Tag Archives: Insurance



Authorized Repair Limit (ARL) in motor insurance is an amount over and above the policy excess which the insured is allowed to expend on repairs of an insured vehicle following a loss or damage without necessarily requiring the insurer’s consent.

Generally speaking, it is a condition precedent to liability that the insurer must be adequately consulted before one can effect any repairs on an insured vehicle. This is very logical as you can not shave a man’s head in his absence. It therefore makes sense that since you the insured is still going to seek compensation from your insurer, it is only fair that you get their approval before incurring such expenses.
However, this might be difficult to apply in all circumstances hence the introduction of the “Authorized Repair Limits ” to take care of petty damages.

The implication is that once the amount expended is still within the stipulated limit, the insurer is duty bound to honour the claim but subject to the insured’s ability to substantiate same.

How is ARL determined?

It is generally not cast in stone. It’s usually a function of how much an amount the insurer considers to be immaterial. Another factor that is taken into consideration is the type of vehicle in question and its sum insured.

There are instances where the insured would request for an upward review of the ARL. This invariably increases the liability of the insurer in the event of a loss or damage. I have seen underwriters grant questionable ARLs which oftentimes results in a claim.

Where an insured requests a beyond normal ARL, it is expected of a prudent underwriter to qualify such conditions. One way is to subject it to the receipt of cost of repairs, and another is to make the ARL time-bound (like 48 hours after receipt of cost of repairs).

The consequences of spending beyond the ARL

Spending beyond the ARL is a violation of the insurance contract between the insurer and the insured.

From experience, I have found that oftentimes it is as a result of ignorance on the insured’s part and the anxiety to get their vehicles back on the road without any delay. So, they go ahead with effecting repairs (and sometimes even before notifying the insurer of the damage in the first place). But then, ignorance is not an excuse. There has however been times where it was a deliberate attempt by the insured to prevent insurers from investigating the claim and verifying the amount claimed.

Where the ARL has been violated, the insurer has the following options:

1. Limit their liability to the amount of the ARL

2. Totally reject liability (where the damage or loss is in doubt or the insured is unable to adequately substantiate the claim)

3. Reimburse the insured based on insurer’s self assessment of the degree of damage and market survey of the possible cost of repairs.

4. Penalize the insured for repairing without authorization by deducting some percentage from the amount claimed.

5. Sometimes a combination of the above.

As an insured, one way to make this pendulum swing in your favour is to request for an upward review of the ARL in your motor insurance policy. And if the underwriter wishes to make it time bound, you can decide the length of time usually within 24 hours to 72 hours. With this you are sure to get prompt response in the event of a loss or damage and where the time set expires, you wouldn’t have violated any condition should you choose to effect immediate repairs. Just ensure that you can adequately substantiate your claim.


Thank you for reading. We would like to have your views and also know if this post has been of any benefit to you. Kindly leave a comment.


Motor Insurance is about the most popular of all the various classes of insurance in Nigeria and understandably so. It is an everyday risk and the very nature of an automobile easily brings to mind the risks attached. Besides, in Nigeria, it is a criminal offense to drive an automobile without having at least a Third-Party Motor Insurance cover (read more on Third-Party Motor Insurance cover “here“).

Motor Insurance also has the highest frequency of claim and like other classes of insurance, it comes with its own challenges.

As a loss adjuster, I witness on firsthand basis, the effects of people’s misconception about insurance and many times their deliberate attempt to swindle underwriters into paying a loss that never occurred or deceive them into paying more than is required. I however must also point out that many people do not believe in insurance and it is at the point of claim that underwriters have the opportunity to prove that insurance is for real.

A claimant once insisted that he maintains his car with a particular standard auto garage and would not have his car repaired anywhere else. On my visit to the auto garage i requested for his service history from which it was observed that his claim was not true. Being a difficult client that he is we opted to pay the auto garage directly. It was at this point that he started to sing another song. Apparently, if he had been paid directly, he would have taken the vehicle to where it would be repaired cheaper thereby benefiting from his own loss.

Areas of challenge with adjusting Motor Insurance claims

  1. What constitutes a loss claimable under the Motor Insurance policy: Not every damage to a vehicle can be paid for by your motor insurance policy. As a matter of fact, if underwriters were to go by the strict wordings of motor insurance policies, over 50% of motor insurance claims would be treated as “not claimable”. A claimant once got back to where his car was parked only to discover that someone had drawn a long line on it using a sharp object. He reported a claim and requested that insurance should bear the cost of painting the said car. While it is true that the vehicle was damaged, such loss is not covered by the motor insurance policy. Another that is like it is when an insured is effecting a complete body works on his vehicle and attempts to transfer the cost to his insurer.
  2. Challenges with determining the degree of indemnity: The purpose of insurance is to return you (as much as it is practicable) back to the position you were before the loss (not better than). Insurance can only repair that part of your vehicle that was damaged. Anything more is “overcompensation”. This implies that you cannot request your insurer to bear the cost of painting the whole vehicle because painting only the affected part could result in “multi-shade of colours” – now, this is quantifiable. A claimant was involved in an accident that resulted in damage to the rear booth and bumper of his car. The point of argument was when the estimate of repairs submitted included the cost of painting the entire vehicle instead of the damaged area. While it is indeed arguable that painting the affected parts might make some parts of the car appear newer than the others, painting the entire car would also amount to the insured benefiting from his loss, and that is against the principle of indemnity. At best, the insured is made to contribute to the cost of painting.
  3. The challenge of unrealistic expectation by the insured: A claimant once requested a replacement vehicle having damaged his. Such offer of course doesn’t come with a standard motor insurance policy in Nigeria. Another claimant once insisted that is motor insurance policy be responsible for the cost of servicing his car following an accident which had nothing to do with any mechanical component of the car,
  4. Fraudulent intent on the part of either or both the insured and or the third party auto garage. Often times we have the cost of repairs inflated unjustly. At other times, the damage claimed for did not occur and at other times, the subject matter of insurance does not exist, yet the insured wants to be compensated for a loss that did not happen. I once had a case where investigation revealed that the insured instructed the repairer to further damage the vehicle so has to enable him get more benefits.
  5. Non-availability of adequate and verifiable database. This particular challenge is not peculiar to the Nigeria insurance industry alone, it cuts across virtually all other sectors of the economy. Recently, the insurance regulatory body in Nigeria, NICOM, has made giant stride in this regard by the introduction of the Nigeria Insurance Industry Database platform. However, there still exist cases where there are as much as 2 to 3 insurance covers on a particular vehicle by different insurance companies. There has been cases where an insured lodged a claim on the same vehicle and incident with four different insurance companies.

Thank you for reading. We would like to have your view and also know if this post has been of any benefit to you. Kindly leave a comment.



Mr. XYZ took up a comprehensive motor insurance cover on his brand new car which he got for N7,500,000.00. Since the insurance premium payable would be based on the value of the vehicle, he decided to reduce the value to N3,000,000.00  so that he would not have to pay so much in premium.

Some months after, his car was involved in a ghastly accident and the cost of repairs was about N2,500,000.00. In settling his loss, his insurance company, having weighed the amount he was claiming to the sum insured, opted to treat the claim on a Constructive Total Loss(CTL) basis. By this option, it means that the insurer decided that based on their records, the vehicle was beyond economic repairs. Mr. XYZ was offered the sum of N2,800,000.00 (after all deductibles) in settlement of the claim.

Mr. XYZ found himself in a fix. The amount he was offered was not even up to half of the value of the car but he couldn’t afford to repair the car himself. However, accepting his insurer’s offer would require that he forfeits the damaged car to them in line with the conditions of the insurance policy.

You obviously cannot eat you cake and have it back. Continue reading EATING YOUR CAKE AND HAVING IT BACK



We started a new series of discussion on Home Owners Insurance Policy last week and we examined the items covered under the policy. Having understood this, we now need to examine the degree of protection provided by the policy and those losses that the policy would provide compensation against.

Before we proceed, we summarize our last discussion below; Continue reading HOMEOWNERS INSURANCE POLICY – UNDERSTANDING WHICH LOSSES ARE COVERED



Recently, there has been lots of campaign on social media for Home Insurance Policies. While this is a welcome development as the public are being encouraged to protect their most cherished possessions, many of these invitations do not detail the numerous benefits of this policy, what you should look out for when buying the policy and how you can effectively seek compensation under the policy. Continue reading HOMEOWNERS INSURANCE POLICY – WHAT DOES IT REALLY COVERS?