Third-Party motor insurance: What motorists need to know

The Nigeria Police Force (NPF) has officially commenced the nationwide enforcement of Third-Party Motor Insurance, marking a significant step toward ensuring compliance with the Insurance Act of 2003.

This initiative is aimed at reducing the high number of uninsured vehicles on Nigerian roads while providing accident victims with rightful compensation.

The Third-Party Motor Insurance policy is a mandatory coverage required for all vehicles operating in Nigeria. While this regulation has been in existence for over two decades, a large number of motorists remain unaware of its significance and benefits.

With the new enforcement, vehicle owners without valid third-party insurance risk facing penalties, including fines and possible vehicle impoundment.

In a statement released by the National Insurance Commission (NAICOM), the agency emphasized that third-party insurance is not just a legal requirement but also a financial safety net for motorists and accident victims.

“The National Insurance Commission welcomes the announcement by the Nigeria Police Force that, effective February 1, 2025, Third-Party Motor Insurance will be strictly enforced nationwide. This move aligns with Section 68 of the Insurance Act 2003 and ensures that innocent third parties involved in road accidents receive adequate compensation,” the statement read.

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According to NAICOM, Third-Party Motor Insurance costs N15,000 per year for private car owners. Premiums for commercial vehicles vary based on vehicle type. The policy provides coverage of up to N3 million for the repair or replacement of property belonging to an innocent third party damaged in an accident.

Motorists can only purchase valid Third-Party Motor Insurance from licensed insurance entities approved by NAICOM to transact motor insurance business in Nigeria.

Insurance experts and legal analysts have weighed in on the significance of the policy enforcement. Mr. Akin Alade, an insurance analyst at Zenith Insurance, stated, “This enforcement will significantly reduce the number of uninsured vehicles on our roads. It’s a win-win for motorists and accident victims, ensuring financial security in times of need.”

Similarly, Barrister Kemi Onifade, a legal consultant specializing in insurance law, emphasized the legal implications: “Many motorists disregard this law, assuming it’s an unnecessary expense. However, failure to comply can lead to severe legal consequences, including financial liability for damages caused in accidents.”

The Nigeria Police Force has assured the public that the enforcement exercise will be conducted with fairness and professionalism. Roadblocks and routine checks will be carried out to verify motorists’ insurance status. Those found without valid third-party insurance may face fines, vehicle impoundment, or both.

NAICOM has also set up a Complaints Bureau to address grievances from motorists who may face difficulties with their insurance providers.

As enforcement begins, vehicle owners in Nigeria are urged to take advantage of the initiative to protect themselves, their assets, and innocent road users. The move is expected to not only improve road safety but also foster a culture of responsibility among motorists.