Car Insurance 101-Ghana in Ghana – Legal Empire


In order to understand insurance, it is important to understand the various elements of an insurance contract signed between the insured and the insurance company.

There are a number of insurance policies available and virtually any individual or business entity can opt for an insurance policy best suitable to them. If entity A ( either Business or Individual), goes to purchase an insurance policy, such entity is called “The Insured” and the insurance company selling the policy to the insured is called “The Insurer”. Some of the most common insurance policies sought after include Auto, Health, Homeowners and Life Insurance (Assurance).

For the purpose of this article, the focus will be on auto insurance. There are two common types of automobile insurance in Ghana. They are third party motor insurance and comprehensive motor insurance. Third party motor insurance is compulsory and comprehensive motor insurance is optional. The former is cheaper than the latter to purchase.
Therefore in choosing an insurance policy, it is important to understand how insurance works. Two main parts of all insurance policies are the “Premium” and the “Deductible”. An insurance company with a concrete understanding of these two concepts will go the extra mile in helping the insured choose the policy that is best suited to their needs and circumstances.
An insurance policy’s premium is simply its price, basically interpreted as a annual cost. “Deductible”, is the amount of money the insurer pays towards the vehicle’s repairs.The insurer is expected to cover the rest. For example, if you’re in an accident that causes Gh¢ 3,000 worth of damage to your car and your deductible is Gh¢ 500, you will only have to pay that deductible towards the repair while your insurer covers the remaining Gh¢ 2,500.

In other jurisdictions, the premium which is determined by the insurer, is based on you and your risk profile. For example, if you own several expensive cars and have a history of reckless driving, you pay more for an auto policy than someone with a single mid-range saloon car and a perfect record. However, this is not so in Ghana. In Ghana there is a blanket cost of insurance premium regardless of the age, gender or risk factor of the insured.

Claiming compensation in Africa is a challenging process and it is one of the many reasons why people rather settle accident damage issues personally.

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