INTRODUCTION
The Nigerian Insurance Industry Reform Act 2025 (“NIIRA 2025 “) has introduced significant reforms to the regulation of motor vehicle insurance in Nigeria. These reforms expand insurance coverage, increase liability limits, strengthen regional insurance cooperation, and enhance policyholder protections. Understanding these developments is essential for vehicle owners, operators, insurers and legal practitioners operating within Nigeria’s insurance and transport sector.
1. Compulsory Motor Vehicle Insurance Against Third-Party Risk
NIIRA 2025 expands the category of persons required to obtain motor vehicle insurance. The obligation is no longer limited to the registered owner of the vehicle. It now extends to any person who has effective control or operational responsibility for the vehicle.
Anyone who operates or manages a vehicle must ensure it is insured with a valid motor vehicle insurance policy. It is an offence to drive a vehicle without insurance, and the penalties include: (i) a
fine of up to N250,000 (two hundred and fifty thousand Naira); (ii) up to 12 months of
imprisonment; or (iii) both a fine and imprisonment.
2. Passenger Insurance Requirement
Under the Motor Vehicle (Third Party Insurance) Act (“the repealed Act”), insurance policies were primarily designed to protect third parties. However, NIIRA 2025 introduces a requirement for vehicles carrying passengers for hire or reward to insure passengers against death or bodily injury.
