Third-Party Vehicle Insurance Enforcement in Nigeria: What Motorists Need to Know
As of February 1, 2025, the Nigerian Police Force (NPF) has begun enforcing the mandatory minimum of third-party vehicle insurance across the Federation. This directive from Inspector General of Police Kayode Egbetokun requires all motorists to possess valid third-party insurance or face sanctions. This explainer provides key information about the policy and its implications.
A vehicular accident is used for illustration purposes.
What is Third-Party Insurance?
Third-party insurance is a mandatory policy in Nigeria, designed to provide financial protection for damages or injuries caused to others by the insured vehicle. It covers losses resulting from the insured’s negligence, protecting the insured from financial liabilities arising from accidents involving third parties. The insurance covers medical expenses and property damage of the third party.
Comprehensive vs. Third-Party Insurance
A key distinction exists between third-party and comprehensive insurance. Comprehensive insurance covers damage to the insured vehicle from various causes, including accidents. According to Modestus Anaesoronye, an insurance sector governance expert, motorists with comprehensive insurance do not need to worry about the new police enforcement. Comprehensive policies include third-party coverage as part of the overall package. Anaesoronye explained, “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.”
The Role of NAICOM
The National Insurance Commission (NAICOM) supports the NPF’s effort to boost compliance with the Insurance Act of 2003. NAICOM highlights that third-party insurance is the legally required minimum coverage, while comprehensive insurance is optional. The core purpose of this insurance is to ensure the safety of all road users, and offer compensation for damages, injuries, or death that may arise from accidents.
It’s important to note that third-party motor insurance policies are obtainable only from licensed insurance companies authorized by NAICOM. The annual premium for private car owners is N15,000; commercial vehicles have varying rates depending on their type.
- Coverage Details:
- N3 million limit for repairing or replacing the damaged property of an innocent third party.
- Access to limited medical care for any third party injured as a result of the accident.
- Financial compensation to the family of a deceased innocent third party if a fatality occurs.
- Coverage for the insured vehicle, even in other West African countries covered under the ECOWAS Brown Card Scheme.
Concerns and Recommendations
While the enforcement aims to improve road safety, the President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions (ASSBIFI), Olusoji Oluwole, has suggested that the Police implement a public awareness campaign prior to enforcement. He stated that the current awareness is low and suggested a month of public education in strategic locations, like motor parks. He observed, “People don’t understand the value of insurance, hence the poor enrollment figures we have currently. Most people who take insurance take it as a result of obligations and not wanting to run foul of the law.”
Legal Framework
The Motor Vehicles (Third Party Insurance) Act in Nigeria mandates third-party insurance. Section 3 (1) states that no person may operate a vehicle without a valid third-party insurance policy. Violators may face a fine, imprisonment, or both, and could also be disqualified from holding a driver’s license for a minimum of twelve months. Enforcement of this law has been strengthened to improve financial accountability.
Conclusion
The enforcement of third-party vehicle insurance in Nigeria is a key step toward enhancing road safety and ensuring financial protection for road users. Motorists should ensure they possess valid insurance to avoid penalties and to contribute to a safer road environment. NAICOM and the Police are providing avenues for addressing public complaints and ensuring compliance with the law.
