Enjoying Benefits of Motor Third Party Insurance

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Ebere Nwoji highlights the ignorance of road users on the benefits of motor third party insurance policy, meant for compensating third party road users in the event of accidents The third party motor insurance is one of the six compulsory insurances stipulated by the Insurance Act 2003 which guides insurance operations in Nigeria.

It represents the legal minimum level of motor insurance cover any motor vehicle owner should have to qualify to ply Nigerian roads and stipulates compensation to accident victims.

Section 1(1) of the 2003 act on the policy states “Motor Third Party Insurance as required by the Motor Vehicles (Third Party Insurance) Act of 1950, is the minimum insurance that owners of motor vehicles plying Nigerian roads are required to have. The policy covers liability for death or bodily injury to a third party arising from the use of the vehicle.

Section 68 of the Insurance Act 2003 extends the liability to cover damage to the property of a third party to the tune of N1,000,000. It also makes it a criminal offence not to have a motor vehicle third party insurance policy and the penalty for non-compliance is imprisonment for one year or a fine of N250,000 or both.”

Contrary to the assumption by many Nigerians that the policy is meant to allow motor vehicle users pass various check points, the motor third party insurance has benefits that compensate the victim when the unexpected happens.
The benefits is that it takes care of damages caused by the insured to the third party’s property or vehicle as well as third party’s medical expenses if any in the event of an accident when the policy holder is at fault.

In other words, it covers the insured’s liability for death/injury to third party and loss or damage to the third-party.
The policy does not cover damage to the owner of the vehicle that has the policy cover.

According to Assistant General Manager, Sales and Corporate Communications of Sovereign Trust Insurance Plc, Olusegun Bankole, the motor third party insurance has a lot of benefits unfortunately many people are not aware of this.

He said many Nigerians don’t know claims from the policy can give an accident victim up to N1 million and if life is involved, the benefit is unlimited depending on social qualification of the person and actuarial calculation.
He said, for instance, with motor third party insurance cover which premium is N5,000, a medical doctor victim can get up to 40,000,0000 claims paid to his dependents in the event of death or permanent disability.

He said the unfortunate thing with the policy was that because of Nigerian’s apathy to insurance and high level of ignorance, vehicle owners buy the policy from fake certificate sellers just to pass Police check points.
He said at local governments offices, licensing and road safety offices, fake insurance certificates are sold at rates as low as N1,000.
“This is why they don’t patronise genuine operators. People have apathy towards insurance therefore don’t care who sold the policy to them whether their certificate is genuine or not whether there is claims attached to the policy or not.
“In 2018, we paid over N4.2 billion claims and motor insurance took almost N600million ranking second or third position among business lines that we got claims from.”
He blamed the challenges on motor third party insurance on improper implementation and enforcement of the policy.
“The problem is this, there has not been proper implementation and regulatory monitoring. People have not gone to jail because of violation of law on motor third party insurance policy or made to pay the fine attached to it by law. So people violate anyhow thinking that they are cheating insurance firms.”

He said to ensure smooth working of the policy, government should be at the fore front of its implementation by first stopping those selling the certificates at local government secretariats, licensing offices and road safety offices.
He said insurers should establish small sales outlets at local government offices where the policy would be sold by licensed agents on their behalf.

He added that insurers on their part should stop cutting rates on the policy, collect standard rates so as to be in position to pay claims on it when accident occurs.

According to him, this will make people willingly patronise genuine insurers in purchasing the policy.
Indeed, the motor third party insurance bought by a vehicle owner from a genuine insurance firm at the standard rate of N5,000 is supposed to take care of cost of repair of any vehicle hit by a road user that has the cover and even provide for the medical expenses in case of any injury to the damaged vehicle owner or any other road user.

Apparently, aside, some motorists fail to make claims from the policy because many owners of vehicles plying Nigerian roads purchased their policy from fake certificate sellers in licensing offices, road safety offices among other places. These fake certificates are sold as low as N1000 as such when the unexpected happens, the affected road user fails to make claims because the insurance certificates is fake.

Before the third party road users whose vehicle or property or life may be damaged by any other vehicle on the road can be compensated, there must be genuine motor third party insurance. It is also very important for vehicle owners to regularly renew their insurance cover as soon as it expires. A situation where the policy cover for a particular vehicle expires and the owner continues to drive it without insurance cover for two or three months before renewal is very dangerous as any unfortunate third party injured by the vehicle will have no compensation especially in this regime of “no premium no cover” in Nigerian insurance market.

There is also the need for vehicle owners to be civil and patient enough to make claims from insurance firms when accident occurs instead of fighting and demanding for instant compensation.

On their part, insurance firms should prove to Nigerians that insurance works by making claims payment on motor third party insurance a reality and on time considering the fact that this particular policy is the only compulsory policy that is actively enforced by law enforcement agents. It is believed payment of claims from it will go a long way to make Nigerians see the value in insurance.

Unfortunately, currently, what is obtained in most cases is that when there is claims from this policy, the claims officer of the insurance firm will in a bid to save cost for his company import all manner of clauses and arguments that will deny the victim the claims thereby tarnishing the image of the entire industry.

A close look at what is trending in the insurance industry especially as it concerns the motor third party policy shows that since the Nigeria Insurers Association (NIA) came up with the idea of the Nigeria Insurance Industry Data Base(NIID) which instantly alerts people on the genuineness of their motor third party insurance policy, most Nigerians now buy the policy from genuine insurance firms.

But two problems commonly affect the policy now. One is the problem of rate as most firms in a bid to sell the policy charge as low as N2,000 and when claim comes from such policy, they will try to shirk the claim knowing that appropriate premium was not collected at the beginning of the transaction. The second problem is that of delay in claims payment even in cases where the standard rate of N5000 was collected.

Consequently, when the delay becomes too long, the claimant will form the opinion that as usual insurance firms don’t pay claims and forget about it. But the danger for the entire industry here is that such claimants, who could not wait due to delay, are those to spread negative information about insurance .This has apparently raised the question on how can Nigerian insurers make claims on sensitive policies like the motor third party insurance as prompt as the insuring public demands?

Recently, the FBN General Insurance provided an avenue for motor insurance prompt claims settlement even at an accident scene through the launch of what it tagged FBNGI ClaimsAlert Service to streamline claims process for its clients.

The Managing Director of the company, Mr. Bode Padokun, said the service would enable customers to get claims to the value of N50,000 and below in cases resolved at the scene of the accidents.
He stated that the ClaimsAlert Service was designed to provide a responsive service to all Comprehensive Auto Insurance policyholders of the company, who have been involved in an accident within the Lagos Metropolis where the service is currently active.

The areas, he said, include Eti-Osa, Lagos Island, Lagos Mainland, Surulere, Kosofe, Shomolu and Ikeja.
Explaining how the service works Padokun said: “The company has dedicated team of claims agents, customer support staff and auto garages for prompt and quality repairs of vehicles. Customers will get claims to the value of N50,000 and below resolved at the scene of the accident.”
Industry observers said this is a good one but would have been better if extended to motor third party insurance which is compulsory in nature and concerns the masses.