Making a Valid Insurance Claim Under Nigerian Law

Contributor: Nnamdi Okoronkwo Esq.

Nigerian motorists have had a particularly difficult time in recent weeks. As the fuel shortage persists, many motorists have expressed their dissatisfaction with the large sums of money they will have to spend on repairing their vehicles, as a result of the malfunction caused by bad fuel. This is where insurance, especially auto insurance, can come in handy.

Simply put, insurance is a means of protection from financial loss. It is a form of risk management used to hedge against risk and/or uncertainty.

In practical terms, an institution known as the “Insurer” provides insurance. The terms and conditions of the insurance contract are usually contained in the insurance policy. The party seeking to buy insurance from the Insurer is known as the policyholder. While the party that the insurance policy covers is known as the insured.^[1]

In the event that a loss that was insured against occurs, the question then becomes how to go about making a claim that covers such a loss. That is what this article seeks to explain in simple terms.

HOW TO MAKE A VALID INSURANCE CLAIM IN NIGERIA

It is important to note that the onus is on the insured to prove the following:

1. That they have a valid claim.
2. That a loss covered by the insurance policy has occurred.
3. The exact amount of the loss.

The process of making a valid insurance claim is usually stipulated by the insurance policy and this varies from company to company. However, the process can be broken down into 3 general steps, namely:

1. Notifying your insurer about the loss which occurred.
2. Your insurer will then accept or deny your claim.
3. In the event that your insurer accepts your claim, payment will be made.

These steps will be discussed below.

The first step to take when a loss that is covered by an insurance policy occurs is to notify your Insurer.  Subject to the terms contained in the insurance policy, the Claimant may use any swift means of communication to contact the Insurer, a designated contact person or department or an intermediary like a broker – for example, by direct reporting, telephone call, text message, email, fax, letter, social media site or website, or any other form of technology that is widely used.^[2]

You can also get a Claims Form from your Insurer. In it, you will give details of the loss and any other relevant information, such as eyewitness accounts of the loss and details of the other party (in the case of a motor vehicle accident).

Following the notification to your Insurer, your Insurer will now have to ascertain the truthfulness of your claim. This is done by a Claims Expert working for the Insurer. As stated earlier, the insured is to prove that they actually suffered a loss that was insured and this is usually done by way of documentation.

Documentation refers to furnishing the Insurer with documents that authenticate your claim. These documents will also be reviewed by the Claims Expert.

The documents to be presented depend on the nature of the insurance and the type of loss that has occurred. A few examples of documents needed for different insurance claims:

1. MOTOR OWN DAMAGE: Accident report form, an estimate of repairs, police report in cases of death and bodily injury, satisfaction note.
2. BURGLARY: Burglary Claim Form, Police Report, Statement of Claims, Purchase Receipts of stolen items, Internal Investigation Report, Estimate of repairs for damaged doors, etc, Discharge Voucher.
3. WORKMAN’S COMPENSATION: Claim Form, Excused Duty Certificates, Discharge Certificates, Medical Report, Death Certificate, Medical Expenses, Pay Slips for 3 months immediately preceding the accident.

These documents in addition to the registration of claims, acknowledgement of notification, determination of the existence of the insurance cover, the appointment of loss adjusters, and the review of the reports submitted by the loss adjusters complete the proof of loss process.

At the end of this, a Claim is either admitted or denied. Admitted Claims move on to the stage where the Insurer makes an offer to the insured and eventually settles with them. When the Claimant fails to prove his loss satisfactorily, this may lead to a repudiation of liability on the part of the insurer.^[3]

GROUNDS FOR REPUDIATION OF LIABILITY

• The claim is fraudulent and cannot be substantiated with material facts;
• Notice is not given to the Insurer at all or in the prescribed format, within a specified period or within a reasonable time;
• The claim will violate public policy;
• The insurance contract is illegal;
• There is no insurable interest in the case of life insurance; or
• There is a breach of the utmost good faith requirement by the insured (See Section 19 of the Marine Insurance Act).
• Where there is a breach of a fundamental term of the insurance policy.^[4]

In the event that the Insurer repudiates liability, the insured can challenge the decision in any of the following ways:

1. Through an alternative dispute resolution mechanism, if this is provided for under the terms of the insurance policy; or
2. By instituting an action at the Federal High Court for marine insurance or the State High Court for life insurance.
3. By making a complaint against the insurer using the National Insurance Commission website.

THIRD-PARTY INSURANCE CLAIMS

A third party insurance claim occurs where you file a claim against another person’s insurance policy. For example, if you were injured at a restaurant, you may file a claim against the restaurant’s insurance policy.

In Nigeria, Third parties can claim against the Insurer by instituting an action against the insured and obtaining judgment. Under Section 69 of the Insurance Act, the Insurer is to satisfy a judgment against the insured on third-party claims.  Thus, the Insurer is mandated under the law to pay the judgement sum.

CONCLUSION

The process of making a valid insurance claim under Nigerian law, although straightforward, has often been shrouded in secrecy. However, this does not diminish the need to know how to go about making one. Ultimately, the burden rests on the insured to prove that his claim is legitimate. This necessitates the need for anyone with an insurance policy to know how to go about making a claim.

REFERENCE

1. N.B. The terms insurer and policy holder are sometimes used interchangeably but do not mean the same thing. ↑
2. Guideline 3.3.1 of the Market Conduct and Business Practice Guidelines for Insurance Institutions ↑
3. Industrial and General Insurance PLC, “Claims Procedure (Non-Life)” Industrial and General Insurance PLC. Accessed 20/3/2022 ↑
4. In Edokpolor & Co Ltd v Bendel Insurance Company Limited (1997) 1 SCNJ 172, it was held that false disclosure of the place of departure of the ship was a breach of warranty and therefore, the insurer was discharged from the liability. ↑