When torrential rains devastated Joseryn Kyosimire’s banana plantation in Rushenyi, Ntungamo District, in 2019, the destruction was swift and unforgiving. Months of labour were wiped out in hours. But Kyosimire believed she had a safety net.
She had secured a Shs 15 million agricultural loan from Pride Microfinance, and 1.75 percent of that loan had been deducted as insurance premium. According to her, a loan officer assured her that if disaster struck, the insurer would settle the outstanding balance.
So when the storm flattened her plantation in September 2019, she expected the insurance to absorb the shock.
Instead, she faced repayment demands and threats of property attachment.
From Assurance to Alarm
Kyosimire says Pride Microfinance, despite its earlier assurances, continued charging interest and demanded repayment. Eventually, she turned to court.
She sued Pride Microfinance and Liberty Life Assurance in the Chief Magistrate’s Court in Mbarara. She sought a declaration that she owed nothing, a permanent injunction to stop the sale of her land in Rushenyi, and damages.
Under pressure, Liberty Life paid Shs 1.4 million. But Pride insisted she still owed Shs 12.8 million.
In September 2023, the magistrates’ court ruled in her favour. The court declared she did not owe the lender any money and ordered Liberty to compensate Pride with Shs 7.6 million plus interest, reasoning that the loan had been fully insured. It appeared Kyosimire had won.But the case was far from over.
The Appeal and the Turning Point
Liberty Life Assurance appealed to the High Court in Mbarara, arguing that indemnity under the insurance contract was limited to assessed loss, not the entire outstanding loan. The insurer also contended that Kyosimire had no direct cause of action against it.
When Justice Allan Nshimye revisited the evidence, he focused on a detail that had gone largely unnoticed: the insurance policies presented in court related to 2020 and 2021 not 2019, the year the storm destroyed the plantation. That gap proved decisive.
“The policies referred to do not relate to the year 2019 when the hailstorm destroyed the 1st respondent’s banana plantation,” the judge observed.
Without a 2019 insurance policy on record, the court had no contractual basis to compel Liberty to indemnify Pride.
The insurer could not be held liable without proof of coverage for the relevant year.
Where Responsibility Ultimately Fell
Yet the absence of a policy raised a deeper question: Why had Pride deducted insurance premiums without producing proof of insurance?
Justice Nshimye turned to the Bank of Uganda Financial Consumer Protection Guidelines, which require lenders to be transparent and to provide borrowers with clear documentation in plain language.
He found that Pride Microfinance had a duty to supply Kyosimire with evidence of the insurance cover for which she paid and failed to do so.
The lender had collected the premium. But it could not produce a 2019 policy. That failure shifted liability.
Justice Nshimye ruled that Pride Microfinance must bear responsibility for the undertaking it had given Kyosimire that in the event of loss, the loan and interest would be settled.
He declared that she does not owe Pride Microfinance any money under the agricultural loan agreement executed on September 19, 2019, and ordered the lender to pay her legal costs in both the lower court and on appeal.
Although no specific damages were awarded, the decision effectively lifted a Shs 15 million debt from her shoulders.
The Wider Implication
Beyond Kyosimire’s personal victory, the case sends a clear message to lenders and borrowers alike.
If a financial institution deducts insurance from a loan, it must be able to prove that valid cover exists — and must provide the borrower with the relevant documentation. A premium without a policy is not protection.
