanslous Bowa

A fire insurance policy is one such policy in which an individual agrees to pay a certain sum of money to an insurer in exchange to get benefits for the fire losses. The money paid to the insurer in this case is called premium.

In Zambia, a fire Insurance policy  offers comprehensive security for stock and business premises, etc.  For domestic property, fire damage is covered by Householders and House owners policies. These policies offer financial security by covering losses or damages that may arise due to fire loss or damage.

There have been many occasions where individuals have lost their properties through first. For instance in 2017 when fires swept through City Market, the incident left the marketers in distress all of which would have been avoided with insurance.

Fire insurance comes with a number of advantages, apart from giving one a peace of mind, It ensures or guarantees the cost of damage to the building, It gives replacement cost which helps a home owner to buy a similar article and It covers replacement costs for household items that may be damaged in a fire.

In regards to businesses, Irrespective of size, every business needs a fire insurance policy. In every office for instance, a company keeps important files, documents and assets. If a fire happens, it will be a great disaster. Therefore, buying a fire insurance policy becomes important which promises to financially guard you against losses or damage.

It comes with a number of benefits that include covering the cost of stock damaged in the fire.  It gives the replacement or repair cost of the machines in case they are damaged due to a fire and in some cases, it may give death benefits to the family of an employee in the event of death in a fire accident.

Remember, fire accidents are unexpected and more often destructive.

Most fire policies are reasonably priced and can even be cheaper if one decides to improve the risk through preventive measures such as installing sprinklers, extinguishers and smoke detectors. A fire insurance policy gives financial security for home and business assets.

Looking at a few fictional scenarios, a couple in Lusaka were celebrating a very important day in their lives –their first big joint investment after marriage. Mr and Mrs. Mansa’s excitement of living in their own home was so big that they decided to discard all their old furniture from their previous apartment. They went as far as hiring an interior designer who donned up the entire house with new style. The couple essentially spent thousands of kwachas on furniture and fixtures.

However, a few days later, a fire erupted in the house when Mrs. Mansa forgot to switch off the iron as she was in a hurry to drop off her son, Elias at school. When she came back, a fire erupted at the ironing table. Though she was able to put out the flames, some household items had already caught fire and got damaged. Luckily, the couple had bought a fire insurance policy at the time of buying the house and therefore, the insurer came forward to cover the losses. The couple therefore did not have to incur major financial losses, as their insurer was there to help.

On the other side of town, a seasoned business woman Mrs. Chewe decided to buy a fire insurance policy for her shop worth K 75,000. For someone who has suffered losses in the past, she surely understands the importance of insuring her stock. She has experienced loss of her goods due to various reasons, including fire and her insurer has always come through in regards to replacing her stock. 

As seen from the above scenarios, insurance, most importantly, a fire insurance policy is useful as it guarantees replacement of assets, which may be damaged in a fire. It is therefore necessary to have a fire insurance policy for both personal and business sectors.

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The author is a Manager – Prudential supervision in the insurance department at Pensions and Insurance Authority