There are different kinds of circumstances in life that man cannot prevent. On the other hand, we can protect ourselves from incidents such as financial fallouts and other unfortunate losses, which is where insurance comes in. However, selecting a specific type of insurance is essential based on the situation. Insurance comes in various styles, but this article will focus on third-party insurance.
What is Third Party Insurance?
Third-party insurance aims to protect the insured if a loss or damage is sustained by a third party other than the insured. Third-party insurance has to do with car insurance. Other expenses, such as medical expenses of the third party, are covered by this insurance up to the sum of 3 million naira for a private motor, according to a new circular from the National Insurance Commission (NAICOM), effective 1st of January, 2023. So as you know, this kind of insurance is the most common form of auto insurance.
This is called third-party insurance because it doesn’t protect you from damages caused to yourself in the event of an accident or any other incident. It also doesn’t include coverage for claims related to drunk driving or driving without a license.
Third-Party Insurance in Nigeria
Having third-party insurance in Nigeria is compulsory. This law is backed up by the Motor Vehicle (Third Party) Insurance Act of 1950, which is part of the six mandatory classes of insurance under the laws of the Federal Republic of Nigeria.
One of the reasons most vehicle owners in Nigeria third-party insurance is that they want to get cleared by law enforcement agencies in case anything happens. Another primary reason is that third-party insurance is cheaper than a comprehensive insurance policy.
Therefore, all insurance companies in Nigeria are being supervised by the National Insurance Commission (NAICOM) This is done to stabilize the insurance industry by contributing optimally to Nigeria’s economy.
Third-Party Insurance Policy; How Does It Work?
Third-party insurance works in a way that shields the policyholder from legal responsibility or liability if the use of the vehicle causes the death or injury of a third person.
Roles of the National Insurance Commission (NAICOM)
NAICOM discharges several functions, known as mandates, as specified in the NAICOM Act of 1997. These functions apply to every insurance company in Nigeria. They are stated below;
● To develop standards for the conduct of insurance companies in Nigeria.
● Act as transaction regulators between insurers and reinsurers, which includes those outside Nigeria.
● Approves warranties, standards, and conditions applicable to every class of insurance business.
● Approves premium insurance rates to be paid for all insurance business classes.
● NAICOM also acts as a counsellor or adviser to the Federal Government on every issue related to insurance.
How to Get Third-Party Insurance in Nigeria
In Nigeria, Third-party insurance can be obtainable in any company with a license from the National Insurance Commission (NAICOM), which should serve as general or for composite insurance companies. Note that there are procedures to buy such an insurance policy. Applicants must fill out the following forms;
● Know Your Customer (KYC) Form
● Insurance Physical Inspection Form
● Motor Proposal Form
However, applicants can get this done in any insurance company around Nigeria offering Third-Party Insurance. Some of these companies will be listed below;
● NEM Insurance
● Mutual Benefit Insurance
● Leadway Assurance
● Consolidated Hallmark
● Custodian Insurance Plc
● Axa Mansard
● Allianz Nigeria Insurance
● AIICO Insurance
What is the Cost of Third-Party Insurance?
The National Insurance Commission raised the premium for third-party motor insurance premium from N5,000 to N15,000, effective January 1, 2023.
Why is Third-Party Insurance Important?
This insurance policy favors only a third party and not the insurer to some extent. Nevertheless, the insurer gets protected from having to sort out the cost of repair or replacements of third-party damages. The following reasons below will state the importance of having third-party insurance.
● The insurance policy provides protection against liability based on damages suffered by a third party.
● Protection from facing the punishment of the law.
● Compared to comprehensive insurance, third-party insurance is cheaper.
● Serves as the primary form of auto insurance with lower premiums.
● Several third-party companies, like Leadway Assurance, offer hybrid plans.
● Also offers protection from further complications with the law in the event of an accident.
Frequently Asked Questions
What Happens if I Have an Accident on Third-Party Insurance?
You will be required to pay for your vehicle’s damages if they determine that you are at fault. Send any correspondence or claim forms you receive from the other driver or their insurer after an accident to your own insurance company.
What are The Disadvantages of Third-Party Insurance?
If there is an accident, a third-party auto insurance policy will not cover the cost of any damage done to the vehicle or any possessions within. Additionally, it won’t cover your car or if your goods are lost or destroyed.
Why is it called Third-Party Insurance? It is necessary to have third-party liability insurance, the lowest level of protection you may get. A person involved in a car insurance claim who is not you is referred to as a “third party” (the policyholder or the driver).
Third-Party insurance has played a significant role based on how road users have prevented themselves from emergencies and costs. However, lots of people need to be made aware of the fact that third-party insurance exists and has several benefits. Understanding the policy and the conditions attached to third-party insurance will help you lay claims and reports.