The resurgence of the real estate sector in Somalia raises pertinent questions on how property owners, suppliers, home owners and the other stakeholders can mitigate risks and avoid losses. Sharia compliant policies are a handful; here is a look at a few.
When you have invested millions of dollars on a shipment of construction materials either as the supplier or as the project owner, heavy losses can occur between the point of purchase and reception of your goods. Thefts at sea, loss of property through damage by rough waters or loss due to fires while on transit are common.
For this reason, for traders who ship in containers filled with tons construction materials, the most prudent thing to do, before your products leave Dubai or Turkey or Yemen, or Mombasa, is to insure the products under cargo Takaful, also known as freight, marine or shipping Takaful. This cover insures your products against any and all types of damage that might arise during transportation from source to end user or from warehouse to warehouse. It covers land, sea, air and parcel post too.
Under Cargo Takaful, there are two main types of covers: Voyage basis cover and annual basis cover.
Voyage basis cover goes into effect from the moment the transit journey begins and ceases immediately the goods reach their destination. This is good for real estate developers who are not frequent importers or frequent movers of goods across the world.
Annual basis cover works best for seasoned traders and suppliers of real estate materials. Under this cover, a single policy is offered by the insurer to cover all shipment from a particular client for the period of 12 months. This type of cover is best for traders who move, frequently, large quantities of goods like bulk oil cargo, bulk steel products, and tons of containerised products among other kinds of goods. As with the previous cover, it covers goods moved by sea, air or on land. What the annual cover does is to reduce the hustle of procuring cover every time one is making a supply run.
According to Islamic Insurance (First Somali Takaful and Re-Takaful), other aspects of the real estate sector can be covered under four major aspects of Islamic banking. These include Property All Risk Takaful, Fire and Additional Perils, Contractor’s All Risk and finally, Contractor’s Plant and Machinery Takaful.
Contractors Plant and Machinery Takaful
Every plant owner or heavy machinery owner knows that the cost of purchasing the equipment that they own is not a walk in the park. The equipment is often extremely expensive and the cost of keeping them functional is not light either. For the owners of these kinds of machines, damage can occur at any point- during transportation, when it is being dismantled for the purpose of cleaning, when they are being moved from one plant to another or simply during their operations. Contractors Plant and Machinery Takaful takes care of all the above scenarios. Take the example of excavator trucks that pave roads and dig construction foundations, these trucks are costly to acquire yet while they are in the field, a tree can fall on them, or they can be caught in a storm. The damage resulting from these kinds of accidents or natural occurrences can be major, leading to unintended costs to the machine owner, contractor or the banking institution that procured it on behalf of the owners.
Property All Risk Takaful
The property world is filled with risks: Fire, burglary, accidents etc are always lurking, ready to leave a property owner with a large dent in his bank account in case they are not insured.
Property All Risk Takaful is aimed at those property owners who would like to be secure in the knowledge that their property is safe regardless of what kind of accident befalls their shop or their property. It should be understood that this cover is tricky to handle since the cover underwrites loss that arise from any fortuitous cause with the exemption of those that are specifically excluded. Anyone seeking this cover is advised to be keen on the fine print, especially, the exclusions.
Fire and Additional Perils Takaful
This is insurance against interruptions on the business. It covers loss of profit and revenue that arise due to the inability of the policy owner to trade as they normally do because they are unable to use or access parts of the business or business premise or all of it entirely. The loss covered is listed and will only be compensated is they fall within the listed risks. It covers physical assets like buildings, machinery, equipment, stock and contents held within the insured properties.
In most cases, fire, lightening, gas explosions, malicious damage, impact by road vehicle and loss of property arising from a riot or strike are all within the areas that are legible for cover.
Contractor’s All Risks (CAR) Takaful
This provides insurance coverage during the installation of machinery and for construction projects against all risks that may befall the project and stall it, lead to loss of machinery or generally lead to the complete destruction of the project. This cover runs against all risks from the start to the end of such projects.
Covers under CAR come in three forms; one, cover for damage to the project under installation or construction and any materials in storage or on transit but heading into the project. Two; the optional coverage on loss or damage from delays. This policy often covers the project owner, contractor, sub-contractor and suppliers of materials. And lastly; part three offers liability insurance for third party bodily injuries and property damage that might occur during the construction process.