As many as millions of Nigerian car owners or drivers are driving without implementing auto insurance. According to the Nigerian Insurance Act of 2003, any driver caught driving without an auto insurance can receive a fine of up to N250,000 and/or imprisonment for about 1 year.
Due to this law, many car owners opt for having auto insurance but the irony of it all is that many of them don't even know or understand the meaning of what they paid for. Some see it as part of the legal documentation needed to own a car or see it as a mere paperwork. This is why there are constant increases in road disputes or arguments among drivers when they collide into each other and damage their vehicles. Instead of standing in the middle of the road arguing, simply take the affected car owner to your auto insurance company and settle the dispute, after all that is what you pay them for. he company can the undertake necessary repairs.
Vehicle insurance is mandatory by law!
The plight of being ignorant of what you paid for is that some unregistered or unlicensed auto insurance companies only collect your money and will offer you nothing, because they know you won't be coming back or visiting again- until it is time to renew. Free money, right? Naijauto will now educate you about this important issue.
What is an Auto Insurance
Using a quick explanation from Wikipedia on auto insurance:
‘primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.’
That is, it is a protection you give to your car against any unexpected damages or occurrence. This is just same as the health, home or even life insurance. Whenever any damages happen to your car or the vehicle of the other affected person, your insurance will cover it.
There are a few terminologies that always come up when we discuss auto insurance. They are “first party”, “second party” and “third party”. It might be a bit confusing if you are new to the auto insurance thing but it's easy to understand.
- The first party: this is you; the person buying the insurance.
- The second party: this is the auto insurance company; the company you (the first party) will be buying the insurance from.
- The third party; this is the other person who was involved in the accident.
With this little explanation, I'm guessing it's all clearer. Having discussed this vital point, let us discuss the type of auto insurance available and which is best to use. There are basically two insurance policies for cars: the third party motor insurance and comprehensive motor insurance.
You are the first party in auto insurance terms
The Third Party Motor Insurance
This is cheaper than the comprehensive motor insurance policy and is what most Nigerian drivers use. If you are using or intend to use this insurance, just bear in mind that you will not be covered. Your insurance company will only cover the third party leaving you to solve your car damages yourself.
For instance, if your car collides with another car and the damages in both cars resulted in damages worth about 500,000 naira each, your insurance company will only resolve the other person car (third party’s car) to the tune of 500,000 naira, and will do nothing about yours.
This insurance is best if you have other means of solving your problem yourself.
You will wish you had insurance when you rear-end someone!
Comprehensive Motor Insurance
This is more expensive than the third party motor insurance but is considered to be the best. When you have an accident this insurance covers almost all of both your expenses and the third party expenses.
Other advantages of this insurance is that it helps other expenses like towing, help in finding a rented car till you get a new one if your car is beyond repair or stolen.
Though it's costly, it's still best you go for the comprehensive motor insurance because sometimes unexpected events can occur, leaving you stranded.
Auto insurance will save you a lot of headache in future.