On February 1st, 2025, The Inspector General of Police Kayode Egbetokun ordered all police formations to enforce Mandatory Third Party Insurance across Nigeria.
This directive is aimed at enhancing road safety and ensuring that vehicle owners comply with insurance requirements.
The Nigeria Police Force also warned vehicle owners against non-compliance, stating that failing to possess valid insurance will lead to strict penalties.
Authorities urge vehicle owners to secure valid insurance promptly to avoid legal consequences.
Read also: Lagos police arraigns insurance boss over alleged N20m fraud
The Act
The Motor Vehicles (Third Party Insurance) Act was enacted in 1945 to protect victims of road accidents in Nigeria.
The Act became effective on April 1, 1950, mandating insurance coverage for third-party liabilities.
It aimed to ensure that victims receive compensation for injuries or damages caused by negligent drivers.
However, over the years, the Act faced criticism for its limited scope and the challenges of enforcement in Nigeria.
Defining Third-Party Insurance
Third-party insurance is a type of liability insurance that protects the insured from claims made by others for damages or injuries.
The insured (first party) purchases this policy from an insurer (second party) to cover potential liabilities arising from accidents.
This insurance covers costs related to bodily injury, property damage, and legal expenses incurred due to third-party claims
Benefits of Third-Party Insurance for Vehicle Owners
- Third-party insurance ensures vehicle owners comply with Nigerian laws and avoid penalties for driving uninsured.
- It protects vehicle owners financially by covering damages or injuries caused to third parties in accidents.
- It gives vehicle owners peace of mind, allowing them to drive confidently without constant worry about liabilities.
- It offers affordable coverage, making it a cost-effective option compared to comprehensive insurance.
- Vehicle owners can easily acquire third-party insurance through simple processes, including online platforms, ensuring quick access to coverage.
Key Provisions of the Third-Party Insurance Act
- Mandatory Insurance Requirements: The Act mandates that vehicle owners must secure valid third-party insurance before using their vehicles on public roads. Non-compliance results in fines or imprisonment.
- Coverage for Third Parties: The insurance must cover liabilities for bodily injury or death, as well as property damage caused to third parties by the insured vehicle.
- Minimum Coverage Limits: The Act establishes minimum coverage limits, requiring at least ₦1 million for property damage, while compensation for bodily injuries and fatalities remains unlimited.
- Authorized Insurers: Only insurers registered under the Act can issue third-party insurance policies, ensuring vehicle owners obtain coverage from legitimate sources.
- Hospital Expenses: Insurers must cover reasonable hospital expenses for victims injured in accidents involving the insured vehicle, providing additional.
- Rights of Third Parties: The Act grants third parties the right to claim compensation directly from the insurer if they suffer damages due to an accident involving an insured vehicle. This provision ensures that victims can seek redress without lengthy legal battles. (Section 11)
- Regulatory Oversight: The National Insurance Commission (NAICOM) regulates the insurance industry in Nigeria, ensuring that only licensed insurers can issue third-party insurance policies.
Exemptions (Section 5 of the Act)
- Government Vehicles: The Act exempts motor vehicles owned by the government when used for official purposes, acknowledging that the government can meet any claims without insurance.
- Police Vehicles: Vehicles owned by the police are also exempted, particularly when used for police duties, as specified in the Act.
- Deposited Funds: Individuals who have deposited a sum of ₦10,000 with the Accountant-General of the Federation may also be exempt from obtaining insurance when driving their vehicles.
- Ministerial Declarations: The Minister has the authority to declare specific vehicles or classes of persons exempt from the provisions of this Act, allowing for flexibility in enforcement.
Crimes and Infractions
- Prohibition of Uninsured Vehicle Use: The Act prohibits vehicle owners from using or allowing the use of vehicles on public roads without valid third-party insurance.
- Fines and Imprisonment: Offenders face fines of ₦250,000, imprisonment for up to one year, or both upon conviction for non-compliance (Section 68(4) of the Insurance Act)
Obtaining Third-Party Insurance
Follow these steps to obtain Third Party Insurance in Nigeria:
- Research Insurers: Identify reputable insurance companies registered with NAICOM and offering third-party insurance policies.
- Gather Required Documents: Collect your vehicle registration details, valid identification (e.g., driver’s license), and any previous insurance information.
- Select Coverage: Choose the coverage limits that suit your needs. The premium is ₦15,000, covering liabilities up to ₦3 million for private vehicles.
- Complete Application: Fill out the application form provided by your chosen insurer and ensure all details are accurate.
- Make Payment: Pay the required premium through the insurer’s approved payment channels and keep the receipt as proof.
- Receive Policy Document: Collect your policy document from the insurer and review it to confirm all correct information.
- Display Insurance Certificate: Place your insurance certificate in your vehicle as proof of coverage during police checks or emergencies.
- Renew Annually: Renew your policy every year to maintain continuous coverage and avoid penalties for non-compliance.
Filing A Claim
Follow these steps to claim your third-party insurance:
- Determine Liability: Identify who is at fault for the accident and gather information from witnesses and involved parties to support your claim.
- Gather Evidence: Take photographs of the accident scene, vehicle damage, and injuries. Obtain a police report and other relevant documents.
- Notify Your Insurer: Inform your insurance company about the accident immediately, usually within 30 days, and request a third-party claim form.
- Fill Out the Claim Form: Complete the claim form accurately, providing all necessary details about the accident and attaching supporting documents.
- Submit the Claim Form: Submit the completed claim form along with all evidence to your insurer to initiate the claims process.
- Allow Investigation: Let your insurer investigate the claim and communicate with the third party to determine compensation.
- Receive Payment: Once your insurer processes the claim, they will pay the third party for damages or injuries caused by your vehicle.
Reactions
Deji Adeyanju & Partners, a public interest law firm, expressed strong opposition to this enforcement in a letter to the Inspector General of Police dated January 13, 2025. They argue that the proposed enforcement lacks legal backing and is not supported by the Police Act or any other relevant law. The firm asserts that the Federal Road Safety Corps holds the authority to regulate road safety issues, not the Nigeria Police Force.
They emphasize that the police should focus on their core mandate of protecting lives and property rather than pursuing revenue generation through enforcement actions. The firm criticizes the police’s approach, suggesting that it prioritizes financial gain over addressing pressing security concerns faced by Nigerians, such as kidnapping and armed robbery.
Adeyanju & Partners also highlight previous unpopular initiatives by the police, such as a vehicle registration fee, which they believe leads to further extortion of motorists. They call for an immediate halt to the enforcement of Third Party Insurance, warning that if their request is not heeded within 48 hours, they will seek judicial intervention to challenge the police’s authority in this matter.
Yusuf Othman, president of the Nigerian Association of Road Transport Owners, welcomed the enforcement. He emphasized that valid insurance is crucial for responsible vehicle operation and believes the initiative will generate revenue for improving infrastructure and services for transporters.
The Nigerian Insurers Association praised the police’s enforcement, stating it aligns with the Insurance Act. They believe it will boost compliance, enhance road safety, and protect motorists and third parties while reducing fake insurance policies.
International Energy Insurance urged insurers to make Third Party Insurance more appealing to motorists. They advised companies to improve distribution models and offer incentives to encourage voluntary compliance rather than relying solely on police enforcement.
