By HANNAH ATOMODE
Third-party insurance is the least cover of motor vehicle insurance in Nigeria. In Nigeria, the insurance of motor vehicles against the risk of liability for injury to, or death of, third parties caused by the driver’s negligence was made compulsory by the Motor Vehicles (Third Party Insurance) Act 1945, which came into force in 1950. Third-party motor insurance is not a new enforcement in Nigeria. Most Nigerians who drive vehicles on Nigerian roads with valid vehicle documents have this cover because an officer renewing these documents always ensures this is inclusive.
I am only stressing this because of the misconception about the news of NAICOM in collaboration with the Nigerian police enforcing third-party insurance effective from February 1st, 2025. This is not a new insurance policy. The first call to all road users is to check on (https://askniid.org) to ensure they have genuine third-party insurance, and once this is confirmed, you are good to go. You can reach out to an insurance company if you don’t have or you observed that your policy is not genuine.
In my opinion, the enforcement is in place for people to benefit from this policy. When there is an accident, the police should request this document, guide the user by informing them to call the insurance company that issued the cover, and let them get the car fixed. The government can then punish whoever does not have this policy by ensuring the defaulter pays their liability with some fines. This will reduce a lot of arguments and unnecessary drama on Nigerian roads when an accident happens.
Benefits of Third-Party Insurance:
1. Third-party Property Damage covers damages to other people’s properties, such as vehicles, buildings, or other structures. This cover has a limit of ₦3,000,000, which implies that any damage within this amount will be borne by the insurance company.
2. Bodily Injury and Death: Provides compensation for injuries or fatalities to third parties, including pedestrians, passengers, or other drivers. This cover is unlimited but reasonable, as you cannot place a value on human life.
3. Legal Costs: Covers legal expenses incurred while defending a claim or lawsuit filed by a third party.
4. Financial Protection: Protects your financial assets in case of an accident, as you won’t have to bear the costs of damages or injuries to third parties. You don’t need to pay a dime from your pocket, so far the damage is not more than ₦3,000,000.00.
5. Compliance with Law: Third-party insurance is mandatory in many countries, including Nigeria, so having this coverage ensures you’re complying with the law. Non-compliance is punishable by law.
6. Peace of Mind: Provides reassurance while driving, knowing you’re protected against unforeseen events. You are not under stress when there is an accident when it comes to third-party liability; to have complete peace of mind, you need a comprehensive insurance cover which covers your damage and the third-party damage.
7. Reduced Risk of Financial Loss: Transfers the risk of financial loss to the insurer, reducing your financial burden in case of an accident. No financial loss when you get insurance cover.
•Hannah Atomode (ACIIN, YIPP) is a business analyst and insurance underwriter. To learn more you can follow *talkinsurancewithhannah* on Instagram, Facebook, Tiktok and YouTube channel.
