Compulsory Insurances: You can easily go to jail

The sight of drivers fighting on the road after an accidental collision is a common sight in Nigeria. But there should not be any fight if they are well informed. To start with, the Motor Vehicles (Third Party) Insurance Act of 1945, which took effect from 1st April 1950, makes it an offence for anybody to use a motor vehicle on the road (road here means any road to which members of the public have access) without having in place the minimum Motor (Third Party) Insurance to cover the motorist against liabilities arising from third party bodily injuries or death. The Insurance Act of 2003 added third party property damage to the tune of N1 million.  So if you are the party at fault in an accident, your insurance policy should cover you to the tune of N1 million for damage to the other party’s vehicle. But that is not our area of focus today. Our focus is the punishment for the violation of these policies, which are termed criminal offences.

There are millions of motorists carrying fake motor insurance certificates or having no certificate, which all boil down to absence of motor insurance. And it is very easy to find out. All that is needed is to use the registration number of the vehicle to check the insurance status in the Nigeria Insurance Industry Database (NIID). If the insurance details of the vehicle are not there, it is likely the vehicle is uninsured. The penalty for putting your vehicle on the road without insurance is N250,000 fine or one year jail term or both. So, if you damage the vehicle of an informed person and decide to do gragra (become aggressive or violent), you can actually go to jail or pay a fine.

Section 64 of the Insurance Act of 2003 also deals with another compulsory insurance, Builders Liability Insurance. The section requires every owner or contractor of a building under construction with more than two floors to have in place an insurance policy to cover his legal liability to third parties for bodily injuries, death and property damage for construction incidents caused by the negligence of the policyholder or that of anyone acting on his behalf such as contractors, subcontractors, servants or agents. The penalty for non-compliance, if convicted, is a fine of N250,000 or three years imprisonment or  both. The building may also be sealed or demolished.

Also, Section 65 of the Insurance Act deals with another compulsory insurance, Occupiers Liability Insurance. This insurance requires the owner or occupier of every public building to be insured against liability for loss or damage to property, death or bodily injury of third parties or any user of the building caused by fire, earthquake, storm, flood or collapse of the building. For the purpose of this insurance, public building “includes a tenement house, hostel, a building occupied by a tenant, lodger or licensee and any building to which members of the public have ingress and aggress for the purpose of obtaining educational or medical service, or for the purpose of recreation or transaction of business.” “An occupier or owner of premises who is in default of this section commits an offence and is liable on conviction to a fine of not more than N100,000 or to imprisonment for one year or both.” Surprisingly, this insurance, though compulsory, has a very low patronage. A professional colleague once told me that he has not transacted a single occupiers liability insurance business in his 25 years of practice!

Employee Group Life Insurance is another compulsory insurance. The Pension Act of 2004, as amended in 2014, made Group Life Insurance compulsory for all establishments and companies in Nigeria with three or more employees.  The act has various penalties for non-compliance and some of the penalties are very stiff.

Finally, we have the Health Care Professional Indemnity Insurance. Section 45 of the Nigerian Health Insurance Act of 1999 makes it mandatory for health care providers (medical centres, institutions and professionals) to have in place a professional indemnity cover from an insurance company approved by the Council. The law defines a health care provider as any registered government or private healthcare practitioner and hospital or maternity centre. Failure to comply will result in the revocation of the permit of the medical institution; also the offender will be prosecuted for involuntary murder.

Many people do not know that non-compliance with these compulsory insurances can send them behind bars or make them ex-convicts. If the person is someone aspiring for a political office, that will be catastrophic.  It is easy to feel that “this is Nigeria, I can always find my way around it.” That is true, but if you meet a more determined or better connected person, who is out for mischief, or a political opponent, the story will be different. Some of these insurance are as cheap as N5,000 per annum. Do not be caught on the wrong side of the law, comply with compulsory insurances.