Motor Accident

I once had a discussion with a friend who claimed to have been defrauded by his insurance company. He lodged a claim under his motor insurance policy and at the end of the whole thing, what he got in form of compensation fell way below his expectations.

As a Claims Expert, i requested to know the details of the transaction and a copy of his insurance policy. After a careful perusal I discovered that my guy like many other claimants threw caution to the wind when he took up his motor insurance policy. It is too late to cry after the head has been chopped off!

When it comes to taking up an insurance policy you can never be too careful. You have the right to ask questions and seek clarifications with respect to grey areas. Your policy document is your insurer’s terms of engagement and it would be the bases of their settlement in the event of a claim. You therefore need to ensure that the terms and conditions of that policy suits you so that you are not disadvantaged.

Whenever you are taking up a Motor Insurance Policy or you are renewing an existing one, you should watch out for the following;

    1. Policy Excess Clause;  Basically, it states that in the event of a claim, you would bear a predetermined amount of the agreed cost of repairs. This amount is deducted from your claim before it is paid. You however have the option of transferring the whole cost to your insurer by paying an additional premium. When this happens, the “excess” becomes “bought back” in to the policy, hence the term “Excess Buy Back”.
    2. Flood Extension; Many motor insurance policies excludes cover against flood damage to your vehicle. You should however request for it to be incorporated into the policy.
    3. Strike, Riot and Civil Commotion (SRCC); Damage to your vehicle following a strike action, riot or an unrest in any part of the country is not covered under a standard motor insurance policy. Should you be interested, you should request for it to be added into your policy.
    4. Authorized Repair Limit; This is a stipulated amount beyond which you are not allowed to incur without the consent of your insurer. If you violate this, your insurer could choose to pay for the “authorized amount” only. You can request for the limit to be increased, however, factors that would be taken into consideration includes; the sum insured, your loss experience among others.
    5. Depreciation; You should compare the rate of depreciation stated in your policy. Where it is too high, you can request for a review.
    6. Towing Limit; Towing expenses as allowed by a motor insurance policy is the amount required to tow your vehicle from the spot of an accident to the nearest safest place. The policy assumes that this would not be a very long distance. However, the amount set as limit could be inadequate depending on the type of your vehicle. You might want to check it for possible review.
    7. Multi-shade of Colours; Where a part of your vehicle is to be repainted following an accident, this could give your vehicle different colour shades. This clause provides that should that situation arise, you policy would bear the cost of painting the entire vehicle.
    8. Sum Insured; The liability of your insurance policy can not exceed the sum insured (the monetary value you placed on your vehicle at the point of insurance).You would be on the disadvantage where you have reduced the sum insured in a bid to pay a lower premium. This is because your insurance would relate whatever quote you submit (in the event of a claim) to the prevailing market price of your vehicle and apply a penalty where you have “under-insured”.


  1. If I have a claim to be made on my comprehensive insured vehicle with a value of GHC40,000 and the total cost of repairs per the estimate is beyond GHC30,000, will my insurance company pay without issues?

    1. Dear Frederick,

      Thank you for your question.

      A lot would depend on the conditions in your motor insurance policy. In your scenario, the cost of repairs already constitutes 75% of the sum insured on your car.
      In Nigeria, the usual practice is that once the cost of repairs is more than 60% of the sum insured, the claim will be treated on a constructive total loss basis.
      That is your insurer would collect your car and pay you off based on the sum insured.

      I hope you found our response useful.

      Thank you.

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