In the early days, there was nothing like vehicle but people still moved from one point to another.The technological development which introduced the use of motor vehicle also brought about some risks involved in its use. Hence, the need for insurance cover. This brought about the introduction of motor insurance.

Anyone driving a vehicle on the road is statutorily required to obtain motor insurance policy in case of injuries or death as a result of accident.



There are various forms of cover provided under this class which are designed to meet various needs of vehicle users. These are:

  • Act only policy.
  • Third party only policy.
  • Third party, fire and theft policy.
  • Comprehensive policy.


  1. Act only policy: This provides the minimum statutory for motor vehicle users, that is, in complying with road traffic acts. In this policy, the financial compensation is made available to the third parties in respect of insured liability against their injury or death. This does not extend to third party property damaged.
  2. Third party only policy: It provides indemnity to the policy holder, for death or injury to third parties arising from the use of motor vehicle as well as for damage to property of third parties.
  3. Third party, fire and theft: In addition to the benefit available under “Act” only and third party only, it also provides the insured with financial compensation in respect of loss or damage to insured vehicles caused by either fire or theft.
  4. Comprehensive policy: This is the widest form of insurance cover available under motor insurance. It provides financial compensation in addition to the three stated above (Act only, third party only, and third party, fire and theft) for loss or damage to the insured vehicle. The damage may be caused by collision or turning which could be accidental or due to mechanical faults. Medical expenses, personal effects are also covered under this policy. Due to its wide scope, it attracts the highest premium.



Motor insurance has been classified according to the type of vehicle put on road.

They are described under the following headings:

  • Commercial vehicles.
  • Private cars.
  • Motorcycles.
  • Motor trade.
  • Special types.


A) Commercial vehicles: These include:

  1. Good-carrying vehicles: This could be used to carry policy holder goods (known as own goods) or could be used for the carriage of goods belonging to others for a fee (known as general carriage).
  2. Passenger-carrying vehicles: These include hire cars with not more than twelve seats including driver’s seat, and buses with more than twelve seats including driver’s seat.
  3. Public authority’s vehicles: These are ambulances, dumpers, hearses, mechanical vehicles, road rollers, site clearing and leveling plants, trolley not constructed for general use and police cars.
  4. Agriculture and forestry vehicles: These are vehicles used for agricultural and forestry purposes.


B) Private cars: These are vehicles used for private purposes.


C) Motorcycle: This provides same cover as private cars and depends on the type of motorcycle, whether it is a moped or a high powered motorcycle in addition to the age and experience of the cyclist. The cover granted are attached with personal accident benefits for both the driver and passenger (if any) because of the increased risk resulting from its usage.


D) Motor trade: These are policies issued to motor sellers engaging in any of the following:

  1. Sale of new vehicles.
  2. Buying and selling of used vehicles.
  3. Servicing and repairing of damaged vehicles.
  4. Specialization in body work and painting.
  5. Sale of fund.

Motor insurance also covers motor trade where damage could occur to the vehicle packed in the garage either for sale or under repair. The mechanic garage and the car owner who are protected against loss or damage suffered from cars parked in the garage will be compensated.


E) Special types of motor insurance: These types of policies are issued to vehicles like forklift, trucks, mobile cranes, bulldozer and excavator, bill graders, dumpers, gritting machines, angle dozers, etc. These vehicles are either used on the roads or they are taken to sites.



A) Cover note: This is the temporary certificate of motor insurance issued to the insured due to non-availability of certain information required to provide the permanent document. Cover note cannot be backdated and it lasts for only 30 days. Information on cover notes include:

  1. Name and address of the insured.
  2. Date and time of commencement of the policy.
  3. Manufacturer of vehicle.
  4. Chassis and engine numbers of vehicle.
  5. Registration number of vehicle.
  6. The use of vehicle.
  7. Special terms imposed, if any.


B) Insurance certificate: This is the document issued to the insured as evidence that the insured has complied with road traffic Acts which is usually for the entire period of the policy, usually 12 months. It has the following information:

  1. The name of the insured.
  2. The date of commencement of the policy and the expiry date.
  3. Persons or classes of persons entitled to drive the vehicle.
  4. Registration number of the vehicle.
  5. Limitation as to usage.
  6. Certificate number.
  7. Policy number.


C) No claim discounts: This is the incentive given to the insured by the insurer for not involving in any kind of accident throughout the period of the insurance policy. It encourages the insured to drive safely and maintain the good condition of their vehicles. The percentage of this discount varies from one class of motor insurance to another. For private motor insurance policy holders,they enjoy no claim discount as follow:

  1. 1st year renewal – 20%
  2. 2nd year renewal – 25%
  3. 3rd year renewal – 33 1/3%
  4. 4th year renewal – 40%
  5. 5th year renewal and subsequent years 50%.

For commercial vehicles insurance policy holders, they enjoy no claim discount of 10% flat for each year of renewal. If an insured moves from one insurer to another, he can transfer his no claim discount from the former insurer to the new insurer but must be backed up by evidence.



The ECOWAS brown card scheme came into operation in 1986 following the signing of the protocol establishing it. The government level of security to cover third party liability arises from the use of motor vehicle, which liability is required to be insured against the laws of the country being visited in the West African sub-region. The card is deemed to cover all the indemnities or guarantees required by the laws or regulations governing compulsory motor vehicles insurance in the country being visited. Thus, a Nigerian motorist travelling to Ghana will have to obtain a brown card from his insurer in Nigeria to cover unlimited liability for personal injury and property damage arising from the use of his motor vehicle while in Ghana.

Each National Bureau shall issue a brown card to its members and the members deliver such card to their respective insured. When an accident occurs in a country which is a party to the protocol, in which a holder of a brown paper is involved and which gives rise to a claim against him, the handling bureau in his country shall receive all relevant notification on behalf of the insurer. As soon as such incident is notified, the handling bureau without waiting for a formal claim against the holder of the brown card (insured) shall proceed with the normal investigation. The handling bureau shall subsequently negotiate the claim with third party or parties on behalf of the member (insurer) and submit to the issuing bureau a full report indicating the nature and the extent of the material damage.

The period of cover ranges from 1 day to 3 months. The premium charged appears to be at the discretion of the insurer, depending on the type of vehicle and the type of car. It may be anything from 20 percent of the annual premium for a period between one month and three months in the case of comprehensive cover for private vehicles.

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