Auto Insurance Policies covers all types of automobiles for both private and commercial uses. Also covered are motorcycles and tricycles.
Auto insurance is one of the compulsory insurance classes and anyone using a motor vehicle on the public highway must have it.
Auto Insurance Policies in Nigeria which is the most common of all the known classes of insurance is designed to protect the insured for loss of or damage to his/her vehicle, damage to Third Party property including bodily injury and death to Third Party caused by an accident whilst using their vehicle.
However, the insurance refers to policies that offer financial assistance in the event of accidents involving your car or bike. Motor insurance can be availed for three categories of motorised vehicles, including:
- Car Insurance -Personally owned four-wheeler vehicles are covered under such a policy.
- Two-wheeler Insurance -Personally owned two-wheeler vehicles, including bikes and scooters, are covered under these plans.
- Commercial Vehicle Insurance -If you own a vehicle that is used commercially, you need to avail insurance for the same. These policies ensure that your business automobiles stay in the best of shapes, reducing losses significantly.
Why Do I Need Auto Insurance Policies?
- It is compulsory; it is the Law! (Road Traffic Act,1950)
- Provides replacement cost of damage or theft of your car
- To provide financial support for you when you damage other people’s property
- Re-imbursement of litigation cost
Types of Motor Auto Insurance Policies
Based on the extent of cover or protection offered, motor insurance policies are of three types, namely:
2. Third-Party Liability –
This policy covers death, accidental bodily injury and damage to the property of a third party
This is the most basic type of motor insurance cover in India. It is the minimum mandatory requirement for all motorised vehicle owners, as per the Motor Vehicles Act of 1988. Due to the limited financial assistance, premiums for such policies also tend to be low. These insurance plans only pay the financial liability to the third-party affected in the said mishap, ensuring that you do not face legal hassle due to the accident. They, however, do not offer any financial assistance to repair the policyholder’s vehicle after accidents.
How Much Is Third Party Insurance in Nigeria
In Nigeria, the third–party insurance cover is relatively cheaper to comprehensive insurance policies. Depending on the type of vehicle, annual insurance premium costs between N5, 000 to N10, 000. Upon complete purchase of your comprehensive car insurance policy, you will get a certificate of insurance.
Why Do You Need Third-Party Insurance?
The insurance coverage might only be beneficial to a third party. However, it saves the insurer the cost of repair or replacement of third party damages. The following are reasons you need third-party insurance
- Third-Party Car insurance offers protection against liability arising from damages to a third party
- It protects you from suffering punishment by law
- It is cheaper in comparison to a comprehensive car insurance policy
2. Comprehensive Cover –
The Comprehensive Auto Insurance plan covers the loss or damage to insured vehicles as a result of fire, theft, vandalism, accidental damage or collision.
Coverage also includes Legal Liability for death, bodily injury or damage to the property of 3rd parties arising out of the use of insured vehicles.
Compared to the third-party liability option, comprehensive insurance plans offer better protection and security.
Apart from covering third party liabilities, these plans also cover the expenses incurred for repairing the damages to the policyholder’s own vehicle due to an accident.
Additionally, comprehensive plans also offer a payout in case your vehicle sustains damage due to fire, man-made and natural calamities, riots and others such instances.
Lastly, you can recover your bike’s cost if it gets stolen, when you have a comprehensive cover in place.
One can also opt for several add-ons with their comprehensive motor insurance policy that can make it better-rounded.
Some of these add-ons include zero depreciation cover, engine and gear-box protection cover, consumable cover, breakdown assistance, etc.
How Much Is Comprehensive Auto Insurance
Comprehensive car insurance covers legal liabilities arising from death, property damage or bodily injury to a third party. All stemming from the use of the insured’s vehicle.
If you own your vehicle, it’s a voluntary coverage on your car insurance policy. However, if you lease your car or it is under a higher purchase arrangement, you may have to hold comprehensive car insurance.
Though comprehensive insurance is not compulsory under Nigerian law, it covers every risk pertaining to driving or owning a vehicle.
In Nigeria, to buy a comprehensive insurance policy, most insurance companies charge between 4% – 7% of the total value of your vehicle yearly.
The value placed on the car is the cost of buying the car. Some insurance policy offers additional services like car tracking devices at a price. This is only available to a comprehensive car insurance policyholder.
Benefits of Motor Auto Insurance Policies
Cars and bikes are increasingly more expensive with each passing day. At such a time, staying without proper insurance can lead to severe monetary losses for the owner. Listed below are some advantages of purchasing such a plan.
1. Prevents Legal Hassle –
Helps you avoid any traffic fines and other legalities that you would otherwise need to bear.
2. Meets All Third-Party Liability –
If you injure a person or damage someone’s property during a vehicular accident, the insurance policy helps you meet the monetary losses, effectively.
3. Financial Assistance to Repair Your own Vehicle –
After accidents, you need to spend considerable sums on repairing your own vehicle. Insurance plans limit such out of pocket expenses, allowing you to undertake repairs immediately.
4. Theft/loss cover –
If your vehicle is stolen, your insurance policy will help you reclaim a portion of the car/bike’s on-road price. You can expect similar assistance if your vehicle is damaged beyond repair due to accidents.
How To Know Fake And Authentic Car Insurance In Nigeria
The most conforming way to identify fake insurance and stay safe is by confirming the authenticity of your Car Insurance.
There are many fake insurance agents out there who take advantage of a client’s ignorance. Given this, it is not enough to receive your policy certificate and relax you have to confirm how authentic the certificate is. This can be done in two ways:
1. Visit the website of the Nigerian Insurance Industry Database (NIID)- www.askniid.org and following the laid out instructions.
You will need your vehicle number and insurance policy number to search their database.
If it comes back with a result, confirm that the bearer of the policy carries your name.
If it doesn’t come back with any result, it might have been a fake, and you need to contact your insurance officer immediately.
2. Use Nigerian Inter-bank Settlement System (NIBSS) Code:
In partnership with the Nigerian Insurers Association (NIA), NIBSS launched the USSD code for validating motor insurance policy. To confirm the validity of your car insurance just type *565*11# and enter your vehicle registration number.
Top Insurance Company Offering Car Insurance In Nigeria
Car insurance policies in Nigeria are sold in any company that has a National Insurance Commission (NAICOM) license as general or composite insurance companies. To buy an insurance policy, you will need to fill the following forms;
- Know Your Customer (KYC) Form
- Motor Proposal Form
- Insurance Physical Inspection Form
For a comprehensive overview of the registered companies check the National Insurance Commission at naicom.gov.ng., which is the website for the regulatory agency for insurance companies in Nigeria –(NAICOM).
Here are the top insurance companies in Nigeria offering Car Insurance. Some of these companies include:
- Zenith Insurance Plc
- FBN General Insurance
- Cornerstone Insurance
- Old Mutual Nigeria
- Leadway Assurance
- Custodian Insurance Plc
- Axa Mansard
- Allianz Nigeria Insurance
- NEM Insurance
- Consolidated Hallmark
- AIICO Insurance
- Mutual Benefit Insurance
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