Insurance is an essential financial safety net that provides peace of mind, protecting the insured/policyholders from unexpected events and the financial repercussions they can bring. However, situations often abound when upon the occurrence of an insured risk, the insurer either partly denies liability or insists on a total denial due to fraud, connivance, or other factors as might have been spelled out as vitiating elements/exceptions in the insurance contract. It is therefore imperative for both the insurer and the insured to seek proper legal counsel before proceeding into an insurance contract.

It is against this background that this piece aims to highlight and provide valuable tips for navigating the sometimes rocky path to crystalizing a contract between the insurer and the insured.


Simply put, insurance is an agreement by which one party (the insurer) commits to do something of value for another party (the insured) upon the occurrence of some specified contingency. By this agreement, one party assumes a risk faced by another party in return for a premium payment.1

The party who is covered or protected by and under an insurance contract is generally referred to as the insured while the party who agrees by contract to assume the risks of the other party's losses and compensate for those losses is known as the insurer.2

The courts in interpreting what amounts to a contract of insurance had this to say in the case of SEC EQUIPMENT & COMM. (NIG) LTD & ANOR v. INTERNATIONAL ENERGY INSURANCE PLC & ORS3

"Insurance business is founded on trust and integrity. In the case of Yadi (NIG). Ltd v. Great NIG In's Co Ltd (2007) 14 NWLR (Pt. 1055) 584, Akintan, JSC held: "The position of the law is that a contract of insurance should be one of utmost good faith, uberrima fide. To constitute a contract of insurance, therefore, there must be an unqualified acceptance by the other party. A prima facie contract of insurance only comes into existence the moment an insurance proposal in the normal form is accepted unequivocally without qualification by the insurers: see Ngillari v. N.I.C.O.N (1998) 8 NWLR (Pt. 560) 1; Northern Assurance Co Ltd. v. Wuraola (1969) 1 All NLR 14; and Royal Exchange v. Chukwurah (1976) 11 SC 295

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Insurance contracts are usually binding between the parties i.e. the insurer and the insured as well as spell out the terms and conditions of the contract between the respective parties. On the occurrence of an insured risk, practical tips to be employed by an insured/policyholder typically include:

  1. Reviewing the insurance contract: An insured/policyholder needs to go back to the insurance contract to review the respective clauses. This helps to guide with respect to limitation periods, timeline for taking certain steps, dispute resolution mechanisms as well as other vital factors that must be meticulously considered before pursuing an insurance claim against the insurer.
  • Engaging the services of a lawyer: Engaging the services of a legal practitioner should be the next step an insured should take on the occurrence of an insured risk. This allows the legal practitioner to properly advise the insured within the limitations of the law and the insurance contract with the insurer.
  • Maintaining detailed records: A meticulous insured/policyholder would ensure that all relevant document and correspondences relevant to the insurance contract is kept and well maintained. This can be referenced when a dispute resolution action is initiated.
  • Ensuring constant communication: Insurance contracts often contain a specific timeline within which the insured/policyholder must notify the insurer of the occurrence of an insured risk. Failure to notify within the specified timeline contained in the insurance contract is often a ground employed by some insurers to deny liability under the insurance contract.
  • Approach the appropriate dispute resolution fora: Insurance contracts usually contain dispute resolution clauses that stipulate how the dispute is to be resolved in the event of one. However, an insured/policyholder needs to carefully review the dispute resolution clause. This is because instituting an action in a forum different from that anticipated by the contract between the parties may be a valid ground to vitiate such proceedings. Where for instance, the insurance contract stipulates that parties should settle all disputes by arbitration and an aggrieved party instead decides to go to court, the insurance party may bring an application to stay the proceedings until arbitration is explored. The courts have however decided that the presence of an arbitration clause does not oust the jurisdiction of the court. This was aptly captured in the case of CIG MOTORS CO. LTD v. MIDASCOPE GLOBAL RESOURCES LTD4

"let me begin by saying that it is a misconception of the law to argue that the mere presence of an arbitration clause in a contract, or agreement by parties to submit a dispute to arbitration, ousts the jurisdiction of the Court...........Therefore, an arbitration clause in an agreement is simply to postpone the right of either of the parties to litigation whenever the other contracting party elects to submit the dispute under the agreement to arbitration. The rationale for this position of law is for the reason that agreement of parties cannot override or exclude the constitutional or statutory jurisdiction conferred on the Court. Parties cannot by their agreement or otherwise confer or dislodge the Court of jurisdiction. See the case of Fastech (Nig) Ltd v Zamfara State Gov. & Ors. (supra), I therefore conclude that the Appellant in the instant case did not seek to oust the jurisdiction of the lower Court when he filed an application for stay of proceedings pending arbitration." Per ABUBAKAR SADIQ UMAR, JCA (Pp 12 – 14 Paras F – D)

  • Engaging the Regulators: An aggrieved insured/policyholder may also file a petition with the National Insurance Commission (NAICOM) where the insurer is without lawful basis trying to deny liability for the insured risks. The involvement of the regulators can greatly help in putting the insurance company in check.

Handling insurance claims disputes can be challenging, but with careful preparation and persistence, an insured/policyholder can improve his or her chances of a favorable outcome. One thing that is important is that the claim must be brought bonafide. This is because one of the fundamental benefits of insurance is that an insured should not benefit from his or her wrongdoings. By following the above-highlighted tips, insured/policyholders can navigate insurance claims disputes more effectively and secure the coverage they are entitled to.


1. Byan A. Garner Blacks Law Dictionary 7th Edition P. 802

2. Ibid at P. 811

3. (2018) LPELR-46839 (CA)

4. (2022) LPELR-58240(CA)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.