An Insurance policy is made mandatory to make for easy compensation of victims in the event of any loss caused by the negligence of the policyholder.
Recently, the Lagos State Government issued a statement about enforcing the state’s Insurance Act 2003. The Act made it compulsory for all buildings in the state to have an insurance cover. The reason behind the statement was the incessant building collapses in recent times in the state. These collapses usually leave victims without compensation who then turn to the government for relief. If there are insurance policies force by such building owners, the case will be different.
Furthermore, the Act made it compulsory for individuals and companies to possess some form of insurances marked compulsory. These insurances, when in force will reduce loss and non-compensation of victims of accidents caused by the negligence of others. Before you start panicking and possibly running to the next available insurer, you might want to read this post first to be enlightened.
What Are Compulsory Insurances?
Compulsory Insurances are insurances made obligatory by legislation to provide protection to the third party and the general public. Most of these insurances are not as expensive as you think. For instance, you can purchase a Third Party Motor Insurance for as low as N5,000.00. Not all insurances are compulsory, but most of the compulsory ones are to compensate the general public for loss, death or bodily injury.
Out of the mandatory insurances in Nigeria the following are the most prominent:
- Builders’ Liability Policy (The Insurance Act 2003/The Lagos State Building Control Law 2010)
- Occupiers’ Liability Policy (as above)
- Employers’ Liability Policy (Group Life)
- Employers’ Liability Policy (Workmen’s Compensation Act 1987 – Now repealed)
- Healthcare Professional Indemnity Policy (The NHIS Act 1999)
- Motor Third Party Liability Policy (The Insurance Act 2003)
Bird’s Eye View of the Compulsory Insurances
- Builders’ Liability Insurance: This type of insurance provide compensation to victims (workers and the general public) for loss of property, death and bodily injury. This cover is usually taken up by owners or contractors of structures/buildings under construction of more than two floors. The policy responds when there is building collapse and other risks related to building construction. Under the laws (Federal and Lagos) failure to comply with the policy attracts a penalty of N250,000 in addition to three years’ imprisonment, sealing and demolition of the affected building.
- Occupiers’ Liability Insurance: This policy is taken up against liability of the members’ of the public for loss or property damage, death or bodily injury occasioned by fire, collapse, storm, earthquake, storm, flood or any allied peril. The cover is required to be purchased by owners or occupiers of every public building. Under the Nigeria Insurance Act 2003, a building is public when the owner does not use it fully (i.e. 100%) for residency purpose. Example of public buildings include hostels, tenanted buildings, residential buildings occupied by lodgers, tenants, etc. Also, a public building is one in which people enter and exit for educational, recreational or medical services such as schools, hospitals, malls, etc. A maximum fine of N100,000 or one-year imprisonment or both is the punishment for defaulters. Sealing-off or demolition of the affected building are the sanctions under the National Insurance Act 2003 and the Lagos State Building Control Law 2010.
- Employers’ Liability Insurance (Group Life Insurance): This policy provides compensation to employees in the event of death, disability, critical illness, and disappearance while in service. The policy also helps to subsidize pension provision in the event of mental or physical disability. Under the Pension Reform Act 2004, the policy is required by employers with more than 4 employees. However, for employers that refuse to comply, the penalty is N250,000, record of conviction and sealing off of the business premises of such are the punishments.
- Employers’ Liability Insurance (Workmen Compensation Insurance): This policy is basically for factory workers under the Employee’s Compensation Act 1987. The act is now re-enacted as Employees’ Compensation Act 2010 and it catered for all category of employees. Under the new Act, the Nigeria Social Insurance Trust Fund Management Board (NSITF) by statues is empowered to implement the provisions of the Employee’s Compensation Act. The board also manages and controls the fund for compensation. Under this Act, employees have the right to demand compensation if they were injured or suffered sickness or fatality while working for the employer. More about the NSITF scheme and the new Act will be revealed in future posts.
- Healthcare Professional Indemnity Insurance: This policy compensates victims (especially NHIS patients) who due to negligence, error, mistakes, acts of commission or omission of Medical Practitioners and institutions suffer Death, Sickness, Partial and/or Permanent Disability. Under the National Health Insurance Scheme (NHIS) Act 1999, all medical professionals, institutions, and centres are required to have Healthcare Professional Indemnity Insurance. The compensation depends on the number of beds in the hospital. It is a serious offense not to comply with this Act. The penalty is that the offender is prosecuted for involuntary murder or and revocation of the permit of the medical institution.
- Motor Third Party Liability Insurance: This is the minimum insurance cover that every motorist should have. It is criminal to drive a vehicle on any public road without insurance. It is compulsory for all vehicle owners either private or commercial vehicle. The Third Party Motor insurance provides compensation to third party in case of accident for death, bodily injury and property damage. The life cover is unlimited but reasonable while the property damage is N1million. Under National Insurance Act 2003 Section 68, “No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer.” The penalty for failure to comply is N250,000 or 1-year imprisonment or both.
Apart from the fact that the above insurances are mandatory, they also come with benefits like peace of mind, financial aid etc.
Do not be a law-breaker, Insure Today!
Photo Courtesy: https://guardian.ng