Types of Car Insurance in Nigeria

Looking to buy a car in Nigeria? One of the first things you need to sort out is getting the right car insurance.

But with so many types of motor insurance policies available, how do you choose the best one? What are the main options and how do they differ in terms of coverage and cost? What factors should you consider to pick the ideal car insurance for your needs and budget?

If you are confused about the different types of auto insurance in the Nigerian market, this article will provide clarity.

We will examine the major categories of car insurance in Nigeria, what risks they protect against, their relative costs and help you make an informed decision when purchasing coverage for your new vehicle.

Read on to learn so you can find the perfect fit.

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.

In this article, we will look at the main types of car insurance in Nigeria and what each covers.

COMPULSORY THIRD PARTY INSURANCE

Compulsory Third Party (CTP) Insurance is the basic legal requirement for all vehicle owners in Nigeria.

Commonly known as ‘Third Party’ insurance, this covers injury or death of third parties (anyone other than the insured) and damage to their property, arising from an accident involving the insured vehicle. CTP insurance does not cover damage to the insured vehicle itself or injury to the driver or passengers.

The maximum claim liability under CTP insurance in Nigeria is capped at ₦1 million. This insurance is mandatory in Nigeria, and you can be fined for driving an uninsured vehicle. CTP coverage is usually the most affordable form of car insurance.

COMPREHENSIVE INSURANCE

Comprehensive car insurance is the most extensive coverage you can opt for. As the name suggests, it provides comprehensive protection for your vehicle.

Comprehensive insurance covers your liability to third parties for injury/death and property damage just like CTP insurance. In addition, it pays for damage to your own vehicle due to an accident, theft, fire, flooding, vandalism etc.

Comprehensive policies may also cover you for injury or death. With this policy, repairs to your car or total loss replacement will be covered (up to the insured amount).

Comprehensive insurance provides end-to-end protection for your asset and is hence the most popular choice for car owners in Nigeria.

THIRD PARTY, FIRE AND THEFT INSURANCE

Third Party, Fire and Theft (TPFT) insurance provides a middle ground between the basic CTP and Comprehensive insurance in terms of coverage.

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.

SPECIAL PERILS POLICY

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.

You can purchase this as a standalone policy or as an endorsement to your existing car insurance.

Companies like Leadway, AIICO, and Consolidated Hallmark offer Special Perils insurance.

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.

Zero Deposit insurance can be comprehensive or TPFT coverage. Leadway and a few other insurers currently offer this option.

TYPES BY COVERAGE DURATION

• Short Term Insurance – Covers your car for a specific short period ranging from 5 days to 12 months. Useful when you need temporary coverage like driving a rented car.
• Annual Insurance – The standard insurance policy that provides cover for a period of 12 months. Needs to be renewed every year.
• Multi-year Insurance – Provides continuous coverage for 2 to 3 years without the need for annual renewals. This works out cheaper in the long run.

So in summary, the key types of motor insurance in Nigeria are Compulsory Third Party, Comprehensive, Third Party Fire & Theft, Special Perils, Zero Deposit and duration-based policies.

Consider your budget, risk appetite and specific needs while choosing the appropriate coverage for your vehicle.

FACTORS TO CONSIDER WHEN BUYING CAR INSURANCE

Here are some important factors to consider when purchasing car insurance in Nigeria:

• Coverage Offered – Check what risks are covered and any significant exclusions or limitations. Go for wider coverage if you can afford it.
• Insurer Reputation and Financial Strength – Buy from established insurers like Leadway, AIICO or Continental Re. Check their claim settlement ratio.
• Premium Cost – Compare quotes online from multiple providers. But don’t just go by the price, also consider claim processing.
• Add-ons and Riders – Consider extras like car hire, personal accident cover etc. If within your budget.
• Claim Process – Understand the claim procedures and turnaround time. An insurer with a smooth claims process is preferable.
• Geographical Coverage – Insurance is valid across Nigeria but some offer additional cover in neighboring countries.
• Policy Terms and Conditions – Carefully read the fine print to avoid surprises later.

Choosing the right car insurance for your needs and budget is important to enjoy comprehensive protection for your valued asset while staying compliant with the law. Consider all the above factors before making your decision.

CONCLUSION

Purchasing adequate car insurance is essential to safeguard yourself from massive financial loss in case of accidents, damage or theft.

In Nigeria, there are different types of motor insurance policies available in the market that provide varied coverage at different price points.

Compare the leading options and evaluate them against your specific requirements and budget.

Some key aspects to consider are coverage, insurer reputation, premiums, add-ons, claims process and geographic validity. Invest time to understand the benefits and limitations of various policies so you can make an informed choice.

With the right car insurance coverage, you can drive your vehicle tension-free on Nigerian roads.