On February 1, 2025, the Inspector General of Police, Kayode Egbetokun, directed all police formations across Nigeria to enforce Mandatory Third-Party Insurance. This directive aims to enhance road safety and ensure vehicle owners comply with insurance regulations. The Nigeria Police Force has warned motorists that failure to secure valid insurance will lead to strict penalties, urging immediate compliance to avoid legal consequences.
The Legal Framework: The Motor Vehicles (Third Party Insurance) Act
Enacted in 1945 and effective since April 1, 1950, the Motor Vehicles (Third Party Insurance) Act was designed to protect victims of road accidents in Nigeria. The law mandates insurance coverage for third-party liabilities, ensuring accident victims receive compensation for injuries or damages caused by negligent drivers. Despite its long-standing existence, the Act has faced criticism due to enforcement challenges and its limited scope in addressing contemporary issues in Nigeria’s transport sector.
Understanding Third-Party Insurance
Third-party insurance is a type of liability coverage that protects the insured (vehicle owner) from claims made by others (third parties) for damages or injuries caused by their vehicle. This policy covers costs related to bodily injury, property damage, and legal expenses incurred due to third-party claims.
Key Benefits of Third-Party Insurance for Vehicle Owners
- Compliance with Nigerian laws, avoiding fines and legal penalties.
- Financial protection by covering damages or injuries caused to third parties.
- Peace of mind while driving, reducing concerns about liability.
- Cost-effective compared to comprehensive insurance.
- Easy acquisition through online platforms and insurance providers.
Provisions of the Third-Party Insurance Act
- Mandatory Coverage: All vehicle owners must secure third-party insurance before using their vehicles on public roads. Failure to comply results in fines or imprisonment.
- Third-Party Protection: Insurance covers bodily injury, death, and property damage caused by the insured vehicle.
- Minimum Coverage: At least ₦1 million for property damage, with unlimited compensation for bodily injuries and fatalities.
- Authorized Insurers: Only NAICOM-registered insurers can issue third-party policies.
- Hospital Expenses: Insurers must cover reasonable hospital expenses for accident victims.
- Rights of Third Parties: Victims can directly claim compensation from insurers, bypassing lengthy legal battles.
- Regulatory Oversight: The National Insurance Commission (NAICOM) regulates and ensures compliance in the insurance sector.
Exemptions Under the Act
- Government-owned vehicles used for official duties.
- Police vehicles engaged in law enforcement operations.
- Individuals who have deposited ₦10,000 with the Accountant-General of the Federation.
- Ministerial discretion to exempt specific vehicles or individuals.
Crimes and Penalties for Non-Compliance
- Using a vehicle without valid third-party insurance is prohibited.
- Offenders face fines of up to ₦250,000, imprisonment for up to one year, or both upon conviction.
How to Obtain Third-Party Insurance in Nigeria
- Research Insurers: Select a NAICOM-registered insurance company.
- Gather Required Documents: Vehicle registration details, valid identification, and any previous insurance information.
- Choose Coverage: The standard premium is ₦15,000, covering liabilities up to ₦3 million for private vehicles.
- Complete Application: Fill out the insurer’s form accurately.
- Make Payment: Use approved payment channels and retain receipts.
- Receive Policy Document: Verify details for correctness.
- Display Insurance Certificate: Keep it in the vehicle for police checks.
- Renew Annually: Maintain continuous coverage to avoid penalties.
Filing a Third-Party Insurance Claim
- Determine Liability: Establish fault and collect witness statements.
- Gather Evidence: Take photos, obtain a police report, and document damages.
- Notify Insurer: Report the incident within 30 days and obtain a claim form.
- Fill Out and Submit Claim Form: Provide accurate accident details and attach supporting documents.
- Investigation Process: Allow insurers to assess the claim and liaise with third parties.
- Receive Compensation: Insurer pays for verified damages or injuries.
Public Reactions and Stakeholder Opinions
Legal Challenge by Deji Adeyanju & Partners
A public interest law firm, Deji Adeyanju & Partners, has strongly opposed the enforcement. In a letter to the Inspector General of Police dated January 13, 2025, the firm argues that the police lack legal backing to enforce insurance compliance, stating that such responsibility falls under the Federal Road Safety Corps (FRSC). They criticize the initiative as a revenue-generation tactic and threaten legal action if enforcement is not halted within 48 hours.
Support from the Transport and Insurance Sectors
Yusuf Othman, President of the Nigerian Association of Road Transport Owners, supports the enforcement, highlighting its importance for responsible vehicle ownership and revenue generation for infrastructure development.
The Nigerian Insurers Association welcomes the police directive, asserting that it aligns with the Insurance Act. They believe the policy will curb fake insurance, improve compliance, and enhance road safety.
International Energy Insurance urges insurers to make third-party policies more attractive to motorists by improving accessibility and offering incentives for voluntary compliance.
The enforcement of Mandatory Third-Party Insurance in Nigeria has sparked significant debate. While the police insist on its necessity for road safety and legal compliance, critics argue that enforcement should be handled by regulatory bodies like the FRSC.
With legal threats and mixed reactions from stakeholders, the effectiveness of this directive remains to be seen. However, one certainty is that vehicle owners must now prioritize compliance to avoid legal repercussions.
