Car accidents are some of the biggest causes of death and losses globally. Five people die from car accidents every hour according to the World Health Organization. While some of these unfortunate events are avoidable, they still happen nevertheless. Hence, one tool you should use to protect yourself is a motor insurance policy.
In this article, we will discuss everything about motor insurance. You will learn of the benefits, types and how to choose the perfect plan for you. I will also tell you about the cost and how to file a claim whenever disaster strikes. This is a comprehensive guide. However, feel free to skip to any section that interests you.
- An Overview of Motor Insurance
- What Is Motor Insurance?
- Types of Motor Insurance
An Overview of Motor Insurance
First, motor insurance is the most popular type of insurance in Nigeria. Due to regulations, every law-abiding vehicle owner in Nigeria has an insurance cover. While having a motor insurance cover may be smart, it is also required by law. This way, all drivers are assured of paying for damages and liabilities which may arise when they use the road. Motor insurance is about more than just following the law.
Beyond legality, however, it is a safety net which secures drivers and vehicle owners against unforeseen costs. It provides financial protection and peace of mind while driving. When you have it, you know you are covered from theft, fire and all forms of damages to your car and others in case of an accident. This is why motor insurance is crucial for managing the risks of owning a vehicle. So, do not be scared when next you scratch someone else’s car. Just call your insurance service provider and they will foot that bill on your behalf. That said, let’s dive right in!
What Is Motor Insurance?
A car insurance, also known as an auto or motor insurance is a contract between an insurance company(the insurer) and a vehicle owner(the insured, or policy holder) wherein the insurer undertakes to provide financial protection for the insured vehicle in return for a premium. A motor insurance policy shields the vehicle owner from financial losses due to unexpected events caused by, or related to the insured vehicle. Examples of these events are accidents, natural disasters, theft, fire and so on. The law mandates the insurer to indemnify or compensate the insured or concerned third party where damages occur in relations to the insured vehicle.
Types of Motor Insurance
There are two main types of motor insurance namely comprehensive and third-party. Each offers varying levels of coverage, catering to the diverse needs and preferences of car owners. Beyond these, one may want to have something in-between these extremes. Here, an insured could choose some unbundled offers to supplement his third party policy. This is oftentimes called Third Party Plus. We will touch on this briefly at the end of this article.
1. Third Party Motor Insurance Policy
Third-party motor insurance is the most basic form of coverage and is legally mandatory in Nigeria. It provides financial protection against damages or injuries caused to a third party by your vehicle. This includes bodily injuries and damage to third-party property. However, it does not cover any damage to your own vehicle or personal injuries. Third party in this instance means other people who may be negatively impacted as a result of an unforeseen negative event in the course of operating your vehicle.
Benefits of Third Party Motor Insurance:
- Affordability: Third-party insurance is generally more affordable than comprehensive insurance. This makes it an attractive option for budget-conscious vehicle owners.
- Legal Compliance: In many jurisdictions, having at least third-party insurance is a legal requirement for vehicle owners, ensuring that you are compliant with the law.
- Ease and Speed of Purchase: Unlike comprehensive cover, a third party cover can easily be bought in a relatively short period of time. Cliche here to buy an insurance cover instantly online.
Limitations of Third Party Insurance Covers
Limited Coverage: Third-party insurance does not cover any damage to your own vehicle or injuries you may sustain in an accident. This means higher out-of-pocket expenses if your vehicle is damaged or you are injured. Additionally, the sum insured or property damage limit is capped. Hence, you may be distressed if you incur a loss higher than the limit. See the limit below.
Cost of Third Party Insurance in Nigeria
The premium for third party vehicle insurance in Nigeria depends on the type of vehicle. The fixed rates approved by NAICOM are as follows:
- Car: 15,000 Naira
- Motorcycle: 3,000 Naira
- Tricycle (keke marwa): 5,000 Naira
- Commercial vehicles, buses and light trucks: 20,000
- Articulated vehicles (trucks): 100,000
NAICOM Approved Third Party Property Damage Limit (Sum Insured)
While the law mandates insurers to pay all claims, there is a limit specified by the the National Insurance Commission (NAICOM).
- Car: 3,000,000 Naira
- Motorcycle: 1,000,000 Naira
- Tricycle (keke marwa): 2,000,000 Naira
- Staff buses: 3,000,000 Naira
- Commercial vehicles, and light trucks: 5,000,000
- Articulated vehicles (trucks): 5,000,000
Frequently Asked Questions on Third Party Motor Insurance
Can I get third party insurance cheaper than the above amount?
No. If anyone offers you for less, then it is a fake policy.What is the fine for driving without an insurance certificate in Nigeria?
250,000 Naira is the fine imposed by law. However, states like Lagos charge 20,000 for driving without an insurance certificate.What is covered under third party?
i. Repair of third party property(car or other assets).
ii. Medical cost of third party in the event of an accident.
2. Comprehensive Auto Insurance Policy
This is the most extensive type of coverage available. It covers third-party liabilities while also protecting your own vehicle. This includes damage from accidents, theft, fire, natural disasters, vandalism, and even certain man-made calamities.
Premium Cost for Comprehensive Insurance
While there is no fixed premium for comprehensive insurance in Nigeria, the policy typically costs between 5% and 10% of the value of the vehicle. The rate offered by your insurer is dependent on a number of factors. These factors include:
- Age and mileage of vehicle
- Driver’s age and experience
- Risk exposure
- Driving record
- Past claim record
Do well to reach out to us for the best rates available in the market. Contact us here today.
Benefits of Comprehensive Motor Insurance
- No-fault Coverage: The insurance company will fix your car regardless of who is at fault in case of an accident.
- Broad and more flexible coverage.
- Free accessories like vehicle tracking devices or dashcams as part of the package from some companies.
Third Party Plus Motor Insurance
As I stated earlier, there is a plan for you if you would rather stay somewhere between the two extremes. It typically involves having a third party policy with some supplementary covers. It is flexible and can be customized to suit one’s specific needs. Several companies have this offer in Nigeria.
How to Buy Motor Insurance in Nigeria
There are several ways one can buy an insurance policy. For convenience, you may reach out to us to recommend the best policy for you which you can buy instantly from the comfort of your home.
How to File Claims for Motor Insurance
Filing for claims for your motor insurance is no different from that of other policies. The only difference is the requirements. Typically, every insurance company has a claims process which is normally detailed in the insurance contract.
However, a typical claims process would involve the following: reaching out to your insurer the moment you have an accident.
- reaching out to your insurer the moment you have an accident.
- Taking necessary pictures and videos for evidence
- Making a police report.
Check out our comprehensive article on insurance in Nigeria. Everything to know about insurance.
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