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Adequacy of Builders Risk Insurance Policy in Nigeria Building Industry

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By Adeleke Jacob Sola, Tai Arowojolu-Alagwe, Esan Martins Taiwo, Buari Tirimisiyu Abiodun

Federal Polytechnic

Ede, Osun State, Nigeria
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Abstract 

It is imperative that all buildings above two stories under construction and renovation must be insured. This paper introduces the Adequacy of Builder’s Risks insurance policy in Nigeria Building Industry. Its objectives seek to identify the insurance policies in Nigeria, its relevance as it relates to construction activities and finally assess its level of utilization by construction firms. A structured questionnaire was used to carry out data collection. The analysis was carried out using simple percentage and inferential statistics which shows that contractors and professionals in the building industries are very aware of the builders risk insurance policy but do not often put construction insurance on project requirement. The paper concluded that, the National Insurance Commission (NAICOM),Council of Registered Builders of Nigeria (CORBON) should ensure concerted effort at creating awareness, embark on implementation and enforcement of insurance to ensure compliance by the building industries in Nigeria and finally, recommended that insurance companies should have proper documentation and make their policies well known to all operators, honour settlements and claims, Federal government to establish insurance court, enforce insurance act and finally, builders risk insurance certificate should be part of contract document to enhance its usage, by construction firm in Nigeria. 

Keywords:    Builders risks insurance, Utilization, Building industry

1.0 Introduction

It is established that in every stage of the building construction process from initial investment appraisal through to construction and use, the built facility is subjected to risks for the parties involved. According to BS60793 risk are the uncertainties inherent in plans and the possibility of something happening that can affect the prospect of achieving business or project goal. The uncertainty may be positive or negative. In common language risks is therefore a possible hazard or opportunity that if it occurs it would threaten or benefit business outcomes. According to Bailey (2003) insurance is define as a contract where by an insurer agrees, in consideration to the premium paid by the insured to protect the insured against loss on the happening of certain events.

Liyadu, (1985) postulated that by taken up insurance, a contractor eliminates the risks of suffering financially crippling losses by substituting a small definite cost i.e. the premium for the variability of construction. Therefore, builder’s risks insurance is a special type of property insurance which protect against damage to buildings while they are under construction. Builders risk insurance is coverage that protects a person or organizations insurable interest in materials used in the construction site, provide coverage for damage done to the insured structure from a wide variety of events. Damage from the following events will be covered by most policies e.g. wind (which may be limited to coastal areas), fire, and theft of materials, lighting, hails, explosion, and vandalism, etc.

Since, this is a specialized form of insurance designed to insure buildings project while they are under construction by Rodriquez (1994) however, this paper study to examine the relevance of these policies, assess the extent of its utilization by construction industry in Nigeria.

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About the Authors

pmwj16-nov2013-sola-taiwo-AUTHOR IMAGE 1 - SOLAflag-nigeriaAdeleke Jacob Sola                 

Osun State, Nigeria

Adeleke Jacob Adesola is an academic staff in the Department of Building Technology at Federal Polytechnic Ede, Osun State, Nigeria  before the commencement of his teaching career, Mr Adeleke worked with Mac Donald construction industry in Abuja with its headquarter based in Enugu State, Nigeria .  He is a graduate of the Federal University of Technology Minna, where he read Building and graduated with Honours. He has taught courses in Building services and construction management at the various level of the Polytechnic Institution. Email: [email protected] 

flag-nigeriapmwj15-oct2013-Arowojolu-AUTHOR IMAGE 150x192Tai Arowojolu-Alagwe                   

Ede, Osun State

Nigeria

Taiwo Arowojolu-Alagwe is an alumnus of Federal University of Technology, Minna, Nigeria and a diplomate of Tower College of Technology, London, UK. He is currently an LLM student of Robert Gordon University, Aberdeen, Scotland. He is an AACEi, Morgantown, USA Certified Cost Engineer and Incorporate Builder (ICIOB) of Chartered Institute of Building (CIOB) UK. He has more than a decade of post-graduation experience working with client organisations, contracting, academic and consulting establishments. He has worked in Africa and Arabian Gulf Region. He can be contacted at [email protected].

flag-nigeriapmwj16-nov2013-sola-taiwo-AUTHOR IMAGE 3 TAIWOEsan Martins Taiwo                

Osun State, Nigeria 

Esan MartinsTaiwo is an academic staff in the Department of Building Technology at Federal Polytechnic Ede, Osun State, Nigeria  before the commencement of his teaching career, Mr Esan worked as a  Building officer in Ekiti State Ministry of works and infrastructure.  He is a graduate of the Federal University of Technology Minna, where he read Building. He is currently pursuing a Master Degree in construction management at Ahmadu Bello University, Zaria. He has taught courses in construction technology and construction management at the various level of the Polytechnic Education. Email: [email protected]

flag-nigeriapmwj16-nov2013-sola-taiwo-AUTHOR IMAGE 4 ABIODUNBuari Tirimisiyu Abiodun             

Osun State, Nigeria 

Buari Trimisiyu Abiodun is an academic staff in the Department of Building Technology at Federal Polytechnic Ede, Osun State, Nigeria.  He is a graduate of Obafemi Awolowo University, Ile ife, Nigeria, where he read Building. He is currently pursuing a Master Degree in construction Technology at University of Ibadan. He has taught courses in construction technology and Building Design and structures at the various level of the Polytechnic Education. Email: [email protected]