Victims of the Abule-Ado Lagos pipeline explosion that occurred Sunday, killing about 20 people and injuring many with loss of properties, may be able to get compensation in the form of third party damage from the Nigerian National Petroleum Corporation (NNPC).
The state-owned oil company should ordinarily have taken insurance for its facilities as well as for third party damage, in the case of an accident like what happened on Sunday.
Third-party insurance is essentially a form of liability insurance purchased by an insured (first-party) from an insurer (second party) for protection against the claims of another (third party). The first party is responsible for their damages or losses, regardless of the cause of those damages.
The victims of the incident can therefore through their lawyers approach the NNPC for compensation on damages, including life and properties lost in the incident.
But how much the NNPC will get from insurance industry support or claims to indemnify the victims are dependent on the level of coverage it took for the facilities.
Sunday Thomas, acting commissioner for Insurance/CEO of the National Insurance Commission (NAICOM), told BusinessDay, Tuesday that “ordinarily the effect of the explosion is a liability to the owners of the pipeline.”
The extent to which insurance companies will be responsible for payment of claims is determined by the nature and extent of the cover, Thomas however noted.
Daniel Braie, managing director/CEO, Linkage Assurance plc, said the incident was third-party liability damage, and so victims would have to fall back on owners of the facility for claims.
The primary cause of the accident was said to be from a granite carrying truck that broke down on the pipeline area of the NNPC facility in Abule-Ado area of Lagos.
Since it is established as an accident and not a kind of explosion that resulted from human intentional actions, like pipeline vandalism or oil scooping activities, war or protest, insurance will have a role to play if it has been contracted for third-party protection.
Fatai Adegbenro, executive secretary, Nigerian Council of Registered Insurance Brokers (NCRIB), said there could be claims depending on the perceptive you were looking at it.
Adegbenro said, “If the victims themselves have insurance, they will be indemnified by their insurance companies, and this affects both life and properties.”
But again, the insurers also have the opportunity to pursue subrogation right from owners of the pipeline, the NNPC, he said.
Subrogation right in insurance is a term describing as a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.
According to Adegbenro, the owners of the pipeline can also get compensation if the facility is insured, and at the same time could claim for third-party damage from owner of the truck that caused the accident.
He also noted that insurance would have a big role to play if there was insurance taken for fire on the buildings or taken for life by those who lost their lives.
Mayowa Adeduro, managing director/CEO, Law Union & Rock Insurance plc, who expressed sadness over the incident, consoled families of the deceased and prayed God to grant the dead eternal rest.
Speaking on the insurance implication, he said, “If those lives were insured they will get compensation from insurance companies involved. Also if those houses were insured they will get indemnity from the insurance companies.
“The remote cause of the explosion was said to be from a granite carrying truck, and so the owner is variously liable to all parties that has suffered financial loss from the incident.”