The basic extensions in a motor insurance policy and their implications



This is a continuation of our series “Understanding Motor Insurance Policy”. We have explained the basic covers provided by a standard motor insurance policy. Kindly go through our page to read it up.

Today we shall be focusing on how to maximize the covers available under motor insurance policy. Your may call them policy “ad-on” but they are technically referred to as “policy extensions or exclusions”. It means the policy excluded these items or the policy has been extended to cover these items. We should however state here that these extensions comes with payment of an additional premium.

Basic extensions under motor insurance policy are;

  1. Policy Excess (or Excess Buy Back (EBB)
  2. Flood extension
  3. Strike, Riot and Civil Commotion (SRCC)
  4. Geographical limit

1. What is Policy Excess (or Excess Buy Back) – There is an implied contributory condition or agreement in a standard motor insurance policy. It is called “Excess”. 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: As stated in our previous discussion, flood damage to your vehicle is not covered in a standard motor insurance policy. You could however request for it to be incorporated into the policy at a cost.

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 can request for it to be incorporated into you policy and of course at an additional fee.

4. Geographical Limit; Virtually every insurance indemnity policy has a geographical limit. It means that your claim is only valid if it happens within the territorial limit of that country. In Nigeria, the limit would be of course Nigeria, hence whatever happens to your vehicle outside Nigeria or liabilities arising from its usage outside Nigeria is not covered. However, if you are traveling to other West African States, you may request for what is called “ECOWAS Brown Card”. It extends the cover of your policy to other West African States.

So, when you are about to buy your motor policy or renew it, be sure to include these extensions especially the first 3. With these we are confident that you are good to go.

Author: Abolaji Dairo

Abolaji Dairo is a seasoned insurance practitioner with several years of experience to his credit and an Associated member of the Chartered Insurance Institute of Nigeria. He started his insurance practice as a Client Relation Officer and Marketer where he witnessed the wide misconception about insurance by the public and the massive knowledge gap that existed. He afterwards became an Underwriter with specialty in Claims Administration and Loss Adjustment. This afforded him the opportunity to acquire adequate practical knowledge about the workings of insurance. His love for writing, insurance and knowledge sharing turned him into a blogger. He presently works with Consolidated Hallmark Insurance Plc. as a Claims Expert and he is committed to customers satisfaction by providing highly professional, timely and qualitative services.

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