Opinion: You can effectively protect your property despite the bad press insurance companies get

By Peter M. Kahindi

Recently, I was having an evening chat with a few business owners in my area of residence. As is the inevitable norm the direction of the discussion went onto the subject of the area security.

Given that as I said, these were business owners, we started discussing whether security guards are necessary and if they are, whether it is sufficient to provide protection against their business assets. The interactions that followed indicated to me a few things which I will share with you, with your permission.

Most property or business owners feel that they are fully protected because they have retained the services of a security company. As a matter of fact when one inquires about one’s fate in the event that property is stolen or destroyed, the security company will be more than ready to inform one that it took out an insurance policy with this and that insurance company.

What they do not reveal is that such policies between security companies and insurance companies are capped, on average, between Sh. 700,000 (Seven hundred thousand shillings) and Sh. 1,000,000 (One million shillings). What this translates into is that in the event of any loss occasioned on the protected premises or property while the same is under the protection of the retained security company, the most the insurance company will pay out towards that loss is the maximum cover as indicated above. Not a penny more.

Inevitably, the amount mentioned above is hardly ever enough to cover the loss that the property or business owner has incurred and yet the insurance company will not be willing to pay more. Ultimately, the owner of the premises loses out or opts to drag the insurance company to Court. My little experience is that in such a scenario, the security company will invoke the clause in the contract that established the maximum amount payable. In the alternative, it will apply to Court to add the insurance company as a third party to the suit. In simple terms, adding the insurance company will mean that the security company is stating that it is not liable but that should any liability to pay arise, it should be visited on the insurance company and not the security company.

Unfortunately for most business or property owners who incur losses when under the protection of security companies, Courts have on several occasions upheld the strict provisions of the clauses that establish the maximum limit. This is simply because Courts are always hesitant to interfere with the freedom that people always partake of while entering contracts. Besides that specific clause is normally worded so strictly that it is quite hard for a Judge to entertain any other interpretation and application of the same besides its literal and deliberate meaning.

It would therefore appear that the only obvious exception to the said strict clause is where it can be established that the employees of the retained company were negligent in the conduct of their duties that the loss could only have arisen due to their negligence. Whereas this may seem straight forward, it is not always easy to prove. For instance can one prove that a security guard who was exposed to a drug like chloroform and he slept throughout a burglary was negligent? How about if the argument of the guard is that he or she was patrolling one end of the fence on a property and because he or she is alone, thieves broke into the property using another access which he or she could not humanely supervise? Or even in circumstances where one has retained the alarm system services of a security company, would it or would it not be negligent on the part of the security company if it can be established that there was a power disconnection as part of the heist? Negligence is therefore very dependent on circumstances and therefore not entirely reliable.

There are also instances when it is obvious and even provable that the security guard(s) were not just negligence or reckless, but that they positively participated in the actions or omissions leading to the loss, damage or destruction of the premises or property that they are contracted to protect. The most common and predictable scenario is where property is stolen or destroyed and the guards simply abandon the premises or property and vanish.

In such cases as above, the property or business owner normally reports to law enforcement agencies. However, more often than not, the suspects are not arrested because they cannot be found. Even when they are found and prosecuted, most of them are not in position to compensate the business or property owner. Therefore a property owner who sues the security company for the criminal activities of the said company’s employees will eventually be left without remedy because the company, without exception, always distances itself from the actions of its employees, arguing that what the suspect did or omitted to do was outside his or her scope of employment and that therefore he or she should be held personally liable.

So what solution is available to a business owner who has already retained the services of a security company but also needs to have protection beyond the Sh. 700,000 that the security company’s insurers will be willing to pay for loss?

I would advise such a person to take out his or own insurance policy from an insurance company of his or her choice, to protect them against burglary, theft, fire, or any other manner of destruction or loss, depending on what is available in a particular policy.

Ordinarily the insurance company will send an officer to carry out an inspection to establish the security measures, safety measures in place, location of the business or premises, state of the property to be insured and the like. Most people would be surprised to learn that insurance policy premiums (usually paid annually) are not very expensive but some would rather not pay. The only challenge is that at the end of the day the loss or destruction of the property, should it happen - and it happens -, comes at a very steep price. My take, guards are important and necessary, but it is not enough if one is serious about securing their property fully.

The author is an Advocate, Managing Partner at PACE Advocates and Insurance Law Specialist.