Car Insurance in Nigeria 2025

Driving in Nigeria comes with many risks traffic congestion, accidents, theft, and even damage from floods or fire. That’s why car insurance is not just a smart choice it’s the law. Yet, many drivers still don’t understand how it works or the options available to them.

In this guide, we’ll break down everything you need to know about car insurance in Nigeria in 2025 types, benefits, costs, and how to choose the best cover.

1. What Is Car Insurance?

Car insurance is a contract between you and an insurance company. You pay a premium (monthly, quarterly, or yearly), and the insurer agrees to cover costs if your car is stolen, damaged, or if you injure someone in an accident.

Without insurance, you’ll bear all these expenses yourself—which can run into millions of naira.

2. Is Car Insurance Compulsory in Nigeria?

Yes. By Nigerian law, at least Third-Party Motor Insurance is mandatory for all vehicle owners. Driving without it is illegal and can attract fines, car impoundment, or even jail time.

Unfortunately, many Nigerians either drive without insurance or buy fake papers from roadside vendors. This is risky—fake insurance gives you no protection when you need it most.

3. Types of Car Insurance in Nigeria

a) Third-Party Motor Insurance (Compulsory)

• The minimum cover required by law.

• Protects other people if you damage their vehicle, property, or injure them.

• Does not cover your own car.

• Very affordable (around ₦15,000 per year).

b) Third-Party, Fire, and Theft

• Includes third-party cover plus protection if your car is stolen or damaged by fire.

• Mid-level option for drivers who can’t afford full comprehensive insurance.

c) Comprehensive Car Insurance

• The most complete cover.

• Protects against:

  • Accidents (your car + third party)

  • Theft

  • Fire and flood damage

  • Natural disasters

  • Vandalism

• More expensive but offers peace of mind, especially for new or high-value cars.

4. How Much Does Car Insurance Cost in Nigeria (2025)?

Car insurance costs vary depending on the insurer, the type of cover, and the value of your car.

• Third-Party Insurance: ₦15,000 – ₦25,000 per year

• Third-Party, Fire & Theft: ₦30,000 – ₦60,000 per year

• Comprehensive Insurance: Usually 3–5% of the car’s value.

  • Example: A car worth ₦5,000,000 may cost ₦150,000 – ₦250,000 per year for comprehensive cover.

While comprehensive insurance is more costly, it can save you millions if you get into a serious accident.

5. Best Car Insurance Companies in Nigeria (2025)

When choosing car insurance, always go for licensed, reputable companies. Some of the most reliable insurers in Nigeria include:

• Leadway Assurance

• AIICO Insurance

• AXA Mansard

• Custodian Insurance

• Cornerstone Insurance

• Mutual Benefits Assurance

These companies are regulated by NAICOM (National Insurance Commission) and offer both third-party and comprehensive packages.

6. Benefits of Car Insurance

1. Financial protection: Saves you from huge repair or replacement costs.

2. Legal compliance: Avoids fines and penalties.

3. Peace of mind: You can drive knowing you’re covered.

4. Third-party coverage: Protects you if you damage another person’s car or property.

5. Value-added services: Some insurers offer roadside assistance, towing, and accident support.

7. Challenges of Car Insurance in Nigeria

• Fake insurance papers: Many drivers buy from touts instead of licensed brokers.

• Low awareness: Some car owners don’t understand the difference between third-party and comprehensive cover.

• Claim delays: Some insurers take long to process claims, causing frustration.

• High cost of comprehensive cover: Many drivers stick to third-party only.

8. How to Choose the Right Car Insurance Policy

Here are tips to pick the best plan for your needs:

• Know your budget: Decide what you can afford yearly.

• Check insurer reputation: Look for reviews and NAICOM registration.

• Compare coverage: Don’t just focus on price—see what’s included.

• Ask about claims process: A fast and transparent process is crucial.

• Consider your car’s value: Comprehensive cover makes sense for newer cars, while older cars may only need third-party.

9. Future of Car Insurance in Nigeria (2025 and Beyond)

The Nigerian auto insurance industry is changing fast. Trends to watch include:

• Digital insurance platforms: Many companies now let you buy and renew online.

• Telematics insurance: Usage-based pricing (pay as you drive) may soon enter Nigeria.

• Integration with vehicle registration: Efforts are being made to link insurance to FRSC and police systems to stop fake papers.

• Flexible micro-insurance: Short-term car insurance for drivers who don’t use their cars often.

Conclusion

Car insurance in Nigeria is more than just a legal requirement—it’s a financial safety net. Whether you choose the basic third-party option or full comprehensive cover, having valid insurance ensures you’re protected against unexpected events.

As 2025 unfolds, more Nigerians are beginning to embrace genuine car insurance, not just to avoid penalties, but to safeguard their vehicles and finances.

Also Remember: don’t wait until an accident happens—get insured today.