Insurance not offered for most prefabricated houses

By Ferdinand Mwongela

As affordable quality housing becomes a clichÈ among players in the real estate industry, companies dealing in pre-fabricated structures are making the dream come true albeit with conditions.

One major concern among the targeted market is safety. Whereas many pre-fabricated structures are physically strong, a number of insurance companies dare not commit their finances to these houses while financial institutions are cautious about them.

But George Laboso, the sales manager for Savings & Loan, a mortgage company, says all property must be insured, adding that financial services are rarely offered to a developer whose property insurance companies are unwilling to cover or do not cover at all.

"The uppermost question when presented with such a venture is — can risks be covered?" poses Laboso. "Houses that insurers shy away from pose a higher risk in the event of a catastrophe. Ideally, insurance forms the security for the company’s exposure."

Laboso adds that most insurance companies do not insure houses made from timber or iron sheets since they pose a higher risk to them as well. He advises potential homeowners to always examine the kind of houses they want to put up alongside other attending factors before making the final decision.

"When a potential developer comes to Savings & Loan with a proposal, for instance, we consult insurance companies allied to us to check the options available and confirm whether they can be insured," says Laboso.

He, however, points out that they finance houses made from concrete blocks produced by Bamburi Cement Company and East African Portland Cement since they can be insured.

Peter Chege, an underwriter with APA Insurance, says the company follows a certain classification when deciding whether or not to insure a house, and to calculate the insurance rates for houses.

The first classification includes houses made with tile or iron sheet roofing, concrete walls and a concrete floor. The second category covers houses made with makuti roofing and concrete walls, or, in the case of some hotels, wooden walls.

He says the third category is makeshift houses. Most pre-fabricated houses fall into the third category, as the majority are semi-permanent. He further points out that, as a company, they insure pre-fabricated houses made from concrete but draw the line at timber and iron sheet houses, arguing that such houses pose a high risk. For instance, in the case of fire, the tragic result would be complete loss since these structures are made from flammable material.

However, Chege clarifies they can insure a timber structure built as an extension of another building that is made of concrete.

Richard Nyangoto, a building supervisor with Timsales Limited, confirms that their houses are not insured since they are made entirely of timber.

Winnie Mwangi, a director at Eco-homes Kenya, however, maintains that their houses are insured and also attract financial backing from mortgage companies. Laboso agrees with her and adds that they have financed some of their projects.

Mortgage and insurance services for pre-fabricated houses, therefore, tend to be an exception rather than the norm, meaning affordable housing comes with strings attached, especially if the house owner ends up holding all his or her eggs on his or her lap because of no property insurance.