The law has, however, developed compulsory insurance in Nigeria.
With compulsory insurance in Nigeria, what insurance must you buy?
Compulsory insurances are those classes of insurance made compulsory by law, with the objective of providing protection to third parties and the general public. It is important to state that not all insurance products are compulsory. For instance, insurance in respect of education of a child, for household items, etc, are not compulsory.
The following 6 types of Insurance are compulsory in Nigeria:
1. Builders Liability – under the Insurance Act 2003/under the Lagos State Building Control Law 2010
2. Occupiers Liability – under the Insurance Act 2003 and Lagos State Law
3. Employers Liability – (Group Life) – under the Pension Reform Act 2004
4. Employers Liability – under the Workmen’s Compensation Act 1987
5. Healthcare Professional Indemnity – under the NHIS Act 1999
6. Motor 3rd Party Liability – under the Insurance Act 2003
What is Builders Liability Insurance?
This is a type of insurance that all owners or contractors of buildings under construction (more than 2 floors), must purchase to provide compensation in event of bodily injury, death and property damage to workers at construction sites and affected members of the public following collapse of the building and other construction risks. The penalty for non-compliance is N250, 000 plus 3 years imprisonment, Record of conviction, sealing-off and demolition of the building are the penalties provided under the Federal and Lagos State laws.
What is Occupiers Liability Insurance?
This is a type of insurance that all owners or occupiers of public buildings, whether private or public, are required to provide under the National Insurance Act 2003 and the Lagos State Building Control Law 2010. A “public building” is any building that is not 100% used by the owner for residential purposes according to the Nigeria Insurance Act 2003. Public buildings include tenement houses, hostels, residential buildings occupied by tenants, lodgers or licensees, and any other building to which members of the public enter and exit for the purpose of educational, recreational or medical services (e.g. schools, cinemas, hospitals, malls, petrol stations, etc).
Occupiers Liability Insurance provides compensation in events of bodily injury, death and property damage to the business users and members of the public in case of building collapse, fire, earthquakes, storm or flood. The penalty for non-compliance is N100, 000 plus 1 year imprisonment, and sealing-off or demolition of the building under the federal and the Lagos State laws.
What is Employer’s Liability (Group Life) Insurance?
This is a type of insurance that all employers of labour with more than 4 employees are required to have under the Pension Reform Act 2004. The law requires the employers to have insurance that will provide for compensation in the event of death, disappearance, disability, or critical illness suffered by staff while in service and to subsidize pension provision in the event of mental or physical disability. This law applies to both public and private sector employees. This means that employees (and their families) have the right to demand compensation and payment from their employers in the event of injury or death. The penalty for non-compliance with this law is N250,000, Record of conviction, and in addition the place of business may be sealed up.
What is Employer’s Liability (Employee’s Earlier Compensation) Insurance?
This is a type of insurance that focused on factory workers (including domestic servants and apprentices) under the Employee ’s Compensation Act 1987 but now re-enacted as Employees Compensation Act 2010 with focus on all category of employees. The law requires them to have insurance that will provide compensation for workers that suffer from injury, contract diseases or die in the course of employment. This means that employees (and their families) have the right to demand compensation and payment of medical expenses from their employers if they had injury, sickness or fatality while they were working for the employer. It also protects the employer against the risk of large claims for injured employees. The penalty for non-compliance of this law is 2 times the amount that would have been paid as premium.
What is Healthcare Professional Indemnity Insurance?
This is a type of insurance that all medical professionals, institutions and centres are required to have under NHIS act 1999 section 45. The law requires all medical institutions registered under the NHIS and working therein. It provides compensation for the NHIS patients who suffer Death, Sickness, Permanent Disability, Partial Disability and Injury by shock from mistakes, errors, negligence and acts of commission or omission of medical practitioners and institutions.
The compensation will depend on the number of hospital beds, for example hospitals with 20 beds and below the compensation would be N10.0m.
The penalty for non-compliance with the law is Personal prosecution for involuntary murder or and Revocation of the permit of medical institution.
What is Motor 3rd Party Liability?
This is a type of Insurance that is compulsory for all owners of Motor vehicle whether private or commercial vehicle are required to provide under the National Insurance act 2003 section 68. The law states that “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”. Motor vehicle 3rd party liability provides compensation in the event of death, bodily injury, and property damage to members of the public.
The compensation to the 3rd party would not be anything less than N1.0m
The penalty for non-compliance is a fine of N250,000 or imprisonment for 1 year or both.