IBADAN EXPLOSION – AN INSURANCE PERSPECTIVE

Tuesday, January 17, 2024, was a tragic day in Ibadan, occurring just after the New Year celebrations. The city woke up to the terrible news of an explosion in Bodija, which took place around 7:44 pm the previous night. This event unfolded in one of Ibadan’s most prestigious areas. Those familiar with the city know how popular Bodija is, a neighborhood where many elite senior citizens own houses. Reports suggest that properties worth billions of Naira were destroyed, and an unconfirmed number of people died in the incident. My deepest condolences to the bereaved families and my sympathy to those rendered homeless by this tragic yet preventable event.

It’s uncommon to meet anyone born in or before the ’60s who hasn’t lived or known someone from Ibadan. Bodija is a well-known area in the city. My ties to Ibadan go back to my early school days. My parents, my in-laws, and childhood friends still live in the city. Naturally, I reached out to check on their safety after the event and learnt that even those living 6 km away from Bodija felt the impact of the blast, with windows shattering and the ground shaking.

Upon investigation into the cause of the explosion, Oyo State Governor Seyi Makinde revealed that it resulted from mining explosives stored underground in a house by illegal miners. Story has it that they are foreigners.

The thought of explosives being stored in a purely residential area is unimaginable. It shows an extreme disregard for human lives and a profound level of greed and insensitivity. At the same time, it’s hard to believe that neighbors were unaware of such dangerous activities in their neighborhood. What has become of the Community Development Associations (CDAs) or Landlord Associations in Ibadan? This incident highlights the erosion of our once-cherished communal living. We were once a society that looked out for each other, but that seems to be eroded. Nowadays, high fences and gated streets isolate us, which explains the increasing ease and frequency of terrorism and kidnapping in the country. It seems imperative for the government to re-evaluate our housing layouts and construction methods, especially in estates. Discouraging the use of gates and high fences could revive our communal lifestyle thereby strengthening internal security and public safety.

Unfortunately, the explosion claimed innocent lives and their assets, with the elderly being the most affected. Although the state government graciously offered temporary accommodation and free medical care to the victims, but the loss of lives and life investments remains unaddressed. Assets accumulated over many years were destroyed in an instant. Once more, I pray for the departed souls to rest in peace and for those who lost properties uninsured, to find the strength to bear their losses.

The importance of insurance in our lives cannot be overstated. It is too vital to be ignored or downplayed. As mentioned in my previous post, ‘Better insure than be sorry,’ insurance acts as a safety net, mitigating the financial consequences of unexpected losses. While it cannot prevent such events, it can significantly lessen the financial burden on victims.

Amidst this tragedy, a family friend in Ibadan engaged me on the prospects of compensation from insurance by victims of the explosion and this prompted this post. Additionally, our conversation touched on some people’s experiences with insurance during the EndSARS protests, where some claims were denied, a topic for another time.

To properly address any claim, the first step is to identify the exact cause of the loss or damage, known in insurance as the proximate cause.

Proximate cause in simple terms is the primary event or sequence of events that directly leads to a loss or damage which in this case was reported as explosion of explosives stored underground at a private residence by illegal miners.

After determining the cause of loss, the next thing is to determine whether the resulting loss or damage is covered and not excluded under the policy.

Next to this is to check for any material breach of the policy conditions such as premium payment, reasonable precautions etc.

Once the above criteria among others have been considered, a decision can be made regarding liability, that is, to decide if insurance is liable to pay the claim or not.

Fire insurance typically covers damage caused by explosion subject to certain exclusions. However, the situation in the Ibadan blast involving mining explosives underground a residential building added a twist to the position of a standard fire insurance. Let me break this down:

Typically, fire insurance covers damage resulting from explosion, subject to certain exclusions except specifically included in the policy.

In our case study, the cause of loss is an exclusion under the explosion cover of the standard fire policy, and there is also a material breach of policy conditions.

The explosion coverage under the fire and special perils policy for a residential building applies to domestic explosions from boilers, and gas used for domestic purposes and not from mining explosives or hazardous materials as in the case in question. Specialized insurance policies exist for explosions from hazardous materials/activities.

Mining explosives stored in a residential building for illegal activities will also void the insurance policy; thus, even if the policyholder had a specialized policy covering the loss, the illegal nature of the activities leading to the loss would still have voided the policy, and compensation would still be denied. Insurance is not intended to cover illegal activities if proven.

There is also a breach of disclosure condition, which makes the policy voidable. The presence of explosives in a private dwelling intended for illegal use, would not have been disclosed to the insurers at the inception of the policy and this is a material breach of non-disclosure because the presence of explosives in a residential building has greatly increased the risk exposures unknown to the insurer.

Additionally, there is a breach of reasonable precaution condition. The policy holder obviously did not take any reasonable precaution for storing mining explosives in a residential building and neighborhood. This you will agree is the height of recklessness by any reasonable person.

Considering the aforementioned points, the fire insurance policy for the residential building storing the explosives will not cover the claims arising from this incident.

Let’s now consider the insurance for the victims of this incident. If insured, the victims will be compensated by their own fire or homeowner’s policy, as the damage is covered and not excluded nor are they in breach of any policy conditions, unlike the building housing the explosives. The other buildings affected did not contain the explosives, they were merely victims of the explosion and would be covered by their fire insurance policy.

Summary

Fire Insurance of the illegal Miners:

Direct damage: Fire insurance will not pay for the explosion damage to the owner of the building storing mining explosives.

3rd party damage: Fire insurance policy will also not pay for the damage to the affected buildings because the cover is not intended to cover 3rd party liability.

Hence, No recovery from Insurance by the illegal miners. As a matter of fact, he should be prosecuted for his criminality against the state and be made to compensate the people affected. 

Fire Insurance of neighbors:

Direct Damage: Fire insurance of the neighbors will cover the explosion damage to their properties including shattered windows, caused by the explosion.

Uninsured Neighbors

Legal Action: The uninsured neighbors could potentially seek legal redress from the illegal miners for compensation. 

Before concluding this post, here is a tip to always remember when buying your insurance policy:

• Always enquire about ‘what is not covered’ (Exclusions). Verify this in your policy document before finalizing your insurance contract.

In my professional journey as a claims manager, my experience revealed that while many are somewhat aware of their insurance coverage, they are often unaware of the exclusions. Exclusions can invalidate your claim. So, after reading this post, take a moment to review the exclusions in your current existing policy.

As you read this post, please note that each case is unique and depends on the specific policy terms, conditions, local laws, and individual circumstances. You may wish to consult theinsuranceguarantor for free professional guidance where needed. I will be very glad to answer your questions or any concerns you might have.

Please feel free to leave your questions or share your insurance experiences in my comments section and don’t forget to include your contact details so I can get back to you without delay.

Admittedly, this is a lengthy read, but consider it an investment into your future. Thus, the adage holds that knowledge is power.

Stay tuned for the upcoming episode “The Untold Story of the Okuoma Massacre” – You don’t want to miss this.