Essential insurances for the season

Nigeria’s annual migration has started in trickles. By the third and fourth week of December, it will peak with millions of Nigerians travelling from one location to the other for Christmas. These trips heighten the risks of travel across Nigeria. Some homes are also left unoccupied during the festive period, so there is also heightened risk. To be specific travellers will be exposed to the risks of accident, bodily injuries, hospitalisation, armed robbery, kidnapping while travelling and burglary of their dwellings while they are away. You can mitigate some of these risks by taking some insurances at a minimal cost.

The starting point are the compulsory insurances that can get you into trouble. Of these only one applies here: Motor (Third Party) Insurance. Ensure your policy is from a licensed insurance company. Most of the motor certificates you see around are fake. You can get a genuine policy by approaching an insurance company directly or going through a Registered Insurance Broker (RIB). Because most of the insuring public is either not very knowledgeable about insurance or too busy and impatient to process claims when losses arise, I always advise that they should go through RIBs. An insurance broker will act as your representative and guide you on the appropriate cover you need. He will also get you a good rate and should an incident leading to a claim arise, he will help you to process the claim. All these are at no extra cost to the insured; his services are free, unless you engage him to do assignments which are outside the normal course of effecting an insurance policy and servicing the policy.

But as we have explained previously, Motor (Third Party) Insurance covers the insured’s legal liability to third parties for bodily injuries, death and property damage. Claims for bodily injuries and death are unlimited, though some parameters are used to arrive at reasonable figures, while the limit of liability for property damage is N1m. If your vehicle is damaged, you have no recourse to your insurers for compensation. Only holders of Comprehensive Motor Insurance have such recourse. To bridge the gap, some insurance companies have come up with motor insurance products, which are actually extensions of Motor (Third Party) Insurance, to enable policyholders have limited compensation for own damage. The usual premium for Motor (Third Party Insurance) for private vehicles is N5,000. With an additional N5000 premium – that is N10,000  in all – you are entitled to a maximum of N250,000 in the event of accidental damage to your vehicle. This insurance product is particularly good for people who cannot afford the premium for comprehensive insurance. It is also good for people who have vehicles with a value of N2m or less. Unless the accident is major, N250,000 is enough to fix such vehicles in many cases of own damage.

We said earlier that Motor (Third Party) Insurance does not provide any benefit to the insured, Comprehensive Motor Insurance does.  But Comprehensive Motor Insurance is only comprehensive as far as the vehicle is concerned. The medical benefits for the insured in the event of accident is painfully limited and in many cases not enough, especially if the accident is major. Consequently, insurance companies have come up with products to fill this lacuna. One of such products provides compensation to the Insured and/or members of the household in the event of physical bodily injuries, disability or death caused solely by violent, accidental, external and visible events such as road accidents and domestic accidents. The company will also pay agreed benefits to the insured in the event of physical activities or accidents resulting in permanent disability (loss of limbs, eyes, toes, fingers), reimbursement of medical expenses incurred as a result of the incident up to the chosen limit. For just a premium N1,500, the insured is entitled to medical expenses of N50,000. If sadly the insured dies, his beneficiary is entitled to a death benefit of N500,000 and burial expenses of N50,000. For a premium of N3,000, the benefit is N100,000 for medical expenses and N1,000,000 in the event of death and another N100,000 for burial expenses. The company also has another variant for N5,000 premium. The medical expenses limit is N200,000, N2m for death benefit and another N200,000 for burial expenses. Some people might be uncomfortable with talks of death and burial. None of us wants to die, but has there been any festive period without record of deaths from accident? Will all the people going for the end-of-year holiday come back alive? I hope and pray so, but it is also necessary to put insurance in place just in case of accident, hospitalisation or death. And how much are we talking about here in premium: N1,500; N3,000 and N5,000. This is less than what travellers will spend on their trips.

Various life and composite (insurance companies that offer life and non-life products) insurance companies also have various term assurance policies that are pocket-friendly and affordable. There are those for about N5,000 premium, but they only offer benefit for death of the insured to the tune of N500,000. There is another one with N10,000 premium and offers hospitalisation cash benefit of N5,000 per day for 10 days, while another variant with N20,000 premium has a hospitalisation cash benefit of N10,000 for 10 days. Hopefully, the insured would have recovered well enough to be discharged from the hospital after 10 days. If unfortunately, the insured dies, the beneficiary will be entitled to a cash benefit of N500,000 for N10,000 premium and N1m for N20,000 premium.

Finally, we talked earlier about buildings that will be unoccupied during this period. There are variants of combined fire, burglary and special perils policy with low premium. The policies cover fire, theft/burglary and natural disasters. A sum insured of N1m comes with N7,500 premium, N2m sum insured goes with a premium of N15,000 and N3m sum insured has a premium of N20,000. There is a platinum variant with a sum insured of N5m and premium of N30,000. The policies also have single article limit, that is, the maximum amount payable per article. The limit rages from N50,000 to N250,000. These policies are not targeted at high net worth people, who can have a single wristwatch or jewellery worth N10m. they are for middle class and lower income earners. So before you travel, you can take this policy. But please note that these policies, like burglary and theft policies, warrant you to inform the insurance company if the house will be unoccupied for more than weeks. If not, your claim can be avoided, if an incident occurs in your absence. You can approach a Registered Insurance Broker for more details of these and similar insurance products. That is the wise thing to do.