So, a fortnight ago, Bounce News ran a story on comprehensive auto insurance, following the Otedola bridge accident which destroyed over 50 vehicles.

Read the story here.

In case you have made up your mind to take up a comprehensive insurance cover for your car, here are 4 things you need to keep in mind before signing the dotted lines.

It is based on the chat Bounce News had with an insurance executive, Uchenna Njoku in Lagos.

1. Your Cover Is Limited To Your Premium: This means that the insurance company will not pay damage exceeding your comprehensive cover.

Let’s take the Otedola bridge accident for instance. Assuming the truck that caused the accident was insured at 4% of its value - let’s say that amounts to 7 million naira, now, the damage it has caused is estimated at over 50 million naira. The insurer will not pay the 50 million naira. What it will pay is a certain percentage of the premium not exceeding the 7 million naira.

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2. Your Discount Determines Your Cover: This seems pretty obvious. According to Njoku, it is generally possible to get between 2 – 4% insurance cover. This means, you can ask to insure your vehicle for anything between 2 to 4% of the total value of the vehicle.

But assuming you got 2%, and your vehicle gets stolen, you will only get a fraction of the total replacement value, because the law requires you to bear certain amount of the risks.

This is called excess buy back. so, if you expect to get full claim if anything happens, you need to buy that excess back by paying at least 3.5%.

So, don’t try to be smart by negotiating for anything below. It doesn’t pay you.

3. Your Cover Diminishes As Your Car Depreciates: Let’s say you purchased you car for 3 million naira in December 2017 and insured it at 3.5%. by December 2018 when it expires, and you want to renew, your car won’t be valued at 3 million naira anymore.

You see, your car has depreciated and that will be taken into account. So, you while you will still pay 3.5% discount, the value may have dropped to say, 2.5 million naira.

4. Your Cover Doesn’t Include Theft By Member Of Your Household: This is an interesting one. So, the insurance company can generally replace your car when it is stolen. But not when it is stolen by a member of your family.

This is just as the insurer is not liable if a minor or someone without a driver’s licence damages your car while driving it.

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