Guide to Third Party Motor Insurance - All you need to know

After reading this post, you should know what is involved on how to get a Third Party Motor or Car Insurance in Nigeria, your claim.

Third Party Motor Insurance

Many members of the insuring public and third party road users have not fully realized the importance of Motor (Third Party) Insurance in Nigeria. Motor (third party) Insurance covers the insured’s (policy holder) legal liabilities for death and bodily injuries to third parties and third party property damage. While remedies for bodily injuries and death are unlimited since we cannot put value on life, the limit for third party property damage is N1million.

Most Nigerian car owners believe that the N5,000 third party insurance does not cover anything. The belief is that it is procured just to avoid the trouble from police officers who check vehicle particulars on the highways.

That so-called meaningless N5,000 insurance cover that you think is just for the police gives you a cover of N1,000,000 (one million naira) for any damage to any person's property. You can check them right away now if you have them with you and you will discover that the N5,000 you paid to the insurance company is not to fulfil all righteousness and escape police troubles.

It is actually meant to protect you from fighting with another road user in the event of an accident. It is meant to ensure that you do not hand over N100,000 or N300,000 to another road user because your car damaged the person’s headlamp or bumper or fender or bonnet. It also has an unlimited cover limit for any death or bodily injury you cause a third party with your vehicle.
This limit can be increased with payment of additional premium. So third party motor insurance is very important as far as third party road users are concerned. Now the issue starts from how we source this policy. Many vehicle owners get theirs from motor park touts and touts in government offices. Naturally, the insurers do not bother to explain to those who patronize them what their rights are. Ironically, getting an insurance policy for a vehicle is the easiest paper one can get for a vehicle. Unlike other vehicle-related documents like driving licence, road-worthiness licence, vehicle licence, proof of ownership, registration number document and the like. The insurance cover is the only one that is not issued by a government agency. Therefore, it does not involve any bureaucracy, which usually causes delays which lead to bribery and corruption in the name of “processing fee.”

There is nothing to process in an insurance policy. Just like banks are open all over the country looking for customers, so do insurance companies have branches and outlets all over the country looking for patrons. And just as banks are regulated by the Central Bank of Nigeria, so are insurance firms, brokers, and agents regulated by National Insurance Commission.

Therefore, when your vehicle is involved in an accident with someone's vehicle or damage someone's property or injure someone or even kill someone, as long as your N5,000 insurance is valid, your insurance company will pay that person the cost of the damage within one million naira, if it is property, but if it is bodily injury or death, the amount may be decided mutually or by the law court.
It is called third-party insurance cover because it does not cover losses you incur in an auto accident. You are the first party; the insurance company is the second party, while any other person hit by your vehicle is the third party. Therefore, you have insured your car for any damage done to any other road user. If you want your car to be covered, you do the comprehensive insurance.

Note also that if you and someone hit each other and damage each other's vehicles and both of you have that N5,000 insurance cover, the person's insurer should pay for the damage to your vehicle, while your insurer should pay for the damage done to the person’s vehicle.

So when Nigerians are involved in minor accidents, there is no need for all the drama they engage in. They just need to confirm that the other party has a valid N5,000 insurance cover. And because of the fear of the police on the highways, most private car owners have that insurance.

Now that you know, next time you want to renew your insurance cover, don't give it to touts to do for you, to avoid spending your money to get a fake document. Check around you for the nearest office of an insurance company, broker or agent, or check for the list of Nigerian insurance companies online and send a message to them. They may even come to your office to collect the material.

That many Nigerian car owners or drivers do not know their right is to the advantage of the insurance companies. What it does for them is that most people who are involved in road accidents do not report such to their insurers. Most car owners ignorantly pay the other party, if such is demanded, and go away to repair their vehicles. Sometimes, the owner of the vehicle decides not to collect any money and goes on to repair the vehicle. Such people are prayed for and called good men or women. Even if some of us know that the Insurance company would pay the sum but because we are always in a hurry and not wanting to go through the rigorous and time taking issues with the Insures would just settle the matter at the spot with the other party.

Once you make a payment to the insurance firm, your details and the details of the car are entered and your policy certificate is printed out. The document contains the policy number as well as your certificate number, which you will quote in the event of any claim. You can immediately verify the genuineness of your insurance by entering your policy number or vehicle number in the portal of the Nigerian Insurance Industry Database (NIID). If there is any issue, you can immediately report the insurance company, and the individual or company will be penalised. The Nigerian Insurers Association (NIA), is the umbrella body of underwriters in Nigeria. It has a platform, the Nigerian Insurance Industry Database. It has a database of all genuine motor insurances issued by Nigerian insurance companies and so far has records of over four million genuine motor policies in the database. You can check the status of a motor policy either with the policy number or registration number of the vehicle.

Your responsibility is to describe what happened. It is not his responsibility to accept liability for the loss; that is for the underwriter to determine, based on the account of the accident by policy holder. Please note again that a third party motor policy provides relief for third parties only; it does not cover own damage or provide personal relief for the policyholder. There is a variant of Motor (Third Party) insurance in the market where for a premium of N10,000, the policy can be extended to cover own damage to the limit of N250,000). But it is a wonderful policy, because for just N5,000 premium, you transfer the unlimited liabilities for third party bodily injuries and death and limited third party property damage liabilities to your underwriter.

The interesting thing about vehicle insurance is that the amount (N5,000) is so small that no vehicle owner should find it hard to pay annually. And one should not wait for it to expire for even a day before renewing it. It is even better to renew it a week or so before its due date to avoid any story. Accidents don't give a notice before occurring.

However, if a car owner wants to add N100,000 cover for his vehicle, he can take the N7,500 special policy. This package covers the third party for up to N1,000,000, but covers you for up to N100,000. This will ensure that anytime you have a minor accident, your insurance company can take care of it for you. But if you want your insurance company to take full responsibility, then you can go for the comprehensive cover, which is usually about 5 percent of the worth of your car. This will also cover the third party.

The ignorance about vehicle insurance is similar to that about health insurance. Most Nigerians do not know that they can insure themselves for about N20,000 annually and get treated throughout the year in good hospitals.
Specifically, section 143 of the Road Traffic Act, states that: “a person must not use a motor vehicle on a road unless there is in force, in relation to the use of the vehicle by that person, such a policy of insurance or security in respect of third party risks…”

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