Every few months, news breaks of a fire tearing through a market in Lagos, Onitsha, or Aba, wiping out hundreds of shops in a single night. Every few weeks, somewhere in Nigeria, a shop is broken into and stripped of stock before morning. These are not rare events. They are a predictable part of doing business in Nigeria, and yet most small businesses carry no cover against either risk.
Fire and burglary insurance, often sold together as fire and special perils cover, exists precisely for this. This guide walks through how to figure out if you need it, what it actually protects, and what to expect when you go shopping for a policy.
What Fire and Burglary Insurance Actually Covers
This policy, sometimes called fire and special perils insurance, protects the physical assets of your business, stock, equipment, furniture, fittings, and sometimes the building itself if you own it, against a defined set of risks. The core risks are fire and lightning. Special perils extensions typically add explosion, burglary with forced and violent entry, riot and civil commotion, and sometimes flood or storm damage, depending on what you add to the base policy.
It is important to understand that burglary cover under this type of policy generally requires evidence of forced entry. If goods go missing without any sign of a break in, insurers may treat it differently, sometimes as a separate claim category, sometimes as excluded entirely. Always ask your broker to clarify exactly what counts as a covered burglary event under your specific policy.
Step 1: Assess Whether You Are a Good Candidate
Ask yourself three questions. Do you hold significant stock or equipment on your premises? Is your location in an area with elevated fire or burglary risk, dense markets, older buildings with poor electrical wiring, areas with a history of break ins? Would losing your stock or equipment overnight put your business at serious risk of closing?
If you answered yes to any of these, fire and burglary insurance deserves serious consideration. A boutique with ₦3 million in stock, a small manufacturing operation with expensive machinery, a pharmacy with high value inventory, an electronics shop, all of these carry the kind of concentrated, replaceable value that this policy is built to protect.
If your business has minimal physical inventory, a service business run mostly online with a laptop and a phone, the case is weaker, though even then, a single laptop and the data on it can represent a real loss worth insuring at a lower cost.
Step 2: Get an Honest Valuation of What You Are Insuring
Before approaching an insurer, walk through your premises and put a realistic number on your stock, equipment, and fittings. Underinsuring, declaring a lower value to save on premium, is one of the most common and costly mistakes business owners make. Most Nigerian fire policies apply what is called the average clause, which means if you insure your assets for less than their true value, any payout is reduced proportionally, even for a partial loss.
For example, if your stock is genuinely worth ₦5 million but you insured it for ₦2.5 million to save on premium, and a fire destroys ₦2 million worth of goods, the average clause means you may only be paid roughly half of that claim, not the full ₦2 million. Getting an honest valuation upfront protects you from this trap.
Step 3: Compare Quotes and Understand the Pricing
Premiums for fire and burglary insurance are typically calculated as a percentage of the insured value, commonly somewhere between 0.15% and 0.5% annually depending on your location, the construction of your building, and the specific perils included. A shop with ₦5 million in insured stock and fittings might expect to pay roughly ₦15,000 to ₦25,000 a year for basic fire and burglary cover, with the price rising if you add flood, riot, or a higher burglary limit.
Location matters more than many business owners expect. A shop in a market known for frequent fires or break ins will typically attract a higher premium or additional survey requirements than a similar shop in a newer, more secure commercial building.
Step 4: Understand What Will Get a Claim Rejected
Insurers commonly reject or reduce fire and burglary claims for a few recurring reasons: undisclosed changes to the premises, evidence of poor maintenance such as faulty wiring that caused the fire, missing evidence of forced entry for burglary claims, or a mismatch between the stock declared at policy inception and what was actually on the premises at the time of loss.
Keep basic records that protect you here. Photos of your stock and equipment, updated periodically, receipts for major purchases, and evidence that your electrical installations are properly maintained all strengthen your position if you ever need to make a claim.
Step 5: Decide, and Revisit Annually
If your assessment points toward meaningful risk, get quotes from two or three licensed insurers or a broker who can compare on your behalf, confirm the insurer's NAICOM registration, and buy cover that reflects an honest valuation of what you would actually lose. Set a reminder to review your coverage every year, since most businesses grow their stock and equipment over time, and a policy bought at last year's inventory level can leave you meaningfully underinsured today.
The Bottom Line
Fire and burglary insurance will not feel urgent until the morning you arrive at your shop to find it gutted or emptied out overnight. For any business holding meaningful stock or equipment, particularly in markets or buildings with elevated risk, this is one of the more straightforward, cost effective policies to justify. The premium is small relative to what a single fire or break in can cost you, and an honest valuation at the start is what determines whether a claim actually makes you whole when it matters.
