Third-party insurance premium: Are Nigeria insurers retooling for Electric vehicles policy?

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…experts warn EVs consumers of high premium over battery data and repairs

In Nigeria, third-party insurance is compulsory by law under the Motor Vehicle (Third-party) Insurance Act of 1950 and the Insurance Act 2003 includes that third-party insurance covers the damage or loss to the property of a third party as per law. And it is a criminal offence not to possess the policy, equally a punishable by the law which including one-year imprisonment or paying a fine.

 

From the traditional way of the third-party insurance which is offering protection against damages to the third-party by the insured vehicle covers physical injuries, damages to the vehicle, damage to the property, and death but in the case of electric vehicles insurance policy is a different ball game

 

As at today, the third-party insurance policy is involving in the 21st century to covers premiums for electric vehicles (EVs) and others which are likely to continue rising unless manufacturers improve access to battery data and address hurdles to repairing packs after minor collisions, insurers and industry experts have warned.

 

For Electric vehicles to flourish in Nigeria, experts are of the opinion that high cost, Infrastructural deficits, knowledge gap in technical know-how, and the government policy regulatory framework on e-mobility among others should be tackled headlong.

 

The Ameh News recalls that there are 4 types of electric vehicles:

  • Battery Electric Vehicles (BEVs) BEVs are also known as All-Electric Vehicles (AEV)
  • Hybrid Electric Vehicle (HEV): HEVs are also known as series hybrid or parallel hybrid.
  • Plug-in Hybrid Electric Vehicle (PHEV)
  • Fuel Cell Electric Vehicle (FCEV):

 

For operational capability, all above mentioned types of vehicles needed an insurance policy in their operations.

 

Citing the Head of Media and Marketing, Stallion Motors, Sonu Singh, who disclosed that the company has sold 120 units of Kona since its launch in 2020, stating that the adoption is gradual, as more people will accept it in the coming years which means insurance policy will be needed.

READ ALSO THIS: NAICOM, NITDA to leverage on cyber insurance to strengthen digital ecosystem in Nigeria

Globally, according to the report, the production of electric cars and hybrid electric vehicles has come with incredible speed and are getting more deeply rooted than ever.

 

 

From the research, the third-party insurance policy in Nigeria should be aware of these three types: Private vehicle Insurance, Two-wheeler Insurance, and Commercial Vehicle Insurance even electric bike will join later.

 

“Insurance operators offers vehicle owner a coverage insurance plan includes protection to a Third Party for incidents such as injuries/death and property damage caused in an accident but in the Electric Vehicle (EV) insurance policy needed adoption of battery packs or repaired after accidents along others mentioned above in the policy package. For instance, this (battery packs & repaired) forces insurers in EV policy to write off cars with few miles, leading to higher premiums.

 

The research showed a better vehicle Insurance goes after a comprehensive insurance cover that can provides complete protection of not only someone else’s car like a Third-Party policy, but also your own vehicle’s damages as well as any injury to the owner driver.

 

Experts are of the opinion that in insuring third-party policy involving EV, emphasis should be based on manufacturers to produce more easily repairable battery packs and provide third-party access to battery cell data, if not, insurers and industry experts argued that premiums will continue to increase as EVs become more popular and a growing number of low-mileage cars get scrapped after collisions.

 

 

“The number of cases is going to increase, so the handling of batteries is a crucial point,”

 

It was reported that one manufacturer has been a particular focus of concern, with the company making battery packs “structural” or part of the car’s body.

 

This decision has helped with cutting back production costs, the Reuters report noted, but it pushes extra costs toward insurers and consumers. While the cost of third-party policy in Nigeria, depending on the type of vehicle, an annual insurance premium is charged, the report noted.

According to the Federal Roads Safety Corps (FRSC) Act, any automobile on Nigerian roads must have at least third-party motor insurance policy or comprehensive insurance coverage, which goes for between five and 10 per cent of the value of a vehicle.

 

 

If you want to know what insurance company is the best fit for you, then visit website of the National Insurance Commission (NAICOM), the apex regulatory body of the insurance industry to know the auto insurance companies in Nigeria that are in business, registered, and safe.

 

 

Also choose your preferred type of Auto Insurance policy will require you to visit either physically or online, the company of your choice, so that, you will fill out some forms required. Some of these forms may differ from company to company but the standard ones are Know Your Customer (KYC) form which contains a motor proposal form and a motor insurance physical inspection form.


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