Occupiers’ liability insurance for owners, occupiers of public buildings

Two weeks ago, we treated Builders Liability Insurance. Like Builders Liability Insurance, Occupiers Liability Insurance is one of the six compulsory insurances, albeit lesser known than Motor (Third Party) Insurance. Like Builders Liability Insurance also, Occupiers Liability Insurance deals with buildings. But while the former deals with third party liabilities arising from buildings under construction, Occupiers Liability Insurance deals with third party liabilities arising from ownership and occupation of public buildings.

Occupiers Liability Insurance protects the owner or occupier of the building against legal liabilities for bodily injury, death and loss/damage of property suffered by any user of the premises and third parties, as a result of fire, collapse, storm, earthquake, storm, flood or any allied peril. Under the Nigeria Insurance Act 2003, 65(2) and the Lagos Building Control Law 2010, a building is public if the owner or occupier does not use it fully for residential purpose. Such 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 ingress and aggress for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business.”

Occupiers Liability Insurance also covers legal costs which are recoverable from the insured by claimants, and costs and expenses incurred by the insured with the written consent of the insurance company are also recoverable under this policy.

Failure to take up an Occupiers Liability Insurance attracts a maximum fine of N100,000 or one-year imprisonment or both. In spite of this comparable stiff penalty, compliance with this policy is still very low. The question is why?

There are many reasons responsible for the low patronage of this policy, but before we go into the reasons, let me quickly say that the premium rate for this policy is low and affordable to all the owners and occupiers of public buildings as defined by the insurance act. Therefore, the premium rate cannot be a reason for the patronage. According to the guidelines the National Insurance Commission (NAICOM) issued to all insurance companies in January this year, the annual premium rate for a single occupier building is N10,000 per floor and N15,000 per floor for recreational centres. The premium for a single occupier residential building is N5,000 per floor. The premium per apartment office/wing is N10,000 and N7,500 for mixed-use buildings.

Lack of will by government to enforce compulsory insurances is one of the major reasons for the low patronage of Occupiers Liability Insurance. Recall the traction Group Life Insurance got when government made it compulsory for employers of labour who have five staff and above. Then imagine what will happen to Occupiers Liability Insurance if government makes it a prerequisite for the renewal of the operating licenses or trade permits of the owners and occupiers of public buildings. Owners and occupiers of public buildings will embrace Occupiers Liability Insurance and it will witness something close to the patronage that Motor (Third Party) Insurance currently enjoys. Only government has the capacity to enforce these compulsory insurances and government must live up to its responsibility and enforce the laws it has made.

The second reason for the low patronage of Occupiers Liability Insurance is lack of awareness. Many owners and occupiers of public buildings are not aware of this policy. If the awareness is there, patronage will improve. Who wants to pay a fine of N100,000 or go to jail for a year and become a jailbird because of an insurance policy that costs between N5,000 and N10,000? It does not make sense. There are a few owners and occupiers of public buildings who are aware, but apathetic because they know government will not enforce provisions of the law. 

Another reason for the low patronage of Occupiers Liability Insurance is that some policy holders mix up Occupiers Liability Insurance with the more popular Public Liability Insurance. While both policies deal with third party liabilities, the scope of cover is different. Public Liability Insurance deals with accidental injuries to, and death of, third parties as well as loss of, or damage to, third party property as a result of the operations of the insured whilst the third party is in the insured premises or other specified sites where the insured operations are ongoing. There is some overlap, but both policies cover different perils and Occupiers Liability Insurance is compulsory anyway. I will advise such owners and occupiers of public buildings with this mindset to have a combined Public Liability/Occupiers Liability Policy or simply get an Occupiers Liability Policy. The additional premium is negligible.

On the part of insurance practitioners, we need to create more awareness for Occupiers Liability Insurance. We also need to continue to engage the government for two reasons. First, government should take Occupiers Liability Insurance for its public buildings. Two, government should put measures in place to enforce the policy. Really, unless government takes this policy, it has no moral right to enforce it on others. He who comes to equity must come with clean hands. Government must remove the log in its eyes so that it can see clearly to remove the speck in the eyes of other owners and occupiers of public buildings.

Finally, the public must begin to form pressure groups on compulsory insurances. All compulsory insurances are for the benefit of third parties. What are these third parties doing to ensure that their rights are protected? Or are they going to continue to be bystanders while others fight their battles?

For your Occupiers Liability Insurance, get a registered insurance broker to guide you.