CIIN Certificate CF5 - Motor Insurance Products (Nigeria)

Which statement best describes the principal difference between private motor and commercial motor insurance transactions in Nigeria?

• APrivate motor policies never require proposal forms, while commercial policies always do
• BCommercial motor underwriting typically involves fleet schedules, business use declaratio…
• CPrivate motor insurance is voluntary, whereas commercial motor insurance is never sold to…
• DCommercial motor policies exclude third-party liability, which is only available under pr…

In the Nigerian motor insurance market, which body regulates insurers authorised to issue motor policies?

• AFederal Road Safety Corps (FRSC)
• BNational Insurance Commission (NAICOM)
• CNigerian Insurers Association (NIA)
• DChartered Insurance Institute of Nigeria (CIIN)

Which distribution channel is most commonly used for retail motor insurance in Nigeria?

• ALloyd's underwriters placing risks directly at the Nigerian Stock Exchange
• BLicensed insurance brokers, agents, and direct sales by NAICOM-authorised insurers
• CCentral Bank of Nigeria branch counters
• DMandatory purchase through vehicle manufacturers only

What is the primary role of the Nigerian Insurers Association (NIA) in the motor insurance market?

• AIssuing certificates of motor insurance on behalf of the government
• BRepresenting member insurers and promoting industry interests, including market-wide init…
• CSetting individual premium rates for every motor policy sold in Nigeria
• DAdjudicating motor claims disputes as a statutory tribunal

A motorcycle used for commercial dispatch services in Abuja requires motor insurance. How is this risk typically classified?

• AHousehold contents insurance
• BCommercial motor insurance
• CMarine cargo insurance
• DProfessional indemnity insurance

Which factor most distinguishes the Nigerian motor insurance market from a fully state-run compulsory scheme?

• APolicies are issued by private NAICOM-licensed insurers operating in a regulated competit…
• BNo insurer is permitted to offer motor cover; only government bonds are used
• CMotor insurance is optional for all vehicles regardless of road use
• DPremiums are fixed by the Federal Ministry of Finance for every vehicle class

A policyholder declares their vehicle will be used solely for social domestic and pleasure purposes, but regularly uses it to carry paying passengers. Which core insurance principle is most directly breached?

• AIndemnity
• BUtmost good faith regarding material facts about vehicle use
• CContribution
• DInsurable interest at the time of loss only

A comprehensive motor insurer pays ₦1.2 million to repair an insured vehicle damaged by a negligent third party. Under which principle may the insurer pursue recovery from the negligent driver?

• AProximate cause
• BSubrogation
• CAverage
• DUberrimae fidei only at renewal

An insured's car is damaged when another driver runs a red light in Lagos. The effective cause of the insurer's liability to pay under own-damage cover is determined by applying which principle?

• AProximate cause
• BContribution
• CSalvage
• DInsurable interest at inception only

What is the minimum statutory cover required for a private car used on public roads in Nigeria?

• AComprehensive motor insurance only
• BThird-party motor insurance covering death, bodily injury, and third-party property damage
• CPersonal accident cover for the driver only
• DFire and theft cover without liability protection

Third Party Fire and Theft (TPFT) motor cover extends the basic third-party policy by additionally covering:

• AOwn-damage from collision regardless of fault
• BFire damage to the insured vehicle and theft of the insured vehicle
• CPassenger liability for fare-paying customers only
• DAll medical expenses of any road user in Nigeria

Under a comprehensive private motor policy in Nigeria, which peril is typically covered under the own-damage section?

• AWear and tear from normal ageing of tyres
• BAccidental collision damage to the insured vehicle
• CMechanical breakdown with no external impact
• DPenalty fines imposed by traffic courts

Which optional motor policy extension typically provides a daily cash benefit or hire vehicle costs while the insured car is being repaired after an accident?

• ANo-claims discount protection
• BCourtesy car or loss-of-use benefit
• CWindscreen excess waiver only
• DAct-only liability endorsement

A commercial goods-carrying vehicle policy in Nigeria will typically include cover for:

• AThird-party liability and may extend to own damage, with goods-in-transit often arranged…
• BOnly theft of the driver's personal jewellery
• CEmployers' liability for office staff not using the vehicle
• DLife assurance for all Nigerian citizens

Windscreen cover under a Nigerian motor policy usually:

• ARepairs or replaces damaged glass with a reduced or nil excess, within policy limits
• BCovers engine failure caused by oil leaks
• CEliminates all third-party liability limits
• DReplaces the entire vehicle if any glass is scratched

Legal expenses cover attached to a motor policy in Nigeria generally funds:

• ADefence costs for certain motoring prosecutions or uninsured loss recovery actions within…
• BUnlimited payment of any traffic fine imposed by courts
• CPurchase of a replacement vehicle of higher value
• DComprehensive medical treatment worldwide without limits

Passenger liability cover under a private motor policy typically protects the policyholder against claims from:

• APassengers injured while being carried in the insured vehicle with the owner's permission
• BPedestrians only, never occupants of the insured vehicle
• CThe policyholder's creditors for unpaid loans
• DAny person injured anywhere in Nigeria regardless of vehicle involvement

A policyholder has Third Party only cover. Their vehicle is stolen from a car park in Port Harcourt. What is the insurer's likely position?

• AThe theft claim is covered because third-party policies always include theft
• BThe theft of the insured vehicle is not covered; only third-party liability is provided
• CThe insurer must pay full replacement value under indemnity
• DNAICOM automatically upgrades the policy to comprehensive upon theft

A comprehensive policyholder's car is flooded during a Lagos rainstorm. The policy includes flood as a specified peril under own-damage. The vehicle is a total loss valued at ₦4 million with ₦5 million sum insured. How will indemnity typically operate?

• APay ₦4 million, the pre-loss market value, subject to policy terms and excess
• BPay nothing because flood is never insurable in Nigeria
• CPay ₦5 million automatically because that is the sum insured regardless of value
• DPay double the sum insured as a penalty to the insurer

A taxi operator carries fare-paying passengers using a saloon car insured for social domestic and pleasure use only. A passenger is injured in an accident. What coverage issue arises?

• ANo issue; social use policies automatically cover hire and reward
• BThe insurer may decline the claim because commercial hire-and-reward use was not declared…
• CPassenger injuries are never compensable under Nigerian law
• DNAICOM voids all motor policies for taxis without exception

An insured with TPFT cover returns to find their vehicle damaged by an unidentified hit-and-run driver. Own-damage collision is not covered. Which section may still respond?

• AThird-party liability for damage the insured caused to others only
• BThird-party liability if the insured was at fault toward another party; own-damage collis…
• CAutomatic comprehensive upgrade for hit-and-run events
• DPassenger liability for fare-paying customers

Under which legislation was compulsory motor third-party insurance first established in Nigeria?

• AMarine Insurance Act 2004
• BMotor Vehicles (Third Party Insurance) Act 1945
• CPension Reform Act 2014
• DCompanies and Allied Matters Act 2020

The Nigerian Insurance Industry Reform Act (NIIRA) 2025 requires compulsory third-party motor insurance for vehicles on roads to cover damage to third-party property up to:

• A₦1 million
• B₦3 million
• C₦10 million
• D₦500,000

What is the penalty under current Nigerian law for using a motor vehicle on a road without valid third-party insurance?

• AA warning letter only with no financial penalty
• BA fine of at least ₦250,000 or imprisonment for up to one year, or both
• CPermanent confiscation of the vehicle without any alternative
• DMandatory life imprisonment for all offenders

A certificate of motor insurance under Nigeria's compulsory motor insurance law must be:

• AIssued by the approved insurer in the prescribed form for the policy to be effective for…
• BPrepared solely by the vehicle owner without insurer involvement
• CIssued only after a claim has been paid
• DValid indefinitely even after policy cancellation without surrender

Under the Nigerian Insurance Industry Reform Act (NIIRA) 2025, if a motor policy was cancelled before an accident occurred, an insurer can still avoid paying a resulting third-party judgment unless the certificate of insurance is surrendered (or a lost-certificate declaration made) within how many days of the cancellation taking effect?

• A7 days
• B14 days
• C30 days
• D90 days

Which document provides temporary evidence of motor insurance cover before a certificate is issued?

• ACover note
• BVehicle licence alone
• CDriver's national identity card
• DRoadworthiness certificate only

Conditions in a third-party motor policy that purport to restrict cover contrary to Nigeria's compulsory motor insurance law are generally:

• AFully enforceable against injured third parties in all circumstances
• BIneffective to the prejudice of third parties claiming under the Act
• CAutomatically converted into comprehensive cover
• DEnforceable only if approved by the vehicle manufacturer

An employee uses their own private car to visit a client on their employer's business. For motor insurance purposes, this raises which legal consideration?

• ABusiness use must be declared; the employer may also need to verify cover for company bus…
• BPrivate cars used for any purpose are automatically covered for all business travel witho…
• CEmployers' liability replaces all motor insurance requirements
• DNo motor insurance is required for short business trips

FRSC officers may request a motorist to produce evidence of insurance during a road check because:

• ADriving without insurance is a criminal offence and officers enforce compliance with road…
• BFRSC issues all motor insurance certificates nationally
• CFRSC sets premium rates for all insurers
• DFRSC adjudicates all motor claims before payment

Which vehicles are generally subject to compulsory third-party motor insurance when used on public roads in Nigeria?

• AMotor vehicles used on roads, including cars, motorcycles, and commercial vehicles, subje…
• BOnly articulated trucks above 40 tonnes
• COnly vehicles owned by companies, never private individuals
• DBicycles without engines exclusively

NAICOM's role in motor insurance includes:

• ALicensing insurers, supervising market conduct, and protecting policyholders
• BIssuing driving licences to all Nigerians
• CRepairing accident-damaged vehicles at government garages only
• DSetting the market value of every used car in Nigeria

When a motor policy is cancelled, the insured must:

• ASurrender the certificate of insurance to the insurer as required under the Third Party A…
• BDestroy the vehicle immediately
• CTransfer the certificate to any unrelated third party for continued use
• DIgnore cancellation because certificates remain valid permanently

Forging or using a false certificate of motor insurance is:

• AA criminal offence under the Motor Vehicles (Third Party Insurance) Act
• BEncouraged when premiums are high
• COnly a civil matter with no criminal consequences
• DPermitted for vehicles kept solely on private driveways used on roads

Third-party motor insurance under Nigerian law covers liability for:

• ADeath or bodily injury to third parties and damage to third-party property
• BDeliberate criminal acts by the insured
• CWear and tear on the insured's own vehicle
• DFines for speeding issued to the policyholder

Part X of the Nigerian Insurance Industry Reform Act (NIIRA) 2025, which repealed and replaced both the Insurance Act 2003 and the Motor Vehicles (Third Party Insurance) Act, governs compulsory motor insurance by:

• ARequiring NAICOM-registered insurers and setting a minimum property damage limit
• BAbolishing all motor insurance requirements
• CReplacing third-party cover with life assurance for all drivers
• DExempting all motorcycles from any insurance requirement

A motorist presents a certificate of insurance at an FRSC checkpoint, but the policy was cancelled last week and the certificate was not surrendered. What is the legal position?

• AThe motorist is effectively uninsured despite holding the certificate
• BThe certificate remains valid indefinitely after cancellation
• CNAICOM automatically reinstates the policy at checkpoints
• DThe motorist is fully covered because a certificate was once issued

A third party sues an insured driver and obtains judgment. The insurer separately commences a court action seeking a declaration that it may avoid the policy because the insured failed to disclose a material fact. Under NIIRA 2025 section 90(4), within how many days after commencing that declaration action must the insurer notify the third-party plaintiff of the grounds it relies on, to use the declaration as a defence to paying the judgment?

• A7 days
• B14 days
• C30 days
• D90 days

A company fleet manager allows employees to drive company vehicles without verifying valid motor insurance. Who may face legal consequences for permitting uninsured use on roads?

• ABoth the owner who permits use and the driver may face liability under compulsory insuran…
• BOnly the vehicle manufacturer
• COnly pedestrians injured in unrelated accidents
• DNo one if the company is registered with CAC

An approved insurer becomes insolvent after a motor accident but before the claim is paid. What consumer protection framework may assist claimants in Nigeria?

• ANAICOM's regulatory oversight including liquidation procedures and policyholder protectio…
• BAutomatic payment from the Central Bank regardless of insolvency
• CNo protection; claimants always lose all rights
• DTransfer of all claims to the Federal Ministry of Works

A Lagos resident purchases third-party cover from an unlicensed entity not registered with NAICOM. Why is this policy problematic?

• AIt does not satisfy the requirement for insurance with a NAICOM-registered insurer under…
• BUnlicensed cover is always better because premiums are lower
• CNAICOM encourages unlicensed insurance to increase competition
• DOnly comprehensive policies require licensed insurers

A vehicle is used solely on a private estate with no public road access and never enters public roads. Compulsory motor third-party insurance under Nigeria's current motor insurance law:

• AMay not be required while the vehicle is not used on a road as defined by the Act
• BIs required even for vehicles that never leave a private garage on private land with no r…
• CIs required for bicycles without engines
• DApplies to ships at sea

A policyholder modifies their car engine significantly without informing the insurer. At accident, the insurer investigates and finds undeclared modification. What legal remedy may the insurer pursue?

• AAvoid the policy or decline the claim for material non-disclosure or alteration of risk
• BMust pay all claims regardless of modifications
• CMust upgrade the policy to comprehensive automatically
• DCan only impose a ₦100 fine

A motor proposal form in Nigeria primarily serves to:

• ACapture material information for underwriting and form the basis of the insurance contract
• BReplace the certificate of insurance permanently
• CEliminate the insurer's duty of utmost good faith
• DGuarantee that no claims will ever occur

Which factor is typically material in rating a young driver's private motor policy in Lagos?

• AAge and driving experience
• BThe colour of the insured's office building
• CNumber of employees in unrelated companies
• DPreferred newspaper of the policyholder

No-claims discount (NCD) in motor insurance rewards:

• APolicyholders who complete claim-free periods with reduced renewal premiums
• BPolicyholders who make frequent large claims
• CInsurers who cancel policies early
• DThird parties injured in accidents

Protected no-claims discount allows the policyholder to:

• AMake a specified number of claims without losing the entire NCD entitlement, usually for…
• BAvoid paying any premium forever
• CClaim unlimited amounts without disclosure
• DDrive without a licence legally