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Want to know the importance of insurance coverage in Nigeria and why you need it now. Then, stick around and read every word on this page. Additionally, you will get 5 tips for those that need insurance in Nigeria.

Nigeria is among the few countries worldwide that is rather hesitant to embrace insurance coverage. We see insurance as an unneeded expense, which we can well do without. The average Nigerian is prepared to fix any damage to his vehicle and prevent the 'hassle' of buying an insurance plan.

For those into the sales of insurance packages, you will agree with me that one of the major challenge faced in the industry is one reoccurring concern which kept popping up while marketing your insurance packages which is 'why the need for insurance coverage, is it not a waste of money and time? A lot of people don't know that they can actually save money when they take up an insurance plan! Yes, you heard me right, I said save! This article is for you if you have ever asked yourself this question. Read on to find out more.

Also Read: What You Need To Know About Health Insurance

In a layman terms, insurance coverage is a contract/agreement in between the proposer (Insured) and an insurance company (Insurer), in which the Insurer agrees to compensate the Insured (for a token cost known as premium), in the event of loss, injury, death or damage to them, their property or that of a third party.

Something you require to understand from the outset is that insurance coverage is not a concrete service, it is intangible. To put it simply, it is not physical or seen. Due to the fact that insurance coverage is an intangible service, it is regarded by some as one of the most difficult things to sell. The only time insurance coverage ends up being 'visible' remains in the event of a loss, in which case a claim is started by the insurance policy holder and it is assumed that the terms of the insurance coverage contract are supported by the insurer.

Some individuals are hesitant to acquire it since insurance coverage is intangible. However, insurance plays a significant financial role which cannot be overemphasized. Thus it is really essential that you have at least one insurance policy to secure you against an unanticipated loss.

So, having that in mind, here are 5 key reasons why you need to acquire an insurance policy.

Also Read: Best Insurance packages for a Nigerian

Importance of Insurance in Nigeria

1. Insurance Helps you save money

At the beginning of this article, I did discuss that when you purchase an insurance plan, you end up saving some cash. I'm sure you are now thinking 'how am I saving money when in real fact I'm investing it by buying an insurance cover.' The answer is basic when you purchase an insurance coverage, you are acquiring it for a little charge (premium), compared to the extent of danger the insurance companies are handling on your behalf.

Let me further explain it using a basic example. If you decide to insure your brand new car and truck for N3million, the basic premium rate is 10%, therefore your premium will be N300,000. If due to unforeseen scenarios the car is stolen, your insurance companies are required to pay the amount N3million, less the applicable policy deductible of 10%.

Hence the likely final settlement will be N2.7 million. So, for your premium of N300,000, you have actually saved N2.7 million. After all, if you had actually not guaranteed the automobile, you would have paid of replacing it with your own finances. Insurance coverage transfers the monetary duty from you to your insurance provider. Now that's what I call saving money!

2. Insurance is a danger transfer mechanism

Having an insurance policy guarantees that the unexpected loss connected with threat is moved from you the insured to your insurance provider. In basic terms, when you have taken up an insurance plan, you are accidentally shifting the danger of a loss happening from you to your insurer. This will give you comfort and the assurance that in the event of a loss you will be protected economically.

3. Protection Against Unanticipated Losses

No one understands what will in the nearest future happen to either them or their loved ones, their home or their properties. With insurance, you are protected from unforeseen losses and ensured that in the event of death, injury or damage your claim will be settled in line with the agreement signed by you and your insurance providers.

In effect, insurance reduces your financial danger in case of an unanticipated loss. Just as was pointed out previously, the cash you would have invested fixing or replacing a lost or harmed product will no longer be borne by you, thus you have the freedom to put your finances to other use.

Also Read: Insurance Strategies - Things You Can Do to Get More from Your Insurance Company

4. Compulsory insurances

There are a number of insurances in Nigeria that are mandatory. This means that anyone, groups or companies that do not have the compulsory insurance can be prosecuted and face huge fines or perhaps imprisonment, if caught.

Below is a list of insurances that are required in Nigeria:

  • Motor -3rd party liability insurance coverage: Every automobile chauffeur and vehicle owner in Nigeria is required to have this insurance. It covers against liabilities such as damage to property, death or injury of a third party as a result of using the insured lorry.
  • Employers liability insurance: This law mentions that every organisation in Nigeria, utilizing a minimum of 3 persons need to have insurance coverage that will compensate their employees in case of death, injury or sickness throughout their employment.
  • Builders liability insurance: This insurance coverage is for specialists and owners of the building that are more than 2 floors. It compensates construction workers on building suites, versus death or injury.
  • Occupiers liability insurance coverage: This obligatory insurance is for owners or occupiers of public structures, such as hotels, workplaces, residences and so on, in the event that users of such locations are hurt or pass away or the structure collapses.
  • Employers liability insurance (group life): Businesses using a minimum of 4 persons are needed to have this insurance. It covers injury, death or illness whilst in the utilize of the insured.
  • Healthcare professional indemnity insurance coverage: It is needed by law that all healthcare professionals, organizations and so-on need to have this insurance cover.

5. Insurance 'Knows' Your Needs

Having an insurance coverage cover generally fulfills your needs. You require to have insurance for your car to safeguard you from unpredicted losses.

Also Read: The Importance Of Life Insurance

6 Tips when Getting Insurance in Nigeria

Now you know 5 reasons why you must acquire an insurance coverage, I wish to give you a couple of tips on how to tackle it. Hope they are practical.

  1. ensure you buy an insurance plan if you have a car or own a structure, employ at least 3 individuals to work for your business, you are a consultant or contractor.
  2. Ensure you do extensive research on the various insurance plan offered, prior to choosing which policy(s) to use up.
  3. Verify which required insurance coverages are applicable to you, to avoid disobeying the law.
  4. Yes, Nigeria is becoming of age, you can get quotes on the internet for your insurance coverage. Nevertheless, I would encourage you do it the old style way by visiting your nearest insurance broker and get a quote from them.
  5. A word they say is enough for the wise. make sure the insurance provider you are acquiring your policies from has the ability to settle your claim in case of a loss. In other words, browse the internet for their claims settlement information. Trust me, an insurer that can't settle a claim of N150,000.00 will definitely not be able to settle a claim of N1,000,000.00.
  6. Take up an insurance policy you can fund, whilst at the same time one that caters or meets your insurance needs.

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