Car Insurance – Types of car insurance in Nigeria and understanding the importance

Everyone knows that a car is a form of investment, and of course, whenever you make an investment, you would want to protect it. This is where car insurance comes in. As a car owner in Nigeria, having car insurance is not just a legal requirement but also a smart financial decision. 

Car insurance provides you with financial protection in case of accident, theft, or damage to your vehicle. Understanding the type of car insurance, coverage options and legal requirements can help you make informed decisions and ensure you have the right coverage for your needs.

In this article, we’ll talk about Car Insurance, the types of car insurance, the coverage options and the legal requirements.

What is Car Insurance?

Car Insurance is an insurance policy where the insurer (Insurance Company) protects the car of the insured (You) in the event of an accident, theft, loss or damage. This protection is valid upon paying an agreed annual premium according to your policy outlined.

Types of Car Insurance In Nigeria 

There are several types of car insurance policies available in Nigeria that provide different levels of protection. Understanding the major types of car insurance can help you make an informed decision when purchasing coverage.

1. Third-party Insurance: This is the basic insurance compulsory for every car owner. It covers injury and damage to the third party and their properties if an accident occurs. It keeps you legal and keeps you safe from law troubles.
2. Comprehensive Insurance: This insurance offers broader coverage. It covers everything third-party insurance does, as well as paying for damage to your car from accidents, theft, fire outbreaks, or bad weather.
3. Third-party, Fire and Theft Insurance: As the name indicates, TPFT covers third-party liabilities along with loss/damage to your vehicle arising specifically due to fire or theft. Accident damage is not covered under this insurance. TPFT insurance is cheaper than a Comprehensive policy and hence preferred by some vehicle owners on a tight budget.
4. Special Perils Insurance: Special Perils insurance is useful when you require add-on coverage for specific risks not covered in a standard policy. For instance, it can provide additional protection against riots, strikes, civil commotion, floods etc. Based on your individual needs.
5. Zero Deposit Insurance: Zero Deposit insurance is a relatively new offering in the Nigerian market. As the name suggests, you pay nothing upfront to purchase the policy. The premium is divided into equal monthly instalments which are added to the car loan repayment. Hence it reduces the initial cash outflow when purchasing a car.

Coverage Options

1. Liability Coverage: This pays if you hurt someone or damage their property. Try to avoid huge bills if you cause an accident.
2. Comprehensive Coverage: This pays for situations like thefts or weather damage to your car.
3. Personal Injury Protection: This pays for medical bills if you or your passengers get hurt in an accident.

Legal Requirements

1. Proof of Ownership: You need to show evidence of ownership before insurance.
2. Vehicle Inspection: Your car needs to be properly checked to make sure it’s in perfect condition and safe.
3. Premium Payment: The money you pay for insurance, keeps your insurance active.
4. Policy Document: This is the paper that generally explains your insurance. It shows what is covered and what is not covered.

Acquiring car insurance in Nigeria is a great deal, it’s not just about going by the rules, rather it’s also about protecting yourself financially. Understanding these basics carefully explained, can help you make a perfect choice choosing the right Insurance and coverage for your needs as a car owner in Nigeria.