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From Adanna Nnamani, Abuja
Insured but unprotected; paying premiums but missing protection. These sum up the plight of millions of Nigerian motorists whose third-party motor insurance has become little more than another annual document required to avoid trouble with law enforcement.
Third-party insurance annual premium is N15,000 for private vehicles and covers damages of the other motorist (third-party) for up to N3 million.
The premium for commercial vehicles varies according to the type of vehicle insured.
In addition to meeting the legal requirement for motorists, the Third Party Motor Insurance Policy provides coverage of up to N3 million for the repair or replacement of property belonging to an innocent third party damaged in an accident. It also covers limited medical expenses for third parties injured in such accidents and provides financial compensation to the family of an innocent third party who loses their life as a result of the incident.
The policy has also been expanded to include third-party motor insurance coverage for vehicles driven to other West African countries under the ECOWAS Brown Card Scheme, enabling motorists to enjoy protection while travelling within participating member states.
Maxwell Marshall, an e-hailing taxi operator, told Daily Sun that he merely procures third-party insurance to stay insulated from Police, VIO and other law enforcement agencies’ trouble.
“I’ve been driving for over 12 years but I’ve never gotten compensation from any insurance firm.
“My vehicle has been hit by other vehicles on countless occasions but it never even occurred to me to pursue any compensation.
“I’m told the process is hectic and takes forever. You will require countless photographs and other documents.
“I can’t leave my car for this sort of herculean investigation. It’s from this cab business that I take care of myself and my family. I’m 49 years old. I need money”, he told Daily Sun.
Another commercial driver, Abiola Olawuwo, corroborated Marshall.
“Look sir, I can’t waste my time pursuing compensation. We’ve been told repeatedly it takes forever.
“It’s pure extortion if you ask me. No value for motorists. It’s just to swell insurance companies’ purse. I can tell you for free that over 90 per cent of commercial drivers don’t even know they can be compensated by the third party. This is Nigeria. We pay for what we don’t enjoy”, he lamented.
These drivers’ stories are not isolated cases.
Many Nigerians and Nigeria residents dutifully pay for the compulsory policy when renewing vehicle papers, yet few understand what it actually covers or how to benefit from it after an accident.
Although third-party insurance is the most widely purchased insurance product in Nigeria because it is mandatory by law, thousands of accident victims still end up paying for repairs and medical expenses from their own pockets.
Industry experts say ignorance, fake insurance certificates, poor claims awareness, distrust of insurers and weak enforcement have combined to deny many Nigerians the protection the policy was designed to provide. The situation came under renewed attention following the nationwide enforcement of compulsory third-party motor insurance by the Nigeria Police Force in February 2025.
The police clarified that they were only enforcing compliance with the law and not selling insurance policies, after widespread public misunderstanding over the exercise.
Under Nigerian law, every vehicle using public roads must have at least a valid third-party insurance policy.
Difference between third-party and comprehensive insurance
Unlike comprehensive insurance, which covers damage to the owner’s vehicle, third-party insurance primarily compensates people whose lives, property or vehicles are damaged by the insured motorist.
Ignorance
Despite this legal requirement, many motorists see the policy merely as another government levy.
Insurance practitioners say that perception explains why genuine claims remain surprisingly low compared to the number of accidents recorded annually across the country.
Many vehicle owners admit they only remember their insurance certificate when stopped at police checkpoints. Once the document is issued, it is often tucked away in the glove compartment and forgotten until renewal time.
According to industry operators, this lack of awareness means accident victims frequently negotiate settlements directly with offending drivers instead of approaching insurance companies for compensation.
In many cases, victims do not even know the at-fault driver’s insurer can be compelled to settle legitimate third-party claims where the policy is valid.
Another major challenge is the widespread circulation of fake insurance certificates.
For years, roadside agents and touts have sold counterfeit motor insurance documents to unsuspecting motorists at prices far below approved premiums.
The fake certificates may satisfy a casual inspection, but they become worthless after an accident because no insurance company stands behind them.
Industry experts say the illegal trade has robbed genuine insurers of billions of naira in premiums while leaving accident victims without compensation.
Weak public confidence
The problem is compounded by weak public confidence in insurance generally.
Nigeria remains one of Africa’s least insured countries, with insurance penetration estimated at below one per cent of Gross Domestic Product. Analysts attribute this to decades of low public trust, delayed claims settlements in some cases and poor insurance literacy.
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For many motorists, the assumption is simple: insurers collect premiums but are reluctant to pay claims.
Insurance operators reject that narrative, arguing that many claims never reach them because policyholders either fail to report accidents properly or do not know the claims process.
Experts note that third-party insurance is not intended to repair the policyholder’s own vehicle. Instead, it protects innocent road users who suffer injury, death or property damage because of another person’s negligence.
Yet, many Nigerians mistakenly expect it to function like comprehensive insurance.
This misunderstanding often leads to disappointment and reinforces negative perceptions about insurance.
Even when motorists know their rights, obtaining compensation can be challenging.
Documentation requirements, police reports, repair estimates and prolonged disputes over liability sometimes discourage victims from pursuing claims.
Some eventually abandon the process altogether, especially where repair costs are relatively modest.
Legal experts also point to enforcement gaps.
Although the police have statutory authority to ensure motorists possess valid insurance, a Federal High Court ruled in 2026 that while the police and the Federal Road Safety Corps can enforce compliance, they cannot impose fines without a court order. The judgment clarified the limits of enforcement powers while affirming that compulsory insurance remains a legal requirement.
Consumer advocates argue that enforcement alone cannot solve the problem.
They insist that public education is equally important.
Many motorists remain unaware that third-party insurance can compensate victims for bodily injury, death and damage to third-party property arising from road accidents, subject to the terms of the policy.
Insurance professionals believe wider awareness campaigns could significantly improve claims uptake and restore public confidence.
Technology improving transparency
The insurance industry has increasingly embraced digital verification platforms that enable motorists and law enforcement agencies to confirm whether a motor insurance certificate is genuine.
The move is expected to reduce the circulation of fake policies and ensure only licensed insurers provide compulsory motor insurance.
The Nigerian Insurance Industry Reform Act 2025 also seeks to strengthen the legal framework governing compulsory motor insurance by improving transparency, consumer protection and claims administration. Industry stakeholders believe the reforms could help close long-standing loopholes that have weakened public confidence.
Still, experts warn that legislation alone will not change public attitudes.
Motorists must understand that third-party insurance is not designed to protect only the insured driver but also innocent victims who may suffer losses through no fault of their own.
Road traffic accidents remain a major public safety concern in Nigeria, making effective insurance coverage an important social safety net.
Industry leaders are therefore urging motorists to purchase policies only from licensed insurance companies and authorised agents rather than roadside vendors offering suspiciously cheap certificates.
They also advise motorists involved in accidents to notify the insurer immediately, obtain the necessary police documentation where required and follow the official claims process instead of relying solely on private settlements.
For many Nigerians, insurance remains an abstract concept until disaster strikes.
Unfortunately, by the time many accident victims discover the value of third-party insurance, they either possess fake certificates, failed to understand the policy or missed the opportunity to file legitimate claims.
As enforcement becomes stricter and reforms reshape the insurance landscape, stakeholders believe the real challenge is no longer convincing motorists to buy third-party insurance. Rather, it is ensuring they understand what they have purchased and how to benefit from it.
Until awareness improves and fake insurance is eliminated, millions of Nigerian motorists may continue paying for protection they never fully use, turning what should be a vital financial safety net into little more than another annual compliance exercise.
According to the National Insurance Commission (NAICOM), many policyholders do not know what to do after an accident. They fail to notify their insurance company promptly, obtain a police report where required or gather supporting documents such as photographs and repair estimates. These omissions can delay or prevent claims from being settled.
Experts have also noted that rather than involving insurance companies, many motorists prefer to negotiate cash settlements at the accident scene. While this may resolve minor disputes quickly, it deprives them of the protection they have already paid for and may expose them to higher financial losses.
Insurance awareness in Nigeria remains generally low. Many people buy motor insurance only because it is compulsory, not because they understand its value. This attitude affects not only motor insurance but also other classes of insurance.
Although NAICOM and insurance companies periodically conduct awareness campaigns, experts say education has not reached enough motorists, especially commercial drivers and vehicle owners in rural communities. Consequently, many remain unaware of their rights and obligations under the policy.
Some claimants abandon the claims process because they perceive it as cumbersome. Requirements such as police reports, proof of ownership, repair estimates and verification of liability can discourage policyholders, particularly where the amount involved is relatively small.
While enforcement of compulsory insurance has improved, illegal insurance vendors continue to operate in some locations. Until fake insurance is completely eliminated, unsuspecting motorists will continue to buy worthless certificates that provide no protection after accidents.
Way forward
Experts say increasing public awareness, eliminating fake insurance certificates, simplifying claims procedures, improving claims settlement timelines and encouraging motorists to buy only genuine policies from NAICOM-licensed insurers will significantly increase access to the benefits of third-party motor insurance. They also urge motorists to verify every policy on the Nigerian Insurance Industry Database (NIID) before driving on public roads.
