Car Insurance Law
We would like to provide our vehicle owners and car insurance policyholders with a brief overview of the most important laws in the regulatory framework governing car insurance in South Africa. These laws include:
- Short-Term Insurance Act (Act 53 of 1998 as amended)
- Policy Holder Protection Rules (Short-term Insurance), 2004
- Financial Advisory Intermediary Service Act (Act 37 of 2002)
- Financial Services Ombud Schemes (Act 37 of 2004)
Introduction
The insurance sector in South Africa is governed mostly by statutory law through various acts promulgated by parliament. The industry is also specifically regulated by the Financial Services Board in terms of the legislation and regulations promulgated by parliament.
How does this affect the vehicle owner and which are the most important aspects in Car Insurance Law that the consumer needs to know?
We would like to provide a brief overview of the Car Insurance laws and how they impact on the rights of our car owners, consumers, financial service providers etc
Short Term Insurance Act 53 of 1998
The Short-term Insurance Act (amongst other things):
- Provides for the registration of short-term insurers.
- Control the activities and administration of short-term insurers and intermediaries.
- Prescribes financial requirements, solvency and liquidity.
- Regulates policies and business practices and offers policy holder protection.
- Regulates commissions, premium collection and claims handling.
Financial Advisory and Intermediary Services Act 37 of 2002
The objective of the FAIS Act is to regulate the rendering of certain financial advisory and intermediary services to clients. In essence, the FAIS Act deals with:
- Regulating brokers as intermediaries and advisors, and Includes various other professions
- The role of the Ombud is explained and formulated.
There is also the following subordinate legislation to FAIS:
- General Code of conduct for authorised financial services providers (FSP’s).
- Determination of Fit and Proper Requirements.
It is illegal for anyone who has not applied to the Financial Services Board to be licensed as a financial service provider, to give a consumer financial advice or sell a financial product. This law protects the consumer from inappropriate financial advice, and consumers can take action if they are given bad advice.
In terms of this law, anyone or any institution selling a financial product or giving financial advice for a fee or commission must, in all their dealings, meet certain minimum requirements; behave honourably, professionally and with due diligence; provide appropriate advice; and are subject to disciplinary procedures if they do not adhere to the FAIS Act.
A financial service provider (FSP) or an FSP representative must always provide financial services honestly and fairly and with due skill, care and diligence. The service must be in the customers’ interests, and uphold the integrity of the financial services industry.
If a consumer receives inappropriate advice or if a financial service provider (FSP) or FSP representative has not followed the proper procedures, the consumer is entitled to complain to the Ombud for Financial Service Providers. A determination by the Ombud is legally binding.
Policyholder Protection Rules 2004
The Policyholder Protection Rules were issued in terms of Section 55 of the Short-Term Insurance Act and Section 62 of the Long-Term Insurance Act, and replace the rules first issued in 2001.
The Policyholder Protection Rules are separate from those in the code of conduct for financial advisers set out in the Financial Advisory and Intermediary Services (FAIS) Act.
The rules have a strong consumer protection bias, and ensure that policies are entered into, executed and enforced in accordance with sound insurance principles and practice, in the interests of all the parties and the public.
The Short-Term Insurance Policyholder Protection Rules apply to any short-term policy, such as motor vehicle or household policies, or public liability policies (for example, those covering third party payments after motor vehicle accidents), where the policyholder is a natural person. The short-term rules do not apply to commercial policies, such as those which solely cover your business.
General Provisions
In terms of the rules, an insurer must inform the consumer, in writing, of a policy issued to them. The insurer must advise the consumer of any internal complaint resolution systems and procedures, as well as full particulars relating to the short-term and long-term insurance ombudsmen.
No insurer may ask or induce a consumer to waive their rights in terms of the rules, and if they do give any such waiver, it will be regarded as void. No insurer or intermediary may allow a consumer to sign a blank or partially completed form necessary for entering into a policy.
Direct Marketing
A direct marketer is an insurer who uses direct marketing methods, rather than working through an intermediary or broker. Typically, direct marketers use telephone sales consultants and advertising to sell their policies.
The Policyholder Protection Rules relating to direct marketers are similar to those laid out in the FAIS Act that applies to insurance brokers.
Financial Services Ombud Schemes Act 37 of 2004
The Financial Services Ombud Schemes Act (amongst other things):
- Creates a mechanism for statutory recognition of voluntary schemes (long-term insurance ombudsman, short-term insurance ombudsman and banking ombudsman).
- Determines minimum standards required for recognition.
- Provides for an independent controlling body for each scheme.
- Recognises voluntary schemes.
- Provides consumer recourse by way of holistic, standardised mechanisms for client complaints with regard to the financial institutions or services in a procedurally fair, informal, economical, equitable and expeditious manner.
Conclusion
On the Car Insurance Blog we will strive to assist vehicle owners, financial advisors, insurers and industry bodies in creating awareness of car insurance and the importance of car insurance for road safety. This will also include the objectives to create awareness of:
- Legislation in the car insurance industry
- Legal requirements in providing car insurance advice
- Consumer protection to vehicle owners and car insurance policyholders
- Criminal law and car insurance fraud
- Contesting car insurance claims /disputes
- Role of the Ombudsman in achieving fair adjudication of insurance disputes
- Discussion of Decisions made by the Ombud for Short Term Insurance
We will discuss these important aspects in Blog Posts and seek to facilitate interaction with car insurance policyholders.
By Prosp Orting September 6, 2012 - 5:21 pm
Hello, A car crashed into the back of mine recently rendering my vehicle unusable. I only have third party insurance so have to claim directly to other drivers insurance. His insurer says they do not pay for car hire unless my employment directly depends on it. This is not the case, but I do need the car to get to work and I don’t see why I shouldn’t have access to a car if the accident wasn’t my fault. Obviously the other insurance company will take their time in approving the quotes to fix the car. Can you let me know what my rights are?
By zodwa October 1, 2012 - 12:13 pm
Hi,
I was involve in an accident and that was not my fault. A car I was following had to stop suddenly with out indicating his intention, i manage to stop behind him, but the taxi who was following me could not make it and it crashed at the back of my car and pushed my car to the one infront of me. the car which was infront of me drive off before i even get out of my car so i could not get his registration number. so my insurance want to write my car off as they say my car damage is above my car value. I did not get the second assessor.What worries me is that the insurence is paying the markert value of the car and i need to pay +-R20.000 short fall.The guy who hit me from behind agreed that he was wrong I send the details of the guy to my insurance and my insurance is going to claim from his insurence and i will only get back my excess of R3000 when the insurence claim is through. here i am losing my car and have to pay the shortfall where as i was not at fault and the other guy is willing to pay all the damages. how does this thing works? All I need is for my car to be fixed and recover the money from the guy’s insurance. or to atleast have my wreck back
Please advice , thanks
By Jennette Visser October 8, 2012 - 1:43 pm
Good day,
I have a question. Some one scratched my car while driving into a parking with his car. He does not have car insurance. How do I go about? Is there any law that says he must pay for the damage?
Regards
By anisa soobrathi November 1, 2012 - 12:35 pm
i was involved in an accident on 30/03/2012.another vehicle collided into the right frnt tyre of my car.
all the airbags activated and the vehicle was towed.the vehicle was a Peugeot 206 convertible.The panelshop declared the vehicle a write off.The insurance appointed assessor said it was not a write off.The insurance company did not give a response to my claim for abot 6 months from the time i claimed.The claims handler said i was drunl etc and that as i am going thro a divorce <i may hve been stressed and thats y i was drinking.there was police at the scene but no blood tests or breathalyser was taken.
the other driver alleged in a statement she saw alcohol bottles in my vehicle etc,and she also claimed i was on her lane and collided into her.the damage to my vehicle was extensive to the right tyre ,fender etc.The whole front of my vehicle was not damaged at all.So clearly she was lying.The insurNCE REPUDIATED THE CLAIM BUT ONLY After i reported it to the insurance ombud,who have to date not resolved the matter.Can the insurance company:PRIME MERIDIAN,make decisions based on hearsay and not proof in the form of direct evidence.Is there a time period within which the insurance has to give a decision as to whether they repudiate or pay the claim.
By chrstine November 7, 2012 - 8:56 am
I have recently phoned around for insurance quotes. one of the insurance companies I dealt with was discovery insure and received a quote from them on the phone 30/10. I decided not go with their quote but use another company as there was lots of complaints regarding the service and false promises they made on the internet. No-where during my discussions with Discovery did I supply them with confirmation of the cars’ registration or Vin number, so they could not insure me for an unknown vehicle. I have however discovered that they have already taken the premium of my back-account on the 1st of November. Surely they cannot insure me for something that I do not own yet. Also I have received no documentation to this point that states that I have accepted the quote they gave me or any written agreement as to the price of what they quoted me over the phone. What can I do to get my money back?
By Sthembiso Mkhwanazi November 12, 2012 - 1:06 pm
Please help I was involved in accident on 01/10/2012 unfortunately my premium did not went through on 15 September 2012, than I reported the accident to my insurer and they towed the car to SMD, when I placed my claim they said my car is not covered for this than asked about the grace period and they said it will not apply to my case. I took the case to ombudman and said they will not assist me. currently for this month of November 2012 they (insurer) they said my car is covered since the payment went through on the 15th of October 2012. Please take note I joined the insurance on June 2011 and car was written off according to the assessor. the car is still at the SMD yard and still owing the wesbank R134000.00. please help I really need a car.
By Cheslen November 16, 2012 - 5:23 am
Would like to know what the answer was to PROSP ORTING’s question is. Dated: September 6 – 2012 5:21pm.
By yuven naidoo December 7, 2012 - 4:04 am
Hi Please can someone advise I have comprehensive car insurance with Model insurance in Durban for about year and half now but recently I had an accident and they approved and authorised repairs but I had to pay the panel beater because he didnt want to release my car saying that this insurance company has not paid him for 2 other repairs done and this insurance company has no FSP number or not even registered and when I went onto hellopeter I was SHOCKED AT THE COMPLAINTS now my problem is that this insurance company told me that they would re-imberse me if I paid for my repairs but to date they keeping on saying tomorrow or next week or month end now what action can i take against them or report them to…
By Matome December 20, 2012 - 10:54 am
Hi can you please assist in steps to follow if my insurance are trying to cheat me or take me for granted? On the 24th of September 2012 I involved in an accident while my car was stationery on traffic light. The accident involved five cars including mine, during that time i remained stationery until the police finish taking statements. On the 25th of Septmber 2012 I notified my insurance to which they immediately faxed the claim form. then i waited for a while because i was still waiting for a police accident report to submit my claim. On the 12th October 2012 i managed to submit my claim with all the documents, and i also received an acknowledged massage. then the assessor was appointed as i received a call on 22nd of October 2012, then the assessor came the following day on 23 October 2012. then i received an sms to let me know that they received an assessor’s report. then from that day no communication was available from my insurance, Then out of curiosity i followed up with the assessor on 1 November 2012 and i was told that everything was still with the insurance company. Then i called the insurance on the 6th November 2012 to the status of my claim to which i was referred to someone who deals with claims, then nothing was done. I followed again on the 12th November 2012, 13th November 2012, 19th November 2012 for all those days nothing was happening up until on 22 November 2012 where i received an saying my claim was authorised and my excess was R10562.00 payable to the repairer. Then i was not happy with the excess i decided to follow up with my insurance where i was referred to my broker. upon following up with my broker i was e-mailed my first conversion with the consultant the time i took up the policy. i listened to it and i eventually picked up some additional excess which was mentioned but the consultant said they might apply depending on the nature of the accident. Now the broker advised me to write to say i will take responsibility to repair my since the excess is to high i did that and send it through on the 5th of December 2012 and no communication until i followed up on the 10th December 2012 where i was referred to the guy in charge, the next day that guy said he will speak to the claims manager he will get back to me later. Then i received an e-mail later saying that they can’t do a cash in leuw. i enquired the following day and i was lucky to speak to the claims manager who said no problem, but she wants to speak with the same guy in charge to see what is the problem she get back to me, never came back. the following day i called and manager said she authorized my sign off (don’t know what that means) she will come back to me, as usual never came back. on the 18 December 2012 i called and i spoke to the guy in charge who said he get back to me but nothing happens. Yesterday (19 December 2012) i called again and i was told the answer is still the same, they are waiting for claims manager to decide who will come today 20 December 2012, she will call me. and i am still waiting. What can i do because the excess is to high and i am not the cause of the accident?
By Beldina Matthews February 27, 2013 - 1:12 pm
Hi please help as I have had an insurane claim with dial direct and I am really not happy as they repudiated my claim. I was working for an insurance company for 12 years and know exactly how it works. Can the insurance company go by hear say as they say that my son was the regular driver which was not and another thing the assessor said that because my son fitted a amp makes him the regular driver. I am really not happy with the outcome as I now owe the bank over R100 000 and my vehicle is a write off,
Please help
By ShawnD March 19, 2013 - 1:09 pm
Hi. please advise. on 31-Dec2012 a lady reversed her bakkie into into the side of my wifes Citroen. The Citroen was parked legally and unoccupied. The driver located my wife in a shop and announced her accident. The bakkies rear bumper & towbar impacted into the Citroens RHS (drivers side) door, front fender & rear body, the impact shattered the drivers door window. We have oustanding high resolution photographic evidence of the location & damage encurred to both vehicles, Photos clearly show the Citroen was legally parked and the driver of the bakkie acknowledged all responsibility amicably without dispute. Our insurer advised us that processing claim would encur loss of our noclaim rewards payback due this year & that our premiums would also be increased as well as we’d have to pay claim excess. We contacted the other parties broker & advised that we wish to claim 3rd party. We followed all the instruction required by the other parties underwriter (Renasa) and presented qty3 quotations from their insisted approved panelbeater/s (cheapest repairer was approx.R19,400-00 vat incl). Renasa have drawn the entire process out (today is 78-days since the incident occured… 62-days since claim submitted, due to industry closure over December holidays) & yesterday Renasa send a document “offering” to full & final settlement of R10,500-00??? I was not entirely surprised – we documented a conversation where their management told my wife telephonically that he will drag this out for as long as possible if we wish to follow 3rd party claim. We are in opinion that we are acting well within our rights to ensue 3rd party claim as we were not physically pertinant to the accident… it was solely constructed by the other party, who has 3rd party insurance.
The ombudsman advises they do not attend 3rd party & that we should consult an attorney? Your advice / input on options would be valued immensly.
Thanks
By shereen March 26, 2013 - 3:55 pm
Good Day,
I need your assistance urgently. I had comprehensive car insurance and have been paying my premiums religiously since 2010. On 20th Feb 2013 my car was stolen from outside my parents property. I opened a case with the SAPS an I notified my insurance company that my car was stolen. An assessor contacted me and said he will sort out my claim as soon as possible. He then contacted me and said that i had changed my permanent address and not notified them of the change of address and that is why they declined my claim. I tried to explain to the assessor that my permanent residence is still Pinetown and that my car was stolen from my parents residence and that is not my permanent residence. I did explain to him that since i have had break in at my premises in Pinetown, there are days in the month when i come and stay with my parent when my husband works nightshift and that does not make my parents residence, my permanent residence. I told him that since inception of my policy i have been at both the premises, but my permanent residence is Pinetown. On the days that i stay at my parents home, my husband uses the car to work becasue he works nightshift and 2-10pm shifts. He is also the additional driver for the vehicle that was stolen and the vehicle is sued by both of us for work and social purposes. Going to my parents home is like going on a vacation and i don;t see the need to contact my insurance company to let them know each time i am going on a vacation as long as i am in SA and not outside SA. My permanent residence is Pinetown, my children school in Pinetown, my husband works in Pinetown, my mail will proove that i am still at my residence except for those days that my husband works shifts and i go to stay at my mums because of us having breakins in Pinetown. Since January this year i also got friend to come and stay with us because they were given notice by their tenants and had no where to stay. I am in such a predicament becasue i have 3 children to cart to school and university and i had to borrow money from a friend to buy a Tazz to move from A to B. The assessor said neighbours told him that we don’t stay in Pinetown. My neighbours don’t know where i go to and what happens inside my house for the assessor to go by hearsay. My car is not a fixed asset, it is a movable asset and could have gotten stolen from a mall or any other place. Will they have also declined my claim if that happened. Amyway there is a difference of 15km from Pinetown to Chatsworth and based on the premium difference and quotationthat i obtained from the same insurers, there is only a +/- R38-00 difference regarding the riski between the 2 addresses. Yet my car cost me R180000 and my claim has been declined> The assessor was very happy to refund my premiums, from inception becasue he knew the premium refund will be much lower than my actual claim on the stolen vehicle??? He said neighbours advised that we were not living in Pinetown since Nov 2011 (totlally untrue), yet i told him that i have been between the 2 addresses from inception of my claim and he was said okay, i will refund your money from inception of my policy with them? i find this totally unacceptable. He even paid the money into my husbands bank account? Please advise what i can do to have my claim paid to me.
DESPERATE MUM
By Neo Selokela April 6, 2013 - 1:51 pm
I have enlisted the help of a third party claims advisor that advised me the insurerance of the car who hit me from behind dont want to pay because I did not accept the offer within the 21days of the offer being put forward and my argument was that the damage to my car was way more than that as proved by the panelbeaters that the cost was well twice as much offered so since I said thats too little I’ve lost on the payout,so not knowing what to do next I just left the matter but now that the other car involved in the accident trying to claim from me I need advise on how to deal with the whole case and also what are the chances of me claiming for the damages to my car.
By M Pillay April 9, 2013 - 12:41 pm
I was stationary at a red robot and another vehicle drove into my rear as the driver could not stop in time. The vehicle was a rental car. I have unfortunately been retrenched and don’t have insurance. I got the relevant information from the other driver along with the car hire company Information.
I contacted the car hire company and advised them of the accident and I reported the matter to the police. I was requested by car hire company to submit my quotations which I have. I was subsequently informed that my claim is with the driver of the rental car and not the car hire company.
This does not make sense as the vehicle would be insured by the company. Please can you advise how I should proceed as my car needs to be repaired.
By alan May 5, 2013 - 4:05 pm
My sister purchased a new Polo Vivo on 13 April 2012, insured with A&G and was financed by Standard VAF. On 10 April 2013 a motorist failed to stop and rear ended her car. On 13 April 2013,the assessor called her and informed that her car would be written off. At first the insurer stated that her car would not be replaced but subsequently stated that the car would be replaced under “substitution of goods”. She was then asked to obtain quotes for a replacement vehicle which she did and submitted same. On May 2, three weeks after her loss, the bank has informed that she doesnt qualify for the substitution of goods as the vehicle was purchased and contract signed on 13 April 2012 (a Saturday) and they only received the request for the substitution on 26 April and that this was beyond the 1 year period for substitution. We contest that the loss occurred on the 10 April -within the 1st year of the purchase – and the claim that the write off was only received by the bank on 26 April is no fault of hers and that the substitution of goods should apply. Can anyone out there advise?