Traffic congestion could be crazy. However, there is nothing more annoying about Lagos traffic than getting stuck for hours only to realize it is caused by two people fighting over an unfortunate minor accident. Worse, they both have third party insurance but do not know the benefit.
First, before we go any further, it is important to note that most Nigerians with “complete papers” have motor insurance certificates. However, because these papers are processed by agents, who carryout all the registrations with the various agencies on their behalf, as required by the law, the car owners simply carry these documents without knowing the purpose of each. Guess what, insurance companies wish you don’t know the benefits of motor insurance.
In this article, I’ll expose the little secrets insurance companies wish you don’t know. We will discuss the cost, benefits and everything you need to know about third party insurance. Feel free to skip to any section of the article that may interest you. You may also watch this three-minute video to see a summary of this article.
- What is Third Party Motor Insurance?
- How Does Third Party insurance Work?
- Cost and Claim Limits of Third Party Insurance
- Benefits of Third Party Motor Insurance
- How To Buy A Third Party Insurance
- How to Make a Claim
What is Third Party Motor Insurance?
A third party motor insurance is a contract between an insurance company (insurer) and a car owner (insured) wherein the insurer undertakes to compensate or indemnify third parties who may suffer losses or damages due to the use of the insured vehicle. In simple terms, third party insurance is a guarantee that the insurance company will pay to fix other people’s cars or property if one is involved in an accident.
How Does Third Party insurance Work?
Having a third party insurance on you vehicle is like outsourcing the everyday risk of driving your car. The best part is that it is not tied to the owner or driver, but to the car. Hence, the insurance covers anyone driving the car at anytime. It is worthy of note, however, that the driver of the vehicle must possess a valid drivers license.
In summary, anyone can get a third party insurance for his car, bike or truck. While most people know of insurance on private cars, you can procure a cover for a commercial vehicle, truck, tricycle or even motorcycle.
On how it works, once you have bought a policy, the company is expected to give you a policy certificate. With that certificate, you can call the company to pay anyone whose car you damage if you are ever involved in an accident.
See also: Motor Insurance in Nigeria: A Complete guide
Cost and Claim Limits of Third Party Insurance
Premiums for third party insurance are fixed by NAICOM based on the category or type of vehicle. Also, these premiums entitle a policyholder to certain claim benefits. In this instance, a policy limit is the maximum cost of repairs or losses your insurer will bear if you cause damage to others in the course of driving. You may call it the sum insured. See the list below:
| Vehicle Type | Premium | Limit |
| Private car | 15,000 | 3,000,000 |
| Commercial car | 20,000 | 5,000,000 |
| Bus | 20,000 | 3,000,000 |
| Motorbike | 3,000 | 1,000,000 |
| Tricycle | 5,000 | 2,000,000 |
| Truck | 100,000 | 5,000,000 |
Benefits of Third Party Motor Insurance
Owning an insurance is one of the smartest investments any car owner can make. While there are several benefits, I will focus on the three key reasons why you should get a third party motor insurance.
- Cost Effectiveness: The greatest benefit of third party insurance is the peace of mind you get from knowing you have it. Of course, no one hopes for an accident. However, disaster strikes when one would least expect. Third party takes the burden away when it happens. Beyond this, it is cheaper than a comprehensive insurance. Imagine saving millions of Naira in cost with just 15,000 Naira. It is certainly a good deal for sure.
- Free ECOWAS Brown Card: ECOWAS brown card is a regional insurance cover that provides third party coverage to international travellers across the West Africa region. Before now, one needed to purchase a brown card separately before driving across international borders in the region. However, third party motor insurance policy holders are now given a free brown card along with their regular insurance.
- Building a good claims record: While this is not very popular in Nigeria, a good claims record is a sure way to get discounts on subsequent insurance premiums. This is especially important if you plan to someday live abroad. Do well to request a no-claims certificate if you did not make a claim during the lifespan of the insurance contract.
How To Buy A Third Party Insurance
Buying third party insurance in Nigeria is as easy as ever. About 50 insurance companies have been approved to sell motor insurance in Nigeria. With increasing digitization, one can now buy insurance online instantly from the comfort of his home. That said, here are a few short steps on how to buy a third party insurance.
First, decide on the company you would like to patronize. While the product may be similar, the quality of service differ. Do well to select the company that suits you the best.
Next, choose your preferred channel. Gone are the days when you had to visit an office. Now, you decide.
Finally, pay the premium and get your policy certificate. Voila! That’s it. You may go ahead to confirm the validity of your policy on the Nigerian Insurance Industry Database (NIID) here.
How to Make a Claim
Accidents could be devastating. While fatalities and certain losses are irreparable, insurance shields you from the financial implications of some of such losses. Of course, third party insurance does not cover the cost of repairs to your vehicle in the case of an accident. However, it covers that of the victim. This takes off some stress, leaving you concerned about fixing your vehicle.
If you have an accident, the first thing to do is to reach out to your insurer to report the situation. Next, gather as much evidence as possible and proceed to the nearest police station to make an entry. If valuables were lost in the process, swear to an affidavit at the nearest court.
Finally, follow your insurer’s claims process and submit all necessary documents. Your claims should be paid within a week. More complex situations may take longer though.
What Happens If Your Claims Are Not Paid
Making legitimate claims is one of your rights as a policyholder. But like any other business relationship, there may be instances where you are not satisfied with the service delivery of your insurer. Sometimes, your insurer may believe your claim is not in line with the terms and conditions agreed to at the inception of the contract. At other times, they may pay lower than expected.
In this case, the first thing to do is lodge a formal complaint with the company. Every company has a complaints process. Do well to follow it. If unresolved, reach out to NAICOM. For more details, read our article on how to make complaints.