March 24, 2023

Various countries across the globe currently have legal frameworks that provide for different insurance policies. These frameworks outline different insurance covers/policies that aim at protecting an insured entity from losses that arise from the occurrence of a given risk. The discussion in this piece will deal with third party motor insurance policy – and this will be based on the law as applicable in Nigeria.

Just as a preliminary, it is necessary to mention that the overall aim of insurance is to financially guard against unpredictable life occurrences. In short, when you buy an insurance policy, you make monthly payments, called premiums, to purchase protection from monetary repercussions related to things like accidents, illness or even death.

Before we deal with the focal point of this piece,


Motor insurance policy is an insurance policy which covers the insured in case of financial losses – resulting from an accident or other damages – sustained by the insured’s vehicle (car, lorry or bus etc). It is a policy fashioned to protect the policyholder – the insured – from loss of or damage to his vehicle, damage to third party’s property which might include bodily injury or even death of third parties.


Motor insurance policy protects the insured in the event of the occurrence of the following:

1) Damages and losses, resulting from natural calamities such as flood, volcano, earthquake, hurricane etc.

2)Damages and losses, resulting from human intervention, such as burglary, theft among others

3)Third party legal liabilities owing to damages – bodily injuries and death – caused to a third party as well as financial losses to a third party property.

Now to the focal point of the piece


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Third party motor insurance, which is the minimum insurance that owners or operators of motor vehicles plying Nigeria roads are required to have. It is a kind of insurance cover under which the insurance company agrees to indemnify the insured, if he is sued for injuries or damages done to a third party.

For instance

Mr Godswill’s Vehicle crashes into another car belonging to one Mr Okeke along the Lagos-Ibadan express way, and the accident unfortunately turns out to be Mr Godswill’s fault. With the third party motor insurance policy in place, Mr Godswill need not fidget as his liability to the driver of the other car – Mr Okeke- would be covered although he will not be able to claim monetary compensation for the damages to his own car.

As seen from the illustration above, the third party insurance policy takes care of the damage caused by the insured (policyholder) to the third party’s vehicle or property, also as the case may be, covers the third party’s medical expenses in the event of an accident, when the insured is at fault.

The foregoing explanation naturally raises the following questions;

Is the third party motor insurance policy mandatory for all car owners in Nigeria?

The question above attracts an affirmative reply as under the Nigerian law, every motor vehicle on the road must be insured against damage to the property of third parties. That is why every vehicle plying the Nigeria roads must have third party insurance. This is predicated on the provision of section 3(1) of the Motor Vehicles (Third Party Insurance) Act and Section 68 of the Insurance Act 2003. Hence it is a criminal offence not to possess a third party motor insurance policy.

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Would anyone who fails to get his vehicle the minimum of the third party liability insurance cover be penalized?

Without mincing words, this also attracts an emphatic ‘Yes! ‘ as anyone found wanting in this regard shall be liable to conviction to a fine of four hundred naira or to imprisonment of one year or to both such fine and imprisonment and such person convicted of this offence shall be disqualified for holding or obtaining a driving license see section 3(2) of the Motor Vehicles (Third Party Insurance) Act of 1950. In addition to the punishment already mentioned, Section 68 of the Insurance Act, stipulates imprisonment of one year and/or a fine of N250,000.

What Does The Third Party Insurance Policy Cover?

Third party motor insurance covers the insured against :

1)Death or bodily injuries done to the third party

2)Accidental death of the third party

3)Damage to the third party property.

What Is Not Covered?

1)Using the scenario of Mr Godswill, it is pertinent to state that the insurance policy does not cover damages done to Mr Godswill’s Vehicle. Hence, the third party motor insurance does not cover your own vehicle’s damages and same way does not cover any injuries sustained by the insured (policyholder) in the course of any accident which he’s solely responsible for.

2) Damage by a person driving without a valid driver’s license. This is only applicable to the insured as if he’s bereft of a valid driver’s license, he can’t seek to have the policy in place to indemnify him if he’s sued for damages or injuries sustained by the third party.

3) Damage by a person under the influence of hard or narcotic drugs or alcohol. This is also only applicable to the insured (Mr Godswill in the hypothetical scenario) as if being under the influence of hard drugs or alcohol made him end up crashing the third party vehicle (Mr Okeke in the hypothetical scenario), the policy won’t have effect on the insured (Mr Godswill) as he will be left alone to decide his fate in the hands of the third party (Mr Okeke).

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4) The third party insurance policy doesn’t cover any damage sustained by the insured vehicle during riots such as the recent #EndSars protest where hoodlums ended up setting ablaze some vehicles, during War and Mutiny.

From the foregoing, a profound discussion has been made on what motor insurance policy is and subsequently inform you about the Third Party Motor Insurance Policy.

Written by  Oluboyo Olamide Taiwo (LLB. In view)

Oluboyo Olamide Taiwo is a law student of the University of Benin, Benin-City, Edo state. A political analyst and an indefatigable personality who has a penchant taste for the Law and its application. He also has a keen interest in legal research and writing and serves as a brand ambassador cum partner of The Legal Triad (TLT). He also enjoys the singular honour of being a member of the Young African Leaders Initiative Network (YALI). During his pastimes, he enjoys reading, watching movies and writing.

As Usual, we have taken care to ensure the information above is correct but it is only provided for general information purposes and does not amount to legal advice or soliciting. This information is not intended to substitute the services of a lawyer, if you need legal advice, we advise that you consult your lawyer for your specific needs and peculiar circumstances. For any further information, you could send us a mail via [email protected]  

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