Types of Insurance in Nigeria
At some point in your life, you must have heard of the word 'Insurance' but still don't understand what it means. Insurance protects against loss or damage to property and personal injury. There are several types of insurance in Nigeria, and this blog will focus on them. Before we list the different types of insurance, what is the full explanation of insurance?
What is Insurance?
In simple terms, insurance is a contract between an insurer (the company) and an insured (you). Insurance aims to protect the insured from financial losses caused by specific events such as fire, theft, natural disasters, etc. In return for paying premiums, the insurer agrees to pay out money if the event occurs.
The type of insurance depends on the risk involved. For example, auto insurance covers damages due to car accidents, while home insurance covers damages due to fires, floods, earthquakes, etc.
History of Insurance
Insurance is one of the oldest forms of financial protection against risks. It helps people protect themselves financially against loss of assets, income, health, life, and property. Let us discuss a little of the history of insurance.
The British Empire had been trading with West Africa since the 17th century. They introduced insurance to protect merchants from losses. During the colonial period, many European countries established agencies to provide insurance coverages to their subjects living in colonies.
After Nigeria gained independence in 1960, the government set up a commission to regulate the industry. In 1962, the Nigerian National Association of General Insurance Companies was formed, and in 1963, the Nigerian Insurance Corporation was established. Also, in 1966, the Federation of Nigeria was formed, and in 1975, the association's name changed to Nigerian Insurance Brokers' Association.
Then, in 1978, the Nigerian Insurance Institute came into being. And today, about 20 insurance policies are in force in Nigeria.
Categories of Insurance
Public Insurance: There are two kinds of public insurance: compulsory and voluntary. Compulsory insurance includes motor vehicles, health, and workers' compensation. However, voluntary insurance includes private medical insurance, private dental insurance, and private life insurance.
Private Insurance: This kind of insurance is also known as non-public insurance because it does not cover everyone. It is usually provided by employers, unions, associations, and other organizations. The most common types of private insurance include group, employer's liability insurance, disability insurance, and accident insurance.
Types of Insurance
Companies offer this type of insurance to their employees. It provides benefits to members who work for the same organization. Some examples of group insurance include employee welfare plans, pension plans, and retirement plans.
Employer's Liability Insurance
Employers are required to provide workers with certain minimum levels of protection. This is called "employer's liability insurance" and ensures that employers are responsible for workplace injuries or deaths.
If you're injured at work, you may be entitled to receive compensation under worker's compensation laws. Accident insurance helps you recover from injuries sustained during an accident.
This insurance helps families cope with the death of a loved one; you typically get a death benefit. Life insurance policies come in many forms, including term life insurance, whole life insurance, universal life insurance, variable life insurance, and annuity.
Health insurance helps individuals pay for medical expenses. This insurance comes in various forms, including HMOs, PPOs, indemnity plans, and catastrophic coverage. Also, you have access to adequate medical care, as health insurance policies cover all the medical costs.
Homeowners insurance protects homeowners from damage to their homes. It typically covers damage from fire, lightning, windstorms, vandalism, and other causes.
Auto insurance protects drivers against financial loss resulting from automobile accidents. It includes collision insurance, comprehensive insurance, uninsured/underinsured motorist insurance, personal injury protection, and property damage insurance.
This type of insurance protects businesses against financial hardship due to business interruptions. Business interruption insurance includes commercial general to theft, fire, natural disasters, and other risks. Moreover, business insurance includes commercial general liability insurance, business auto insurance, professional liability insurance, and directors and officers liability insurance.
Commercial Property Insurance
Property insurance protects real estate owners against losses caused by fires, floods, earthquakes, hurricanes, tornadoes, and other hazards. Commercial property insurance includes building, contents, and landlord's insurance.
Renter's insurance protects renters against damages to their belongings while away from home. This includes personal effects, burglary, and accidental death insurance.
Disability insurance provides income replacement benefits if you become disabled. If you have been diagnosed with a long-term illness, you may qualify for disability insurance, and your insurance company will cover all your medical costs.
Employee benefits assist employees in meeting their needs after retirement or termination of employment. These include pension plans, health savings accounts, 401(k) plans, profit sharing plans, stock options, deferred compensation plans, and severance packages.
Leadway Assurance Company
Leadway is one famous insurance company in Nigeria that started in 1970. Though it began in the Philippines, Leadway has branches worldwide. They provide products like life, health, car, and more. Besides all these, they offer financial services like credit bonds, portfolio management, and more.
Coronation Insurance Plc
The Coronation Group was founded in 1958, offering several insurance products. Over the years, it has gained experience in risk management and provides a wide range of products and services to cover life, general and special risks.
Standard Alliance Insurance Company
SAIC is among Nigeria's top-rated insurance companies. Founded in 1992, it operates across different industries, including property & casualty, life & health, auto, marine, and reinsurance. Its headquarters are in Lagos, while subsidiaries operate in Abuja, Kaduna, Port Harcourt, Ibadan, Kano, and many other states.
Guinea Insurance Plc
Guinea Insurance Plc., founded in 1987, is a leading insurer based in Accra, Ghana. With over 30 years of experience in the industry, it offers a wide range of general insurance products such as life assurance, health insurance, auto insurance, home insurance, travel insurance, and many others.
The company operates under the following brands:
Africa Direct: A multi-channel general insurance provider offering a broad product portfolio, including life assurance, motor, home, pet, and travel insurance.
Africa Direct Life Assurance Limited: This is an innovative and dynamic life assurance specialist, providing a wide range of life cover options to suit individual needs.
African Home - A specialist in the property sector offering homeowners insurance, contents insurance, and landlord insurance.
African Travel & Leisure - Providing travel insurance and vacation protection for leisure travelers.
Royal Exchange Plc.
Royal Exchange brand has significantly impacted the financial market and the insurance sector. To achieve their goals, they became a group structure in 2008. They specialize in carrying out the Non-Life insurance business in Nigeria.
Their core competencies include Property & Casualty, Life Assurance, Motor Vehicle Insurance, Health Insurance, General Liability, and Professional Indemnity. They also major in marine, Aviation, Retail Banking, Brokerage, and Financial Services.
Law Union and Rock Insurance Company
Law Union and Rock Insurances are one of the oldest insurance companies in Nigeria. Its main objective is to provide quality products and services to customers. Moreover, they have provided insurance coverage to individuals, businesses, associations, and organizations for over 50 years.
They offer a wide range of insurance coverages, including life, health, property, motor vehicle, etc.
Car Insurance in Nigeria
Nigeria has dangerous roads, causing road accidents. This makes car insurance an essential part of your daily routine. Car insurance covers you against any loss or damage to your car. It can be used to pay for repairs if your vehicle gets damaged by accident, theft, fire, flood, storm, vandalism, or natural disaster.
Types of Car Insurance
The Act Only Car Cover
This insurance cover is often called "the third party liability cover or Motor Third Party Insurance." It is mandatory for all car owners in the country. Also, it adequately covers liabilities incurred by the policyholder for third-party death or damage. However, this coverage does not protect against claims arising from accidents caused by the vehicle itself, such as theft, vandalism, fire, etc.
The coverage includes medical expenses, legal fees, funeral costs, lost wages, etc. But there are some limitations to this type of insurance. For instance, the insurer cannot recover damages caused by the insured's negligence. Also, the insurer cannot retrieve any amount paid to settle claims against the insured.
Furthermore, the insurer cannot recover anything paid to the injured parties if the insured was negligent. However, the insurer can still sue the uninsured tortfeasor for wrongful conduct.
Third Party Only Cover
This insurance protects you against damage to someone else's vehicle or property. In most cases, the insurance will pay enough money per accident. However, there are some exceptions to this rule. For example, the third party must cause the damage, meaning that if the driver hits another car while texting, the liability falls on the driver behind the wheel. The insurer will not be responsible if the damage is caused by a natural disaster such as a flood or earthquake.
Third-Party Fire and Theft Cover
This type of cover pays out when your car is stolen or damaged by fire. If your car is stolen, you may receive compensation for the value of the vehicle. You may also get reimbursement for replacing your belongings inside your car.
This type of insurance protects against losses due to fire, theft, collision, and other hazards. It also covers damage to the vehicle, its contents, and accessories. Comprehensive insurance usually includes additional benefits like roadside assistance, rental cars, and emergency travel expenses.
Tips to Consider When Choosing An Insurance Company
When choosing an insurance company, consider these tips:
1. Compare rates among different companies.
2. Ask about discounts.
3. Shop around. Ask friends and family members which companies they use. They may be able to recommend companies that are better than those offered by your current insurer.
4. Check out customer reviews. Online sites such as Yelp.com allow customers to post reviews of local businesses. So, read through these reviews before making any decisions.
5. Review your policy. Make sure you understand what is covered under your policy. For example, does it only protect you from certain types of injuries? Does it provide coverage for the cost of replacing lost items? Is there a deductible amount you must pay first? How much does it cost to renew your policy?
6. Find out how long your policy lasts. Policies usually last one year, three, five, ten, or even longer. The length of your policy depends on the type of insurance you purchase.
7. Understand what happens when you make claims. Will your claim be paid immediately? Do you need to submit receipts? What documentation is required? Are there any limitations on how much you can receive?
8. Know what to expect when you file a claim. Claims can take several weeks to process. Be prepared for delays.
9. Determine whether you want to buy additional coverage. Additional coverage may include liability insurance, auto insurance, and umbrella policies.
10. Get quotes from multiple companies. It is essential to compare prices so you don't end up paying more than necessary.
11. Keep track of your payments. Write down the date each payment was made and keep copies of canceled checks.
12. Contact your agent regularly. Your agent should be available to answer questions and help resolve problems.
13. Avoid scams. Scams exist in every industry; don’t fall victim to them.
Insurance is essential to protecting yourself and your assets. There are many different types of insurance, but all have one thing in common: they protect you from financial loss. Get insured today!