Small Business & Insurance…God Is In Control

Insurance must be the very first cost saving item on every small business operators’ list when the time comes to tighten the proverbial belt and monitor outgoings a little more closely.

Let’s be honest, by the 2nd year of buying a “newish” car, most small business owners are likely to opt for a simple third party insurance policy for their beloved cars. We  vow to drive more carefully and cover said cars daily with the blood of Jesus. Put plainly, we save hard earned money by not buying comprehensive car insurance.

As for insurance against fire and theft, “it will never be our portion”. Natural disasters? Disability? “God forbid”. And woe be tide that insurance salesman or woman who comes near a Nigerian small business owner selling life insurance! You might as well be asking his in-laws to move in right away to share his property after the untimely death you and your ill-fated policy have brought his way.

It would appear then that the truly successful insurance policy sellers in Nigeria are the churches, mosques and the hardcore spiritualists who fend off all manner of risks and dangers, from enemies – real and imagined, mothers in-law, and of course the ever lurking Devil.

Our challenge therefore is this: how do we as entrepreneurs and small business owners – men and women, convince ourselves to take a dispassionate look again at insurance, understand the concept, and use it to better our operations?

Well, to guide us, we have our first of two SMExperts on insurance – Ms. Jennifer Okwumah of Allied Insurance, who has taken the time to collate a few articles which will help shed a little more light on insurance as it relates to the small business and medium business owners.

If I may, let us start with these:


Compulsory insurances are those classes of insurance made compulsory by law, with the objective of providing protection to third parties and the general public.  The following types of insurance are compulsory in Nigeria:

Builders Liability Insurance

This type of insurance requires that all owners or contractors of buildings under construction (more than 2 floors), must purchase to provide compensation in event of bodily injury, death and property damage to workers at construction sites and affected members of the public in the event of collapse of the building and other construction risks. The penalty for non-compliance is N250, 000 plus three years imprisonment. Record of conviction, sealing-off and demolition of the building are the penalties provided under the federal and Lagos State laws.

Occupiers Liability Insurance

This type of insurance requires that all owners or occupiers of public buildings, whether private or public, to provide under the National Insurance Act 2003 and the Lagos State Building Control Law 2010. A “public building” is any building that is not 100 per cent used by the owner for residential purposes. Public buildings include tenement houses, hostels, residential buildings occupied by tenants, lodgers or licensees, and any other building to which members of the public enter and exit for the purpose of educational, recreational or medical services (e.g. schools, cinemas, hospitals, malls, petrol stations, etc).

Occupiers Liability Insurance provides compensation in events of bodily injury, death and property damage to the business users and members of the public in the event of building collapse, fire, earthquakes, storm or flood. The penalty for non-compliance is N100, 000 plus one year imprisonment, and sealing-off or demolition of the building under the federal and the Lagos State laws.

Employer’s Liability (Group Life) Insurance

This type of insurance requires that all employers of labour with more than four employees are required to have under the Pension Reform Act 2004. The law requires the employers have insurance that will provide for compensation in the event of death, disappearance, disability, or critical illness suffered by staff while in service and to subsidize pension provision in the event of mental or physical disability.

This law applies to both public and private sector employees. This means that employees (and their families) have the right to demand compensation and payment from their employers in the event of injury or death. The penalty for non-compliance with this law is N250,000, record of conviction, and in addition the place of business may be sealed up.

Healthcare Professional Indemnity Insurance

This type of insurance requires that all licensed health care providers and medical practitioners (such as doctors, nurses, pharmacists, etc) are required to have under the National Health Insurance Scheme (NHIS) 1999. The law  have insurance that will protect their patients in case of accidents or fatalities (death) resulting from professional negligence.

This type of insurance provides compensation to patients and their relatives in the event of involuntary murder, disability, shock and injury suffered by patients as a result of the negligence of Health Care Providers. The penalty for non-compliance with this law is a possible revocation of licence by the National Health Insurance Council, a record of conviction, and sealing-off of the premises.

Third Party Motor Liability Insurance

This is the minimum insurance that all owners and drivers of motor vehicles, motorcycles and special type vehicles plying the Nigerian roads are required to have under the National Insurance Act 2003. The third party motor liability insures the motor vehicle against liability as to death, bodily injury or damage to property of a third parties arising from the use of the vehicle. The penalty for non-compliance is a fine of up to N250,000 plus one year imprisonment.


Further References:



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