Life has a way of springing surprises, some pleasant, others capable of erasing years of hard work in a matter of hours. A sudden illness, a fire outbreak, an auto accident, or even a flood can push families and businesses into deep financial distress if there’s no safety net in place, JOSEPHINE OGUNDEJI writes

It was a rainy Tuesday morning when Chika’s life took an unexpected turn. She had spent years building a small fashion business in Lagos, saving diligently to buy her first car, a silver Toyota Corolla. That day, she was driving to meet a client when a speeding truck skidded across a wet junction and slammed into her car, whose front crumpled instantly. She was fortunate to escape with only minor injuries, but the car was a write-off.

Chika didn’t have comprehensive car insurance, only the basic third-party coverage required by law. This meant the damage to her own car, worth almost N4m, would have to be covered entirely out of pocket. She didn’t have the funds, so she sold part of her business inventory at a loss to raise cash for repairs. The loss of her vehicle slowed her deliveries, caused her to lose clients, and wiped out the savings she had spent years building.

This is the reality many people face. A single accident, illness, disaster, or theft can erase years of progress. In Nigeria’s unpredictable economic and infrastructural environment, insurance is not a luxury for the rich; it is a shield for anyone who has something to protect. Without it, financial wipe-outs are only one misfortune away.

In Nigeria, where economic volatility, rising living costs, and unpredictable weather patterns have become part of daily life, the absence of proper insurance can mean the difference between recovery and ruin. A sudden medical emergency can swallow years of savings, a road accident can leave a breadwinner without a source of income, and a single fire outbreak can erase an entire business overnight. Without a financial buffer, such events often push individuals and families into cycles of debt and hardship from which it can take years, or even decades, to recover.

Yet, despite these growing risks, insurance penetration in the country remains critically low, hovering at less than one per cent of GDP, far below the African average. This gap leaves millions exposed to the possibility of a complete financial wipe-out, with no structured means of rebuilding. Part of the problem lies in low awareness, mistrust of insurers, and the perception that insurance is only for the wealthy. But as economic and environmental uncertainties grow, protecting assets, income, and livelihoods is no longer just a choice; it’s a survival strategy.

From health coverage that cushions the blow of medical emergencies, to motor insurance that safeguards vehicles and liabilities, to property and home policies that protect against fire, theft, or natural disasters, and life insurance that secures a family’s future, the right type of insurance can be the difference between bouncing back and starting from scratch.

President Bola Tinubu recently assented to the Nigerian Insurance Industry Reform Bill, 2025.

In a statement signed by Special Adviser to the President on Information & Strategy, Bayo Onanuga, on Tuesday, the new Act will provide for comprehensive regulation and supervision of all insurance and reinsurance businesses operating within Nigeria.

The Act introduces critical measures such as stringent capital requirements to ensure the financial soundness of operators, enforcement of compulsory insurance policies to enhance consumer protection, digitisation of the insurance market to improve access and efficiency, zero tolerance for delays in claims settlement, creation of dedicated policyholder protection funds, especially in cases of insolvency, and expanded participation in regional insurance schemes, including the ECOWAS Brown Card System.

“This development reaffirms the administration’s commitment to financial stability, economic development, and inclusive growth,” said Onanuga.

“The NIIRA Act 2025 ushers in a new era of transparency, innovation, and global competitiveness for the insurance industry. It aligns with the Federal Government’s vision of achieving a $1 tn economy,” he added.

The insurance industry reform bill was sponsored by the Chairman of the Senate Committee on Banking, Insurance & Other Financial Institutions, Tokunbo Abiru. It repealed the Insurance Act, Cap. I17, Laws of the Federation of Nigeria, 2004; the Marine Insurance Act, Cap. M3, Laws of the Federation of Nigeria, 2004; the Motor Vehicles (Third Party Insurance) Act, Cap. M22, Laws of the Federation of Nigeria, 2004; the National Insurance Corporation of Nigeria Act, Cap. N54, Laws of the Federation of Nigeria, 2004; and the Nigeria Reinsurance Corporation Act, Cap. N131, Laws of the Federation of Nigeria, 2004, to provide for a comprehensive legal and regulatory framework for insurance business in Nigeria and for related matters.

Health insurance

Health insurance is one of the most important safety nets anyone can have. In Nigeria’s private hospitals, the cost of treating serious illnesses or injuries can run into millions of naira, often demanded upfront before treatment begins. Without coverage, individuals may have to deplete their savings, take on high-interest loans, or even forgo treatment altogether. With health insurance, the cost of care is shared with the insurer, making quality treatment accessible without destabilising your finances.

From the National Health Insurance Scheme to private Health Maintenance Organisations, there are plans to suit different budgets. Some cost less than a weekly outing but provide coverage worth hundreds of thousands in medical expenses. For families, this is not just a personal safety measure; it is peace of mind that a medical emergency will not derail years of financial effort.

The Healthcare Providers Association of Nigeria, Lagos State Chairman, Abiola Paul-Ozieh, lamented that it was worrisome that less than 10 per cent of the population has been covered under health insurance despite over two decades of government-led initiatives.

“Health insurance has been in Nigeria for over twenty years, yet over 90 per cent of Nigerians are still uninsured. This is unacceptable. We cannot talk about universal health coverage if people are not brought into the system,” Paul-Ozieh stated.

Car insurance

Car insurance is more than a legal requirement; it is a financial shield against one of the most common risks in everyday life. In Nigeria’s bustling cities, road accidents are an unfortunate reality, and repair costs can be crippling. Comprehensive car insurance covers damages to both your vehicle and others involved in an accident, while also protecting against theft and fire. This can mean the difference between getting your car back on the road quickly or being forced to sell assets just to cover repairs.

Too many drivers settle for the cheapest, third-party-only option, believing they are saving money. In truth, this often proves far more expensive when an accident occurs. Comprehensive cover ensures that a crash, theft, or natural disaster does not become a long-term financial setback.

Property insurance

Property insurance protects your home, rental property, or commercial building from losses caused by fire, theft, natural disasters, or vandalism. For many Nigerians, real estate is their most valuable asset, yet it is often left uninsured. The cost of rebuilding or major repairs can be overwhelming, particularly in flood-prone cities like Lagos and Port Harcourt. With property insurance, these expenses are covered, ensuring that an unforeseen event does not erase years of investment.

Building insurance

Building insurance is a more specific form of property coverage, focused solely on the physical structure, the walls, roof, floors, and foundation. It is essential for homeowners, landlords, and real estate investors who want to protect their buildings from structural damage due to fire, storms, or other disasters.

This type of coverage ensures that if the worst happens, you are not left shouldering the entire cost of reconstruction.

Business insurance

For entrepreneurs and business owners, business insurance is not optional; it is a necessity. A single lawsuit, employee injury, equipment loss, or major disaster could not only shut down operations but also threaten the owner’s personal finances. Business insurance provides coverage for these risks, allowing for continuity even when disruptions occur.

With this protection in place, salaries can still be paid, damaged equipment can be replaced, and customer trust can be maintained. Without it, years of hard work can vanish overnight, leaving the owner to start from scratch.

Life insurance

Life insurance is a commitment to those who depend on you. It ensures that in the event of your death, your family receives financial support to cover living expenses, education costs, and debts. This prevents your loved ones from having to sell property, take on loans, or struggle to make ends meet in your absence. For breadwinners, life insurance is not just a policy; it is a legacy.

A former Commissioner for Insurance, Emmanuel Chukwulozie, described life insurance as an insurance contract in which the insured transfers and the insurer assumes the risk of death for a specified period of time. As in other insurance businesses, the insured transfers the risk to the insurer and receives a life insurance policy upon payment of a premium.

Apart from the insured and the insurer, there is usually a beneficiary who is the person (or persons) who is to receive the policy proceeds if the insured event (death) occurs within the policy period. Life insurance can expire upon the death of an insured person or after a set period agreed upon by both parties.

Income protection insurance

Income protection insurance replaces a portion of your earnings if you become unable to work due to illness or injury. It is especially important for freelancers, self-employed individuals, and anyone whose income stops the moment they stop working. By maintaining a flow of income during recovery, this type of insurance prevents a sudden medical issue from becoming a financial disaster.

Travel insurance

Travel insurance offers peace of mind when travelling locally or internationally. It covers emergencies such as illness, injury, lost luggage, or trip cancellations. In an age where more Nigerians travel for work, study, and leisure, this type of coverage ensures that a mishap in a foreign city does not lead to unexpected expenses that follow you home.

For the Nigerian working class, where every naira is stretched between bills, transport, and daily living costs, insurance often feels like a luxury. Yet, it is one of the smartest financial investments you can make, if approached with strategy.

Start with the essentials

The best way to approach insurance as a working-class Nigerian is to focus on the risks that could cause the most damage if they happened tomorrow. Health insurance should be your first priority because medical emergencies can be financially devastating. Look for NHIS-approved HMOs or employer-sponsored plans to cut costs. If you own a vehicle, consider comprehensive motor insurance for broader protection or, at the very least, a reliable third-party policy. And if you have dependants who rely on your income, life insurance is critical. It ensures they have financial support in the event of your death.

Match coverage to your needs

Paying for insurance you don’t need is money wasted. Instead, assess your lifestyle and protect what’s most at risk. A single renter, for instance, may not need full building insurance, but contents insurance could be a smart investment to cover electronics, furniture, and personal belongings from theft or fire. By aligning your cover with your actual circumstances, you ensure every naira you spend works for you.

Compare policies before buying

Not all insurance plans are created equal. Premiums, coverage limits, exclusions, and claim processes vary widely between insurers. Take the time to compare multiple providers, either by using online comparison tools or consulting a licensed broker, so you can find the best balance between affordability and adequate protection. This step alone can save you thousands over the long term.

Leverage employer benefits

Many companies provide group life, health, or accident cover for their employees. These benefits are often underutilised simply because people don’t understand them. Review your employment package carefully to see what’s already covered. Then, use personal policies only to fill in the gaps. This way, you’re not paying for cover you already have.

Pay annually where possible

While paying monthly premiums can feel easier on the pocket, they often end up costing more due to administrative fees. If you can afford it, paying your premium annually can save you money and ensure your coverage remains uninterrupted. It also removes the risk of missing a payment and having your policy lapse at the wrong time.

Bundle policies for discounts

Some insurers offer discounts when you purchase multiple policies with them, such as motor and home insurance. Bundling not only saves money but also makes managing your cover easier since all your policies are in one place.

Review and update regularly

Your insurance needs will change as your life changes. Marriage, having children, buying a home, or starting a business all bring new responsibilities and risks. Review your policies annually to make sure they still match your circumstances and provide the protection you need.

Keep an emergency fund alongside insurance

Insurance won’t cover every possible expense. Deductibles, waiting periods, and exclusions can still leave you with unexpected costs. An emergency fund, ideally covering three to six months of expenses, ensures you can handle these gaps without going into debt.

In conclusion, insurance is the quiet defender of financial stability. From Chika’s story, it is clear how easily a lack of coverage can undo years of work. Whether it is health, car, property, building, business, life, income protection, or travel insurance, each plays a unique role in safeguarding your assets and future.

In a country where uncertainty is part of daily life, insurance is not about expecting the worst; it is about making sure the worst does not destroy everything you have built. The question is not whether you can afford insurance, but whether you can afford to be without it.