About 30 percent of vehicles in Nigeria are insured, and the Nigeria Police Force (NPF) said plans have been concluded to begin a crackdown on third-party motor insurance policy defaulters from February 1, 2025. JOSEPH INOKOTONG in this piece highlights the benefits of having an insurance policy and advocates a mass awareness campaign before the commencement of the police action.
THIRD-PARTY Motor Vehicle Insurance Policy is a type of car insurance that provides financial protection against damages caused by the insured vehicle to a third party. This policy is typically mandatory in many countries, including Nigeria and focuses on covering liabilities involving third parties.
In recognition of the importance of the exercise, the Commissioner for Insurance (CFI) and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olusegun Ayo Omosehin, called for a mass awareness campaign and education of the Nigeria Police Officers to ensure the successful enforcement of the Third-Party Motor Insurance policy. Also, he pledged to provide the necessary support to the Police to guarantee seamless enforcement of the insurance policy across the country.
This became necessary as the Nigeria Police Force alerted the public that anyone driving without the third party motor insurance policy would face the full wrath of the law from February 1, 2025, the commencement date for inspection and enforcement of the law nationwide.
Earlier, the NPF had announced the effective date for enforcement of the compulsory insurance law when the Commissioner for Insurance and Chief Executive Officer of NAICOM paid a working visit to the Inspector-General of Police (IGP), Mr. Kayode Adeolu Egbetokun at the Force Headquarters in Abuja.
The Commissioner for Insurance had seized the opportunity of the visit to congratulate the IGP on his notable achievements, particularly the recent licence acquisition for the Police Insurance Company, and reminded the IGP of his earlier request for assistance in enforcing all compulsory insurance policies, but this time narrowed his focus on Third-Party Motor Insurance.
The IGP, in response, expressed his alignment with the position of the CFI, acknowledging the compulsory nature of third-party motor insurance in Nigeria. Mr. Egbetokun had emphasised that violating this law is punishable, yet unfortunately, only 30 percent of vehicles in the country are insured. He highlighted the numerous benefits of having insurance coverage, stressing the importance of protecting lives and property. The IGP urged drivers to obtain at least a third-party insurance cover for their vehicles before driving on Nigerian roads. He expressed the Police’s steadfastness in collaborating with all Ministries, Departments Agencies (MDAs), and companies in ensuring the protection of lives and property of all residents.
The benefits of having a third-party motor insurance policy are immeasurable. Key features of third-party liability cover legal and financial liabilities arising from injury or death of a third party caused by the insured vehicle. It also includes property damage to a third party (up to a limit specified in the policy).
However, there is no coverage for own vehicle as this policy does not cover damages to the insured’s vehicle, injuries to the policyholder or passengers in the insured vehicle, and theft or vandalism of the insured vehicle.
The National Insurance Commission while reacting to the development said it welcomes the announcement by the Nigeria Police Force that with effect from 1st February 2025, there will be a nationwide enforcement of the Third Party Motor Insurance for all vehicles on Nigerian roads. This move, it noted aims to ensure compliance with Section 68 of the Insurance Act 2003.
According to the Commission, many Nigerians, especially vehicle owners, may not fully understand the importance of the law and the benefits of the Third Party Motor Insurance Policy.
Explaining what this means for vehicle owners in Nigeria, the Commission states said, “The Third Party Motor Insurance is the minimum coverage compulsorily required by law for any vehicle on our roads, while Comprehensive Motor Insurance is optional and recommended,” adding that the essence of every vehicle on the road having the “Third Party Motor Insurance is to facilitate safety of others and ensure the financial recovery/compensation for damages and/or injuries or in the event of the policy loss of lives accidents covered by the policy”.
The Third Party Motor Insurance Policy can be procured from or through only licensed insurance entities authorized by the National Insurance Commission to transact Motor Insurance business in Nigeria. The third party motor insurance policy is sold for a premium of of N15,000 per year to private car owners, while the premiums for commercial vehicles vary depending on the type of vehicles.
The third party motor insurance policy gives the policyholders the limit of N3 million to repair or replace the property of the innocent third party damaged during an accident. Also, it gives the policyholders access to limited medical care for any injured third party as a result of the accident. In addition, it provides financial compensation to the family of the deceased innocent third party in the event of death. Furthermore, the Third Party Motor Insurance Policy now includes third-party motor Insurance cover for the vehicle if the vehicle was driven to any West African country based on the protocol of the ECOWAS Brown Card Scheme.
The Commission encouraged vehicle owners in Nigeria to take full advantage of the enforcement announced by the Nigerian Police Force to ensure the safety and protection of lives, properties and financial compensation for innocent third parties on the roads.
Also, a Complaints Bureau is in place at the National Insurance Commission for resolving all complaints that emanate from members of the public who may be dissatisfied by insurance company’s service response to claims.
In most countries, including Nigeria, third-party insurance is the minimum required by law to drive a vehicle on public roads. It is cost-effective as it is generally more affordable compared to comprehensive insurance since it offers limited coverage.
Who Needs It?
Vehicle owners who are looking for basic legal compliance and do not want to pay for full coverage. Those driving older vehicles with low market value, where the cost of full insurance might outweigh the vehicle’s worth.
An overview of comprehensive motor insurance and other common types of motor insurance policies shows that Comprehensive Motor Insurance is a more extensive form of car insurance compared to third-party insurance.
Its coverage extends to Own Vehicle Damage, which covers repairs or replacement costs if one’s vehicle is damaged due to accidents, natural disasters (e.g., floods, earthquakes), or man-made events (e.g., vandalism, theft). Third-party liability covers injury, death, or property damage caused to third parties.
In the event of theft or total loss, it provides compensation if the car is stolen or irreparably damaged. Personal accident cover often includes coverage for the driver in case of injury or death.
Other optional add-ons include, zero depreciation cover, roadside assistance, engine protection, consumables cover, and passenger cover.
Those who should opt for these are owners of new or high-value vehicles, and those who want peace of mind with all-around coverage. The cost for this entails paying higher premiums compared to third-party insurance because of the broader coverage.
Another variant is third-party, fire, and theft insurance. It is a middle ground between third-party and comprehensive insurance. The coverage extends to all third-party liabilities – injury, death, or property damage – damage to one’s vehicle caused by fire or theft. However, it does not cover damage to one’s vehicle due to accidents. Those who should opt for this are drivers who want slightly better coverage than third-party insurance but do not require full coverage.
Also, there is usage-based insurance (Pay-As-You-Drive). This policy is based on how much you drive. Its coverage is similar to comprehensive insurance but premiums depend on the number of kilometers driven. It is ideal for people who drive infrequently. Those who should opt for this are occasional drivers or those with limited daily commuting needs.
Commercial vehicle insurance is designed for vehicles used for business purposes, such as trucks, taxis, or delivery vans. Its coverage extends to damage to the commercial vehicle; third-party liabilities, and losses due to theft, fire, or natural disasters. Businesses or individuals owning vehicles used for commercial purposes are those who should opt for this.
Personal Accident Insurance is an add-on or separate; this is an optional policy or add-on for any motor insurance. Its coverage extends to medical expenses, disability, or death caused to the driver or passengers in an accident.
Anyone who frequently drives or wants extra protection for themselves and their passengers can opt for this.
Experts say it is advisable to compare policies or understand add-on before settling for any deal. There are detailed guides to help compare motor insurance policies and understand their add-on before choosing the best option for one’s needs.
When comparing motor insurance policies, it is pertinent to consider the coverage needs. If one only needs basic coverage for legal compliance, go for Third-Party Insurance. For broader protection, comprehensive insurance is ideal. Consider third-party, fire, and theft insurance for moderate coverage.
In terms of premium costs, third-party policies are the cheapest, while comprehensive policies are more expensive but provide extensive coverage.
Vehicle value and age play vital role in considering a policy to pick. For older, low-value vehicles, third-party insurance might suffice. For new or high-value cars, a comprehensive policy is better.
In considering add-on options, check what it offers with comprehensive policies; choose add-on based on your driving habits and risk profile.
Compare the insurer’s claim settlement ratio and reviews. Look for insurers offering a cashless repair network for convenience.
Check if the insurer offers discounts for claim-free years. Look for insurers with a reputation for excellent customer support.
Common add-on and their benefits include zero depreciation cover, which takes care of the full cost of replacing parts without factoring in depreciation, and it is ideal for new or premium vehicles.
Roadside assistance provides services like towing, fuel delivery, and on-spot repairs if your car breaks down, while engine protection covers engine damage due to water ingression, oil leaks, or other reasons. This is useful for cars in flood-prone areas.
Personal accident cover carters for medical expenses or compensation in case of injury or death to the driver or passengers. Return to invoice cover pays the invoice price of the car in case of total loss or theft (instead of the current market value). Consumables cover takes care of the cost of consumable items like engine oil, nuts, bolts, etc., during repairs. Loss of use cover provides compensation for alternative transportation expenses while your car is being repaired. Tyre protection covers the repair or replacement of damaged tyres due to accidents or road hazards.
There are steps to choose the right policy. These can be accomplished by assessing one’s budget and how much risk the person is willing to take. Also, one should list the specific coverage and add-on needed, and compare quotes from multiple insurers online or with an agent. There is a need to review the claim settlement process and network garages, and read the terms and conditions carefully to avoid surprises.
To assist in selecting the most suitable motor insurance policy in Nigeria, some reputable insurance providers offer various coverage options and add-on: Allianz Nigeria offers comprehensive car insurance with benefits like a 15 percent discount for women and men aged 45 and above and rewards for safe driving.
AIICO Insurance provides comprehensive auto insurance covering damages from accidents, fire, theft, and third-party liabilities. Their user-friendly online platform allows for easy quote comparisons.
AXA Mansard offers affordable car insurance that covers losses resulting from accidents, floods, fire, and theft. They provide a 5 percent discount for full-year payments.
Leadway Assurance provides comprehensive auto insurance with extensive coverage against fire, theft, and other damages to your vehicle.
Custodian Insurance offers motor insurance policies that cover repairs or replacement costs in the event of accidents, fire, or theft, including medical expenses.
When comparing these providers, consider the following factors: Coverage options: Ensure the policy covers your specific needs, including any desired add-on. Premium costs: Compare premiums to find a policy that fits your budget. Claim settlement process: Research the efficiency and customer satisfaction regarding claim settlements. Customer service: Evaluate the quality of customer support and assistance provided.
By carefully assessing these factors, one can select a motor insurance policy that offers the best value and protection for his/her vehicle.
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