Mandatory Third-Party Vehicle Insurance Enforcement Begins in Nigeria
Starting February 1, 2025, the Nigerian Police Force will begin enforcing the mandatory third-party vehicle insurance policy nationwide. This directive, issued by Inspector General of Police (IGP) Kayode Egbetokun, requires all motorists to have valid third-party insurance. Those who fail to comply face potential sanctions.
Crash test for illustrative purposes.
What the Enforcement Means
The enforcement of the third-party insurance mandate follows a license granted to the Nigerian Police Force (NPF) Insurance Company last November. However, drivers covered by comprehensive insurance policies are exempt from this specific enforcement, according to insurance sector governance expert Modestus Anaesoronye. Comprehensive policies already include third-party coverage, eliminating the need for separate third-party insurance.
“Those under comprehensive insurance policy are not affected by this police enforcement. Comprehensive has in it both the third-party-vehicle insurance coverage and the total insurance package for an insurer’s car, hence there’s no need for the police to disturb such person during enforcement,” Modestus Anaesoronye told The ICIR.
Third-party insurance is officially priced at N15,000, with options for extensions or “plus” coverage to protect against minor vehicle damage, up to approximately N750,000. Comprehensive insurance is a more extensive package, typically costing around 5% of the vehicle’s total value annually.
Need for Awareness and the Value of Insurance
Some industry experts argue for more public awareness before enforcement. Olusoji Oluwole, President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions (ASSBIFI), suggests a pre-enforcement awareness campaign, potentially in motor parks. This is vital given that many Nigerians purchase insurance primarily to avoid legal repercussions, rather than for the intrinsic benefits of protection in unforeseen circumstances.
Understanding Comprehensive Insurance
Comprehensive insurance, as defined by Investopedia, covers damage to a vehicle from a wide variety of causes beyond collisions, such as natural disasters, vandalism, or theft.
The Current Law and NAICOM’s Stance
The enforcement aligns with the Insurance Act of 2003. The National Insurance Commission (NAICOM) supports the police initiative, aiming for strict compliance with Section 68 of the Insurance Act 2003. NAICOM acknowledges the need to educate the public regarding the law and the advantages of third-party motor insurance.
Third-party motor insurance is a mandatory minimum coverage, while comprehensive insurance is optional. Its main goal is ensuring the safety of others and providing financial support after accidents.
What Third-Party Insurance Covers
Third-party motor vehicle insurance is compulsory in Nigeria. It offers financial protection for injuries or damages caused to other parties involved in an accident by the insured vehicle. Policies cover losses resulting from the insured’s negligence, which causes damage to other people or their property. This includes vehicle passengers, occupants of other vehicles, or pedestrians.
Key Provisions of the Law
The Motor Vehicles (Third Party Insurance) Act mandates that motor vehicles be insured against third-party risks. Section 3 (1) prohibits the use of a motor vehicle without valid third-party insurance. Violators face a fine or imprisonment, and potential disqualification from holding a driving license.
The Benefits of Third-Party Insurance
The policy offers a limit of N3 million for repairing or replacing damaged property belonging to a third party and limited medical care, as well as provisions for compensation to the deceased third party’s family in the event of death. Many policies also now extend cover to the insured vehicle when driven in West African countries covered by the ECOWAS Brown Card Scheme. The Commission is urging vehicle owners to take full advantage of the announcement by the Nigerian Police Force to ensure the safety and protection of lives, properties, and financial compensation for innocent third parties on our roads. The NAICOM has put a complaints bureau in place to handle any issues arising from policies or company service.
