Fake vehicle insurance policy in Nigeria is a menace, and it hurts everyone-road users, car owners and the insurance sector. The activities of fraudsters selling a fake vehicle insurance policy to unsuspecting car owners has helped create the perception that the insurance sector does not pay claims and has denied vehicle owners the cover an authentic motor insurance policy can provide.
According to reports, Local governments and car licensing or registration offices play a pivotal role in the activities of fake insurance policy agents. So what is a fake vehicle insurance policy?
What is a Fake Vehicle Insurance Policy?
A fake vehicle insurance policy is a counterfeit insurance policy unauthorised and not recognised by the regulatory insurance bodies. The insurance policy does not exist beyond the paper certificate that criminal agents or brokers provide.
Every year millions of vehicle owners in Nigeria fall for this scam. According to the Nigerian Insurance Association(NIA), as of January 2022, there are only 4.3 million vehicles with a genuine motor insurance policy.
This translates to millions of vehicle owners on Nigerian roads risking the lives of Nigerians and exposing themselves to legal consequences. As Section 68 of the Insurance Act, 2003 states, “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 registered under this Act.”
As a vehicle owner in Nigeria, a Third-Party insurance policy is a minimum required. It is crucial to purchase a genuine one because it covers death or bodily injury to a third party arising from an accident. It also covers damages to third-party up to One Million Naira.
For vehicle owners who do not comply with owning a genuine vehicle insurance policy in Nigeria, the penalty for non-compliance is one-year imprisonment, a fine of up to Two Hundred and Fifty Thousand Naira or both.
Since ignorance of the law is not an excuse, let us look at how to spot fake vehicle insurance policy in Nigeria.
Spot Fake Vehicle Insurance Policy in Nigeria
Vehicle Insurance Policy Price: If you are looking to spot a fake vehicle insurance policy, a quick place to begin is to look at the price. In many cases, because it is a quick money grab by fraudsters, fake policies are priced lower. When writing this, third-party policy ranges from Five Thousand Naira to Seven Thousand, Five Hundred Naira.
Ask About The Insurer: When buying any vehicle insurance policy, inquire about the insurance partner backing the broker or agent selling the policy to you. If you have any doubts about the institution, do your research online and check regulators like NIA & NAICOM licensing of such institution or their partners.
Check Policy on Nigerian Insurance Industry Database: Database was developed by the Nigerian Insurance Association (NIA) as a tool to checkmate fake compulsory insurance certificates. Known as ASKNIID (www.askniid.org), vehicle owners and law enforcement agencies use it to confirm the validity.
USSD From Nigerian Insurance Association
Furthermore, in its commitment to solving the fake motor insurance policy scams, the Nigerian Insurers Association (NIA) launched the Unstructured Supplementary Service Data (USSD) code *565*11# to verify vehicle owners the authenticity of insurance policies they purchase. Dial the *565*11# code, enter your vehicle registration number, and you are charged Twenty Naira to confirm the policy’s validity instantly.
In conclusion, the insurance sector in Nigeria has come of age, and unlike many believe, insurers in Nigeria pay claims. In 2021, the industry paid Eleven Billion Naira to claimants.
Octamile is building insurtech and claims tech solutions1 that help insurance payout claims in 60 minutes. It ensures genuine claims are settled in record time; buying a fake insurance policy will deny you this experience.
Regulatory bodies and genuine insurance organisations are doing everything to protect you from scammers selling fake policies; use the tips we have shared here to spot a phoney insurance policy. Stay covered and protected!