Motor Insurance: Types and Meaning

Vehicle insurance policy protects the insured vehicle against any potential damages that may be caused by accident, fire, theft or natural disasters. to be on a safer side should any of these unforeseen events happen, you need a car insurance coverage.

Why You Need Vehicle Insurance Coverage

  • To protect yourself against financial loss
  • Helps to reduces expenses
  • Easy access to loans from Auto lenders
  • Covers the losses and damages done to your passengers or third party.

Types of Vehicle Insurance

Now a days, different insurance companies have developed some auto insurance plan to serve their customers well. But no matter the auto plan that they may come up with, all of it falls under these ones listed bellow.

1. Comprehensive auto insurance

This is the type of vehicle insurance coverage that provides protection to the insured card against damages due to accident, theft and other related problem that may lead to the damage of the insured vehicle. Comprehensive as the name implies means it covers both the insured car and the third party’s car.

2. Third party auto insurance

This is the type of auto insurance that covers only the third party’s damages and losses. A third party could be your passenger or somebody you hit his car. One major disadvantage here is that the insurance company will fix the third party’s car, living you to fix your own car.

3. Third party, fire and theft insurance

This type of insurance policy works more like a third party insurance coverage but then it covers your vehicle when damaged by fire or when stolen.

4. Third party auto base

This type of policy covers everything under third party insurance coverage but covers partial damages done to your car up to a specified amount. Usually between N200K -N500K

5. Vehicle third party insurance only

This plan also give you partial protection from damages caused by accident even if you are at fault.

6. Motor Trade

This plan covers motor traders and garage monitors. These group of people requires a special coverage of vehicles under their custody or even during road tasting. So they are covered under premises risk and road risks.

Private Car Insurance Requirement

  1. Get a proposal form from the insurance company
  2. Fill the proposal form accordingly with your signature
  3. Be aware that some insurance companies in Nigeria will not insure your car if the value of the car is not up to N500k
  4. You must provide an engineer report for second hand vehicle
  5. Current vehicle license
  6. Means of identification.

Type of Vehicles to be Insured

  • Private car: used for social, domestic and pleasure purposes
  • Commercial Vehicles: Taxi, buses and hired cars
  • General cartage Vehicles: Trailers
  • Motor cycles
  • Tricycles
  • Bulldozers: construction workers
  • General and all purpose vehicles

What you should know before you buy car insurance

  • The type of car you drive determines the amount of your  insurance premium and rates
  • In Nigeria, if the worth of your vehicle is less than N500k, you may not get insured under comprehensive car policy
  • You may get discount from some insurance company if you want to insure more than one vehicles
  • The more miles you drive per year the more likely the insurance company is going to charge you during your policy renewal
  • If you install anti theft device on your vehicle, the price of your premium will get cheaper because your insurance policy will no longer need theft coverage.

How to verify your car policy statues

In Nigeria, there are two way in which you can confirm the authenticity of your insurance policy. The first method is to visit the Nigeria Insurance Industry Database (NIID) Official website 

Follow the lay down procedures and get your policy confirmed if it’s fake or original. It is simple to check, don’t panic. Just your policy number and your Vehicle registration number that is needed.

The second method of knowing if your vehicle is fake or original is to type in the the USSD CODE *565*11# on your phone using the phone number you used during your policy registration. Follow the commands and get your vehicle policy verified.

Conclusion

When paying for an insurance premium, don’t assume you are wasting money, what you are actually doing is that you are preserving the future of your vehicle. Just because you have have been driving for years and you have got no accident should not give you the confidence to ignore getting your car insured. Accident can at any time and it does not ring bell.

Related Article: Motor Insurance Rates in Nigeria

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