INSURANCE

Insurance Principle: Utmost Good Faith And How It Affect Your “COVER” Redemption.

Published

1 year ago

Insurance Principle: Utmost Good Faith And How It Affect Your “COVER” Redemption.

Have you ever come across this notion- that Insurance Company in Nigeria is a scam? …oh, Insurance people all they know is to collect money, but they don’t pay when the need arise…

All these, and many more negativity clouds the mind of average Nigerians, and thereby, it prevents them from involving in this great necessity of life – called Insurance. And the adverse effects of not having a “plan B” (Insurance) in life is that, it contributes to the low standard of living experienced by them or their loved ones in the event of a negative outcome as the case maybe.

To curtail this notion in people’s Mind, and to help them better understand what might have contributed to their cover redemption being delayed or denied, thereby contributing to their negative mindset about insurance, this article will focus on; Insurance Principle of Utmost Good Faith, and how it affect your COVER Redemption.

Let’s Dive In;

WHAT IS INSURANCE?

Insurance is said to be a CONTRACT or an agreement between two parties; where one party, the insurer, in return for a premium, agree to pay the insured (i.e the policy holder) a sum of money or it’s equivalent UPON THE HAPPENING OF A SPECIFIED EVENT- which might affect the insured’s financial interest in the future. (Emphasis on the words in capital letters).

Having established the fact that insurance is a “Contract”, And like every other contract, there is usually a legal backing, and some principles in place which ensures a smooth experience for both parties. One of these principles, is the principle of Utmost Good Faith -which implies TRUTH!

WHAT IS UTMOST GOOD FAITH AND HOW DOES IT AFFECT MY COVER REDEMPTION?

The term “Utmost Good Faith” as stated earlier signify TRUTH.

This principle automatically requires you to provide only but the truth in the informations and documentation you provide for the insurer when registering your policy, as this informations and documentation will be required from you, when it is time for your cover redemption

. It also entails that if you state that it is a particular risk you intend to cover, when something other than what is stated occurs, you have no right to make a claim until the stated event as at the time of opening your policy occurs.

Let’s dive in and see how not upholding this principle in insurance can deter you from claiming your cover!

There has been scenes where policy holders have clamoured for their unpaid claims at the gates of insurance companies, and because they are not made to be aware of the principles that surrounds their policy when subscribing; as many of the terms and conditions are not usually read by we Nigerians before we affix our signature on any contract. Typical Nigerians really don’t want to know how and what, all we focus our mind on is Money.

If, only we understood the process of reporting claims and what transpires thereafter, then we will understand and appreciate why some claims are denied or not settled in full as we expect.

When subscribing to an insurance policy, it is expected of you to tell the whole truth as regarding the informations and data about you, or any loved ones you are adding to the policy. Likewise, the insurance company is expected to tell you the truth about how they function/operate – Most of these are placed in writing in what is called “Terms and Conditions”.

Hence, when the company asks some certain questions about you, or the person for which the policy is for, as is required before they can register your policy, you as the policy holder is required to provide all the necessary informations without hiding anything. This is because, at that point in time, the company does not have the time to start investigating to determine if you are providing them with the right details and informations. They are interested in providing a solution to you and sell you a “cover”, Hence they believe in you and everything you say, and on that premise, register your policy.

Now, I know some will say; what happens if I made a mistake with the informations I provided, as nobody is above mistakes?

My Answer;

After your policy has been registered, the insurance company will send you a copy of your policy document, when this is done, it is now on you to check all the informations and confirm them as accurate. If otherwise is the case, that is, if you at that point in time notice an error or two, it is expected of you to contact your insurance company and update them with the correct information, and it will be updated on their database as well.

WHAT HAPPENS IF I DO NOT UPDATE THEM?

If you fail to provide them/update them with the right informations and your policy matures, or a specific event for which you took the policy occurs, and you visit your insurance company for your cover redemption, that is, to receive the money promised (Sum Assured), the first thing the insurance company will do is to ask you few questions of what happened, so as to know if your statements and evidence tendered for claims will match.

They will ask for your policy document which was given to you, proof of the event that happened, for example if you state that your car had an accident, they may require a picture of the car at the accident scene, or let’s say someone died, you will be required to provide the death certificate- please don’t fake this, cause they will cross-check for validity of data, alongside other necessary investigations before your cover redemption is made available to you.

Now, if they notice an error or misinformation regarding the tendered documents that was provided, they will automatically delay your policy redemption.

The problem, most times is that some policy holders provide falsified data at the point of policy entry, and when they can’t provide the documents that backs the registered policy during a cover redemption, then they are denied of their policy redemption- this is as a result of breach of Utmost Good Faith principle.

Another Problem also is the case of a client losing his/her mother at a date earlier before they subscribed to a policy in a bid to enjoy premium cover from an insurance company. In a bid to play smart, the client may wait for about six months after taking the policy and paying premiums, only to go back to the insurance company to redeem their cover, informing that their mother passed away. But when document that confirms their statement is being asked for, for example the certificate of death, and the date of death is showing something different implying that the mother has died before taking the policy, you automatically breach the principle of Utmost Good Faith, and you lose your redemption.

Also, in life insurance the higher the age, the higher your premium, so what some do is to adjust their age so as to pay lesser premium, and when this is identified at the point of cover redemption, most companies re-calculate your premium and deduct the right fees in respect to your real age, while the balance is paid to you; Then you say they are bad.

Or is it the case of someone setting up their car for accident just to eat insurance money, but these people you may be trying to outsmart are wise. They carry out forensic investigation amongst others to determine a cause. So why not just be truthful?

The case scenarios that might affect your cover redemption is endless; and it is those who have tried to lie in one way or the other, and as a result lose their covers, that goes round tagging insurance as bad. But that is really not true.

THE INSURANCE INDUSTRY IS NOT LEFT OUT…

The blame is not just on the people, I believe strongly that if the insurance company takes extra time to explain most of these things that can affect a policy holder from receiving their covers expressively and not just hiding it in writing – seeing that most Nigerians don’t read those clauses, before affixing their signature on the contract, the masses will be aware of the danger ahead of time and desists therefore from anything that will jeopardise their claims at the occurrence of a specified event. They will subscribe to insurance and uphold their integrity, hence, desisting from trying to outsmart the company when they’re faced with financial pressures.

THINGS TO AVOID FOR EASY AND IMMEDIATE COVER REDEMPTION

For easy Cover Redemptions, I have listed some of the things to avoid as a policy holder;

Avoid falsifying your data and informations at the point of entry and exit of the policy.
Avoid requesting for claims when the specified event in the policy hasn’t occur.
If you are on a Life Cover policy, do not reduce your age just to pay lesser premiums. The aftermath result is usually not so good.
Do not go for your cover or benefits, when the term hasn’t mature- especially if you are on a “Term” insurance policy.
Avoid leaving your premium to lapse…cause when this happens you lose your benefits.

WHAT TO DO FOR EASY COVER REDEMPTION AS A POLICY HOLDER;

Pay your premiums regularly as at when due.
Only approach the insurance company for your cover when a stated or specified event in the contract occur.
Be Truthful and plain when providing your informations
Make sure all your documentations and proofs are coherent with what you provided the company at the initial stage.
If you notice any error in the information you provided for the company, make it a duty to update them with the right information.

HOW THE INSURANCE INDUSTRY CAN HELP…

For a revolutionary effect in the insurance industry, I believe that with proper product informations and education about how each product functions, clients will appreciate and understand insurance better. That way, a good number of persons will give in to having an insurance as a guard against financial crisis, in the event of a negative outcome, and not the other way around.

CONCLUSION;

Insurance isn’t as bad as it has been painted, in fact, subscribing to an insurance is a good “PLAN B” towards planning your life, and financial obligations. Life they say is a journey…and like every other journey you embark on, it is safe to have a Plan B, than to be sorry!

But it is your duty to uphold the principle of “Utmost good faith” (truth) at the point of entry and exit of your policy, in order to redeem your COVER as at when due without being denied.

Also, the insurance providers should endeavour to take time to educate their customers before registering them, and not just waiting for them patiently to have a breech of agreement, and thereby denying them of their covers- this I believe is causing a great dent on insurance industry as a whole, and this need to be corrected effectively to allow people accept insurance as the best plan B in life’s journey!

More from my site

BANKING

The Impact of Supply Chain Disruption on Business Operations and Financial Performance

Published

11 months ago

softchris4ol

The Impact of Supply Chain Disruption on Business Operations and Financial Performance

Supply chain disruptions are very commonplace in today’s interconnected global economy, affecting organizations in a variety of industries. These interruptions may have far-reaching effects on a company’s financial performance in addition to its commercial operations. In addition to offering techniques to reduce the risks involved, this article seeks to give readers a thorough grasp of how supply chain interruptions affect corporate operations and financial performance.

MEANING OF SUPPLY CHAIN DISRUPTIONS

Any incident or event that prevents information, services, or items from smoothly flowing through the supply chain network is referred to as a supply chain disruption.

It describes any situation or incident that stops the movement of products, services, or data inside a network of supply chains. These interruptions may happen at any time during the supply chain, from suppliers of raw materials to final consumers, and can lead to disruptions, shortages, higher expenses, and eventually affect the chain’s overall effectiveness and performance.

Disruptions to the supply chain can be divided into two categories: internal disruptions that occur within the company and external interruptions that occur outside the company.

The Impact of Supply Chain Disruption on Business Operations and Financial Performance

TYPES OF SUPPLY CHAIN DISRUPTION

Disruptions to the supply chain can come from a variety of sources and take many different shapes. Typical forms of supply chain disruptions include the following:

Natural Disasters: Incidents like hurricanes, floods, tsunamis, and wildfires can cause damage to transportation networks, destroy infrastructure, and force the closure of manufacturing and distribution facilities.
Geopolitical Events: The movement may be impacted by trade disputes, tariffs, sanctions, war, terrorism, political instability, and changes in governmental policy. moving commodities across international borders, sour commercial ties, and cause bottlenecks in the supply chain.
Supplier Issues: Delays in the delivery of components or raw materials might result from issues with suppliers, such as bankruptcy or sudden changes in production capacity.
Transportation Disruptions: The supply chain as a whole may be impacted by delays in the delivery of goods caused by strikes, fuel shortages, accidents, port congestion, and other transportation-related problems.
Demand Surges or Drops: Unexpected fluctuations in customer demand, such as sudden increases in orders or decreases in sales, can result in mismatches between supply and demand, which can cause delays in manufacturing and delivery.
Cybersecurity Breach: Information technology system malfunctions, cyberattacks, or data breaches can impair critical data, interrupt the flow of products and services, and offerings.
Quality Control Issues: Recalls, manufacturing halts, and supply chain interruptions may result from issues with product quality, safety, or compliance.
Pandemics and Health Crises: Situations like the COVID-19 pandemic can result in worker shortages, manufacturing closures, travel restrictions, and interruptions to international supply chains.

IMPACT ON BUSINESS OPERATIONS

Disruptions to the supply chain can have a big effect on how businesses operate, impacting many different parts of what they do. Among these effects are the following:

Production Delays: Supply chain disruptions may cause delays in the delivery of components, finished goods, or raw materials, which may cause production to halt or slow down. This may affect a business’s capacity to reach production goals and promptly complete orders from customers.
Increased Costs: Expenses associated with carrying excess inventory, accelerating shipments, finding alternate suppliers, and putting emergency plans in place can all rise as a result of supply chain interruptions. These extra costs have the potential to weaken profit margins and lower overall financial performance.

Customer Dissatisfaction: Customers may become dissatisfied and lose faith in the business as a result of delays in the delivery of goods or services. Customer loyalty and the company’s reputation may suffer as a result.
Inventory Management Problems: Disruptions in the supply chain may result in inventory levels that are out of balance, with an abundance of certain commodities and a deficiency of others. This may result in ineffective inventory management, a lockup in working capital, and higher carrying costs.
Operational Disruptions: When important vendors or partners in logistics are unable to deliver merchandise services as anticipated, it may cause daily operations of a business to be disrupted, affecting departmental productivity and efficiency.
Risk of Loss of Market Share: Prolonged supply chain interruptions increase the likelihood that a company may miss out on sales opportunities, lose market share, and experience other negative effects. Those with more dependable supply chains could have an advantage over rivals.
Legal and Regulatory Issues: When a supply chain is disrupted, there may be legal repercussions, including breaking contracts, missing deadlines, and breaking rules. Legal issues, fines, and reputational harm to a business may arise from this.
Long-term Business Impact: A company’s financial performance, competitive position, and general viability may all be negatively impacted by protracted or severe supply chain disruptions. It might impair the business’s capacity to sustain connections with clients, vendors, and other business associates.
Communication and Collaboration Challenges: Interruptions can make it difficult for supply chain participants to coordinate, make decisions, and solve problems. Both efficient crisis management and general operational efficacy may be hampered by this.

IMPACT ON FINANCE PERFORMANCE

A company’s financial performance can be significantly impacted by supply chain disruption in a number of ways, including:

Increased Expenses: Supply chain interruptions frequently result in greater expenses for items like faster shipment, purchasing from more expensive alternative suppliers, keeping extra inventory on hand, or putting emergency preparations in place. The company’s profitability may be directly impacted by these added expenses.
Revenue Loss: Supply chain disruptions may cause delays in completing client orders, which may result in a potential loss of revenue because lost chances to close deals. If there are delays or product shortages, customers can also look for other suppliers, which would mean fewer sales for the business.
Inventory Write-offs: When there are disruptions in the supply chain, inventory levels might become unbalanced, with certain items having excess stock and others lacking. As unsold or outdated inventory builds up and negatively affects the company’s financial condition, this may lead to inventory write-offs.
Contractual Penalties and Legal Expenses: If supply chain disruptions cause a party to miss contractual obligations, there may be penalties and legal expenses. Conflicts involving partners, suppliers, or customers may lead to legal action and more expenses.
Long-Term Financial Impact: Extended or severe disruptions to the supply chain may have a long-term effect on the financial performance of the business, limiting its capacity to produce revenue and sustain long-term profitability. Stock performance and investor confidence may potentially be impacted by this.
Working Capital Restraints: In order to minimize disruptions caused by supply chain disruptions, the business may need to store excess inventory or pay in advance for faster transportation. Money that may have been spent for other company endeavors is diverted by this.
Business Continuity Costs: In order to avoid or lessen supply chain interruptions, businesses may need to make investments in business continuity and risk management techniques. These costs can have an adverse effect on their bottom line.
Stock Market Reaction: When businesses see significant interruptions in their supply chains, investors may react negatively, which could lead to a drop in stock prices. The market capitalization of the company could be impacted if investors lose faith in its capacity to handle risks.
Legal and Regulatory Repercussions: Disruptions to the supply chain may result in legal and regulatory repercussions, such as breaking contracts or neglecting to fulfill duties to customers. A company’s reputation and financial performance can be severely impacted by lawsuits, fines, penalties, and compliance expenses.

STRATEGIES FOR MITIGATION

Businesses can handle supply chain disruption and reduce its impact on operations and financial performance by implementing a number of mitigation techniques, such as:

Diversify Your Supplier Base: Dependence on only one source might make disruptions more likely. Increasing the variety of suppliers helps lessen the effect of interruptions from a particular source.
Supply Chain Insight: Put in place systems and technology that offer real-time insight into every aspect of the supply chain, including transportation, production status, and inventory levels. This visibility aids in identifying anticipate possible problems and make proactive mitigation strategies possible.
Risk Assessment and Management: Perform thorough risk analyses of the supply chain to find possible weak points and put risk management plans in place to lessen their effects.
Contingency Planning: To handle and minimize supply chain interruptions, create and update backup suppliers, logistics routes, and alternate sourcing choices.
Cooperation and Communication: Create effective channels for cooperation and communication with consumers, logistical partners, and suppliers. Having solid connections and open channels of communication will make it easier to deal with interruptions in a cooperative and efficient manner.
Inventory Management: Use agile inventory management techniques to balance supply and demand, keep ideal inventory levels, and lessen the effects of shortages and surpluses brought on by disruptions.
Adoption of Technology: Invest in Supply chain resilience and agility can be improved by utilizing technology like blockchain, supply chain management systems, and predictive analytics.
Financial Risk Management: To lessen any financial effects, assess your exposure to financial risk as it relates to supply chain interruptions and take into account risk transfer strategies such supply chain insurance.
Technology Adoption: Supply chain visibility, traceability, and control can be improved by utilizing cutting-edge technologies like blockchain, data analytics, automation, artificial intelligence, and the Internet of Things (IoT). By facilitating real-time monitoring, predictive analytics, and prompt decision-making, these technologies improve resilience and lessen the effects of disruptions.
Scenario Planning: Create and maintain scenario plans that take into account a range of possible interruptions and how they can affect financial performance and business operations.

CONCLUSION

Disruptions in the supply chain significantly affect financial results and commercial operations. Companies need to proactively identify risks, improve teamwork, use technology, and create strong contingency plans in order to successfully traverse these issues. Businesses may reduce the effects of disruptions, enhance financial performance, and preserve a competitive edge in the complex and unpredictable business world of today by putting these mitigation techniques into practice.

ECONOMY

Vehicle Insurance: Everything You Need To Know

Published

11 months ago

softchris4ol

Vehicle Insurance: Everything You Need To Know

Getting behind the wheel is a daily necessity for many of us, but it comes with its fair share of uncertainties. Accidents, theft, and unforeseen mishaps are part and parcel of the road. That’s where vehicle insurance steps in as your trusted safeguard.

In this comprehensive guide, we’ll walk you through everything you need to know about vehicle insurance, from the basics to the finer points, so you can hit the road with confidence and peace of mind.

What is Vehicle Insurance?

Vehicle insurance, also known as auto insurance or car insurance, is a contractual agreement between an individual (the policyholder) and an insurance company. It is designed to provide financial protection in the event of accidents, theft, damage, or other unforeseen incidents involving a motor vehicle.

In exchange for regular premium payments, the insurance company agrees to cover the costs associated with repairing or replacing the insured vehicle and potentially covering medical expenses or liabilities resulting from accidents. The specific coverage and terms of a vehicle insurance policy can vary, but it generally helps protect individuals from unexpected financial burdens related to their vehicles.

Vehicle Insurance: Everything You Need To Know

Types of Vehicle Insurance

Here are the most common types of vehicle insurance:

Comprehensive Insurance

Comprehensive insurance is the most extensive coverage you can have. It not only includes protection for third-party loss and damage but also covers you, your vehicle, and others involved in an accident. This policy covers everything in a third-party fire and theft policy, and additionally, it safeguards you as a driver. It may provide compensation for medical treatment, legal expenses, accidental damage, repairs after an accident, accidental damage, and even vandalism. However, note that driving other people’s cars under this policy usually offers no more than third-party cover. Despite its comprehensive coverage, it may not be the most expensive option.

Third-Party Insurance

Third-party insurance is the basic and mandatory coverage that protects you from damages and losses caused to a third party, excluding coverage for your own vehicle. Despite being the minimum legal requirement, it may not necessarily be the cheapest option. This type of insurance covers the costs of injury or damage you cause to others or their property. However, it does not provide any protection for your own car in case of damage or theft. It might be suitable for those who find comprehensive insurance less affordable. Third-party insurance covers damage to someone else’s property, injury caused to others, and injury to your passengers during an accident. It does not cover you or your car.

Collision Insurance

Collision insurance specifically covers accidents or damages to your vehicle resulting from a collision, typically when it’s your fault. This coverage takes care of repairing or replacing your vehicle, regardless of who is at fault. It provides protection in situations where your vehicle collides with another vehicle or object like a tree or pole.

Why You Need Vehicle Insurance?

Car insurance is essential for providing financial protection in the unfortunate event of an accident. Beyond safeguarding you, certain types of insurance also extend coverage to claims arising from injuries to other individuals. If you own a roadworthy car, it is a legal requirement to have at least a basic level of coverage, commonly known as third-party insurance, even if you don’t actively drive the vehicle. The sole exception is if you officially declare your car as off the road by obtaining a Statutory Off Road Notification (SORN).

Driving without insurance carries serious consequences, including fines and a minimum of six points on your license. In more severe cases, it may lead to disqualification from driving, and there is even the possibility of having your car confiscated. Ensuring proper car insurance is not just a legal obligation but a crucial means of securing yourself and others on the road.

How to Cancel Your Vehicle Insurance

If you wish to cancel your vehicle insurance, you can request your insurer to do so at any time. However, it’s important to note a few key considerations:

1. Maintain Valid Insurance

Ensure you have alternative valid insurance if you intend to continue using your car. Canceling your current policy doesn’t exempt you from the legal requirement of having insurance coverage on the road.

2. No-Claims Bonus Impact

If you cancel your policy midway through the current year, you may not be eligible for the no-claims bonus for that year.

3. Cancellation Charges

Typically, cancellation incurs charges unless it aligns with your policy renewal. Be prepared to cover cancellation fees unless you’re at the renewal stage.

4. Refund for Upfront Payments

If you’ve paid upfront and haven’t filed any claims, you can expect a refund for the remaining months, minus the applicable cancellation fees. This ensures you receive a fair reimbursement for the unused portion of your insurance.

How to Choose the Right Vehicle Insurance

Selecting the right vehicle insurance involves considering various factors and posing essential questions:

Vehicle Type: Determine the type of vehicle you need to insure.
Usage Patterns: Assess how you use your vehicle on a daily basis.
Age Factor: If you’re a young driver, take that into account.
Family Considerations: Consider whether you drive as part of a family.
Travel Distance: Evaluate the distances you typically cover.

Add-ons You Can Include to Your Insurance Policy

Enhance your car insurance by adding these optional features for an extra cost:

Breakdown Cover: Avoid being stranded if your car breaks down.
Personal Accident Cover: Get compensation for serious injuries or fatalities in a car accident.
Motor Legal Protection: Cover expenses for legal actions after an accident.
Courtesy Car Cover: Receive a temporary car after an accident until yours is repaired.
No Claims Discount Protection: Safeguard your discount and save on insurance costs.
Windscreen Cover: Check if your comprehensive policy includes this, as replacing a windscreen can be pricey.
Lost Keys Cover: Protect yourself from the expenses of replacing lost or stolen electronic car keys.

Conclusion

Understanding vehicle insurance is essential for every driver. Whether you opt for comprehensive coverage, third-party insurance, or collision insurance, the goal is to protect yourself, your vehicle, and others on the road. Not only is car insurance a legal requirement, but it also acts as a financial safety net in case of accidents or unforeseen events. Remember, driving without insurance can lead to serious consequences, including fines, points on your license, and even disqualification from driving. It’s not just a legal obligation; it’s a crucial step in ensuring responsible and secure driving. Drive responsibly, stay insured, and enjoy the peace of mind that comes with knowing you’re covered on the road.

Frequently Asked Questions (FAQs)

What factors influence the cost of car insurance?

Car insurance costs are influenced by factors such as your driving history, age, type of coverage, vehicle make and model, and even your credit score.

Is it necessary to have car insurance?

In most places, having car insurance is a legal requirement. It provides financial protection for both you and others in the event of an accident.

How does the deductible work in car insurance?

The deductible is the amount you pay out of pocket before your insurance kicks in. Choosing a higher deductible often lowers your premium but means you’ll pay more in the event of a claim.

Can I switch car insurance providers mid-policy?

Yes, you can switch providers before your policy expires. However, it’s essential to consider any potential penalties or fees and ensure continuous coverage during the transition.

What is the difference between comprehensive and collision coverage?

Collision coverage pays for damage to your car in an accident, while comprehensive coverage protects against non-collision events like theft, vandalism, or natural disasters. Both are optional but provide additional protection.

INSURANCE

How Much is Car Insurance in Nigeria 2024?

Published

11 months ago

softchris4ol

How Much is Car Insurance in Nigeria 2024?

Curious about car insurance in Nigeria for 2024? It’s a crucial protection for drivers, ensuring both the vehicle and road users are covered. In many countries, Nigeria included, having car insurance is a must to hit the road: “How much is car insurance in Nigeria 2024?.”

As we step into 2024, you might be wondering about the cost and the best policy. Good news – we’ve got the info you need! This article covers everything about car insurance in Nigeria, from costs to types and coverage plans. We’ll also guide you on choosing the right insurance for your car and how to switch plans if needed.

What is Car Insurance?

Car insurance is a financial protection plan for drivers, covering the costs associated with damage to the vehicle or injuries caused to others in case of accidents. It’s a mandatory requirement in many countries, serving to safeguard both the driver and other road users. If unexpected bumps or accidents happen, having car insurance can help cover the costs of repairs and medical expenses.

In simpler terms, car insurance is an agreement between you and the insurance company, to cover the costs if your car gets damaged or if you’re involved in an accident. Typically, you pay a premium, and in return, the insurance company helps cover the repair costs, medical expenses, or even replacement in case of a total loss. It’s like having a backup plan for unexpected mishaps on the road, giving you peace of mind while you drive.

How Much is Car Insurance in Nigeria 2024?

Types of Car Insurance in Nigeria

There are different types of car insurance, and each, has it’s own level of coverage and cost. They include:

Third-Party Car Insurance

Third-Party Insurance also known as Basic insurance typically refers to the essential coverage required by law. In Nigeria, this is the fundamental protection every vehicle owner must have. It ensures that if your car causes damage to other people’s property or injuries to individuals, the financial responsibility is covered by the insurance. While it doesn’t extend to your own vehicle, Basic Insurance serves as a legal and financial safeguard, preventing you from facing the full brunt of liabilities in case of an accident. It’s the starting point for responsible driving, ensuring compliance with legal requirements on the roads.

Comprehensive Car Insurance

Comprehensive Insurance is like a full protective armor for your vehicle in Nigeria. Unlike basic coverage, it not only handles third-party liabilities but also protects your own car. It covers the cost for a variety of scenarios, including theft, fire, and even non-collision incidents. Essentially, it’s your go-to plan for a wide range of unexpected events that can befall your vehicle. While comprehensive insurance is not mandatory, it provides peace of mind by ensuring that your car is financially shielded against a broader spectrum of risks. Whether it’s a broken windshield or a stolen vehicle, Comprehensive Insurance has your back, making it a wise choice for those wanting extensive coverage.

Collision Insurance

Collision Insurance specifically covers the repair or replacement costs of your car if it’s damaged in a collision, regardless of who is at fault. Picture it as a safety net for those unfortunate moments when your car meets an unexpected obstacle. While it may not be mandatory like third-party coverage, having Collision Insurance ensures that your vehicle is financially looked after in the aftermath of a collision, helping you get back on the road without bearing the full financial brunt of repairs.

Personal Injury Protection (PIP)

Personal Injury Protection, or PIP, is your vehicle’s medical guardian. This type of insurance goes beyond the car itself, covering medical expenses for you and your passengers, regardless of who caused the accident. It acts as a safety net, ensuring that medical bills don’t become an additional burden in the aftermath of a collision. PIP is particularly valuable in a country like Nigeria, providing financial support for necessary medical treatments, rehabilitation, and even lost wages. While not mandatory in all regions, opting for PIP is a wise decision to prioritize the well-being of both you and your passengers on the road.

Cost of Car Insurance in Nigeria

The cost of car insurance in Nigeria can vary widely based on several factors. These factors include the type of coverage, the make and model of the car, the driver’s age and driving history, as well as the insurance company’s policies.

Starting from January 1, 2023, the Nigerian government has raised the premium rates for compulsory third-party vehicle insurance significantly. Private vehicle owners will now pay N15,000, a 200% increase from the previous N5,000.

As of now, these are the stipulated premiums on all vehicles and automobiles:

Private cars – N15,000 premium for a 3 million Naira claim.
Owned goods vehicles – N20,000 premium for a 5 million Naira Claim.
Staff Buses – N20,000 premium for a 3 million Naira Claim.
Tricycles (Keke) – N5,000 premium for 1 million Naira claim.
Special types – N20,000 premium for a 3 million Naira claim.

NOTE: “Special types” are vehicles such as cranes or forklift trucks that aren’t easily spotted on the road but are used for unique commercial purposes.

How to Choose the Right Car Insurance

Choosing the right vehicle insurance is important, and you can do it by thinking about a few key things:

Type of Vehicle: Figure out what kind of vehicle you want to insure.
How You Use Your Vehicle: Think about how you use your vehicle every day.
Your Age: If you’re a young driver, keep that in mind.
Family Situation: Consider if you’re part of a family that shares the vehicle.
How Far You Travel: Look at the distances you usually travel.

Conclusion

Choosing the right car insurance is not just a legal requirement but a strategic decision to ensure financial protection in the event of unforeseen circumstances. As we step into 2024, drivers in Nigeria are encouraged to carefully evaluate their options, considering the specific needs of their vehicles and lifestyles. The recent adjustments in premium rates set by the Nigerian government shows the importance of staying informed about the latest developments in car insurance costs. Remember, the cost of insurance is an investment made to safeguard you against the unexpected.

Frequently Asked Questions (FAQs)

Is fully comprehensive car insurance worth it?

If your car isn’t worth much, opting for third-party motor insurance can save you money. It’s the minimum coverage required by law.

What is third-party insurance in Nigeria?

Third-party insurance in Nigeria covers your liability for injury, death, or damage to a third party’s property in an accident. It’s a mandatory insurance policy.

Does third-party insurance cover my car?

Third-Party Property Damage cover shields you from costs if your car damages someone else’s property. However, it doesn’t cover any damage your own vehicle might suffer in accidents or other insured events.