Explosions and indemnity
My septuagenarian mother, Daa Minawo, almost cursed me the day I surprised her with a gas cylinder and a 4-burner gas cooker, as a gift.
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She actually summoned me to a family gathering and requested me to explain the reason behind my intention to ‘kill’ her with such a dangerous gift. I was dumbfounded, initially, but only realized her fears after she recounted the many unfortunate incidences of gas explosions, lately, and their devastating effects including injuries, loss of property, and lives.
The Tema Explosion
The recent report of gas explosion in Tema, involving a premises used for ‘tye and dye’ business is still fresh on our minds. The report alleged that some four persons, including the owner of the property, who was also a traditional ruler, had perished. The inferno also destroyed several other properties within the neighborhood, worth hundreds of thousands of Ghana cedis. Industrial chemicals allegedly stored below acceptable temperature, were initially blamed for the inferno. Indeed, eyewitnesses sadly intimated that the inferno was one of the most devastating they could recount.
The thrust is that when these disasters occur, our immediate attention is drawn to the loss of property and lives. Often, people grimace at the charred images of the deceased or the injured, as they are shown on our sets and on the front pages of our newspapers. The next line of attention is to call on the government (or its agencies) for some intervention, including compensation to the bereaved families and aid to those who lost their properties.
In all of this, the all-important question of whether the victims had any insurance, from which they could make a claim, is completely lost on everyone. The essence of this article is, therefore, to situate the unfortunate Tema explosion in the context of insurance, draw attention to whom and what could have been covered for an insurance claim.
What Is An Explosion?
An explosion is a very rapid reaction, mostly chemical in nature, but can be electrical (lightning) or thermonuclear. The reaction often produces heat resulting in rapid expansion of gases and / or other particles. The shock waves from explosions are usually responsible for the physical destructions leading to immediate loss of property and lives.
Explosion Insurance?
Primarily, lightning, explosion and fire constitute fire insurance. While explosion insurance is often targeted at commercial interests and industries, it can also apply to residential homeowners. Many homeowners’ insurance policies will cover explosions under the category of fire losses.
Explosion, in relation to home insurance, covers domestic gas and / or propane cylinders. This is generally a part of the standard fire insurance, which only covers the damage caused by fire or lightning. On the flip side, however, industrial or unlimited explosion insurance covers commercial entities that use steam boilers and pressure vessels in their activities.
Explosion in Property Insurance
Property insurance provides protection against most risks that are likely to affect insured property. These are often caused by events such as fire, lightning, explosions and impact. Modern insurance has revolutionised this to include theft and other specialised forms of insurance such as sewage back-up, flood, earthquake, home and boiler insurance packages.
The Tema Explosion Context
As far as insurance is concerned, the explosion would ordinarily be covered under the basic fire and allied perils cover and due compensation paid to the victims. What remains uncertain is whether the insurers of the house, part of which was being used for commercial purposes would have extended any form of compensations to the other affected houses. In their case, the one who could be held liable for compensation is the landlord and business owner who himself was one of the victims. Assuming the landlord had domestic insurance cover and not commercial, no claims could be paid under the circumstance. The situation could, however, be different if their insurer was notified about the use of part of the facility for business and the appropriate underwriting was done.
In fire or property insurance, liability could only be borne after investigations have been duly carried out. Cases of arson or anything close to that need to be established in order to avoid fraudulent claims before any form of indemnity is taken care of.
Third party Indemnity
If the affected neighbors had homeowners’ comprehensive cover they would have been covered by their own policy. The bulk of medical expenses resulting from such explosions under normal circumstances should be covered by the medical insurance; in this case, the victims may not have to pay significant amounts of money from their own pockets for treatment. If for any reason, the victims do not have active health insurance cover, they may have to pay a substantial portion of their treatment cost before getting any benefits from the insurer of the ‘exploded’ house.
Thus, the exact source of healthcare payments will depend on the circumstances surrounding the explosion, that is, if an adequate homeowner’s comprehensive policy has been taken.
The Way forward
There is an urgent need for individuals, businesses and state institutions to apprise themselves of the need to take up insurance for their domestic and commercial properties, in preparedness towards future uncertainties. Moreover, insurers must constantly engage the public on the need for insurance covers providing them some detailed options, with clarity on the technicalities involved. The engagement must also focus on claim documentation, processes and procedures, as well as the rights and responsibilities of the insuring public.
Until next week, this is “Insurance from the eyes of my mind.”
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