MOTOR VEHICLE INSURANCE

Motor vehicle insurance, governed by the Motor Vehicle Ordinance of 1945, is the most abused and unappreciated insurance product in the country as at today. Most people see it as a means of avoiding the troubles of the law enforcement operatives. It is basically seen as “let my people go” documents. The concern is having one to flash in the face of the operatives and are not bothered if it’s genuine or not.

Touts and other scrupulous licensing officers have capitalized on this to make brisk business in issuing fake insurance certificates especially, Third Party Insurance which is one of the 5 (five) compulsory insurance products, when registering or renewing vehicles license.  The insurance certificates are either from non-existing underwriting companies or from forged certificates of existing companies. The continuous patronage of the touts and the miscreants can be traced to our attitude for short cut, easy/cheap way of doing things, lack of concern for human life and the effect of our actions of others but most importantly, lack of knowledge.

In our usual style, we blame others for our mistakes and failures. We fail to understand the terms and conditions of the insurance policies to determine our rights and obligations by just one act; failure to read or study the policy document. Proper understanding/awareness will reduce the incidence of fisticuffs amongst vehicle owners on the highway with just the exchange of insurance details. Let’s look at the types of motor vehicle insurance and their features:

1.   Third Party: the Insurance Act of 2003 made this insurance policy compulsory for all motor vehicles owners to provide cover for the commuters’ and other road-users in event of motor vehicle accident against damage to property and injuries/death to others. It is however the most bastardized and least appreciated but the most powerful given the amount paid as premium. The features include:

·     Premium payable is from N5,000.00 subject to the type of vehicle but lower for motorcycles

·    Covers damage to 3^rd party property up to N1m for property damage and other vehicles

·          Unlimited cover for injuries or death to 3^rd parties subject to the determination by the court or settlement by parties involved

·      Those to benefit include passengers in commercial vehicles, pedestrians, 3^rd party vehicles/property owners and victims of hit and run vehicles

2.  Third Party, Theft and Fire: this is a hybrid motor vehicle insurance policy that combines the features of the 3^rd Party Insurance with Fire and Theft to the vehicle of the insured. This is however not common in the country or with the insurance underwriters. Premium payable is from 3% of the sum insured subject to the nature and type of vehicle to be insured. Gives the insured the comfort in the event of fire outbreak and theft of the vehicle.

3.  Basic Comprehensive: it is the combination of 1 & 2 plus accidental damage to the vehicle insured. There is however a caveat that insuring public should take note of. Comprehensive Insurance does not guarantee cover for all risks. The policy document should specify the risk covered and further extension can be sought to cover other risks at a cost e.g. flood, pilferage, damage to windscreen, etc. Key features include:

• Premium payable is from 5% of the insured sum or value of the vehicle subject to the nature, type and usage of the vehicle
• Group or fleet discount can be negotiated where vehicles involved are more than 2.
• Trackers can also be installed as extra precaution subject to the value of the vehicle usually from N3m
• Towing expenses are usually covered but subject to a limit as determined by individual underwriter.
• Medical expenses to occupant of the vehicle should also be covered.
• Policy excess, which is 10% of the insured sum can also be waived

How to avoid conflicts

From experience, some major areas of conflict between the insuring public and underwriting (Insurance) companies have been identified:

1.  Study, assimilate and understand the policy document to appreciate the rights and  obligations of parties.

2.      Seek clarifications on ambiguous technical terms for proper understanding

3.      Seek professional help where applicable

4.      Ensure prompt payment of premium as and when due to protect yourself from the clause “no premium no cover”. The law however allows some days (at least 30 days) grace period

5.      Ensure full disclose even when considered immaterial

6.  Do not allow unauthorized personnel to handle your vehicle (valid driver’s license is required)

7.    Once a claim occurs, ensure it is reported within the stipulated time for notice backed by necessary police report.

As at today, the law tend to protect the supplier and the not be buyer as the onus is on the buyer to prove his case and need for reinstatement. Insurance practitioners have been living off the ignorance of its consumers. It is important to have everything well spelt out and documented before appending your signature on the policy documents which serves as a contract that binds you and the insurance company.