car_insurance_lawsWe 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)


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.


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.

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163 thoughts on “Car Insurance Law

  1. I have a question, My damaged vehicle was towed to a panel beater after an accident and I was told that it had been written off and was I was told I have to wait for the insurance assessor to assess the car , then if its damaged they were going to transferred it to a salvage yard. I was not given any quote to prove that it should be written off, or assessor’s name.
    Insurance sent me a total loss statement:
    car value R67643.00
    Total excess@30% R20 434.00
    Balance 47 434.00
    is this fair

  2. Tarien

    Good day my insurance company has informed me that my premium will be going up in August. But its going up from 451.38 to 763.89 its almost 70% increase. is this legal what should i be looking at and whats the max increase after one year with a insurance company. I have only claimed once. please assist.

  3. Tarien

    I was just informed by my company that after a year that my premiums will be going up.
    But they have put an increase of almost 70% on my current premium. From R451.28 – R763.89.
    I have a 2009 1.4 polo. What is the legal % increase allowed for vehicle insurance.
    Received a very long email explaining what they take into consideration for increases.
    Since i started paying my own insurance i have only claimed once for vehicle damages and the increases the premium because of the claim and the claim was logged last year October. Now they increase again. Please assist as i would like to search for a new insurance company.

  4. Sam

    Hi there..I would like to find out how an insurance company decides that a accident vehicle is a total loss and whether I as the owner of a car can rightfully request a second assessment or even contest the writeoff to have the car repired.

  5. Obj

    I had a minor scratch on someone else’s car. As at then my car was not yet insured. I was not given 3 quotes in respect of the repairs and after more than six months of the incidence, I am now being asked by his insurance company to pay an amount I consider outrageous for the repairs. They are threatening court action if I do not pay the amount. Please what an I do?


    I bumped a lady car door in a parking lot her car and mines was
    already parked. THe time i was moving from the parking I scratches her door its was small dent areaand the passenger was already getting out Now she wants to take us to court for with my company as I was driving company. Now she want a new door from Toyota and according to her and lawyers
    They demand we pay R7000-00 within 2 days if we are failing to pay we will go to court. Can you please give me some
    advice regarding the matter? i cant afford a attorney, at work they decided dat I must paid this woman.

  7. Ricky

    Please can somebody help with the problem below:

    My car got bumped in a complex, the person forgot to put their car in gear as we were parked on an inclined surface. I have received the claim number but now the problem lies on my shoulders! I need to send my car in for repairs but this is a huge inconvenience as i need my car for work. A couple of panel beaters require my car to be booked in for at least two days just for a quotation.

    How long is the claim number valid for?

  8. Sibongile

    I was involved in an accident and at the time of the accident i hadn’t paid my insurance premium,meaning i am not covered, i understand that but the other party was on the wrong and now i need to claim for my car to be fixed, I tried asking for him to get his insurance to assess the damages but he is not giving me any joy, can i get help for someone to do the claim,will my insurance assist? or is there any other way i can get my car fixed.

  9. Sean

    Hi I hope you can assist.

    I purchased a car for a family member, the car being registered in my name until such time as the family member payed off the car, then will be transfered to their name. The car has been added to my insurance policy, full comprehensive. Due to family member not paying for insurance, i’m forced to remove it from my policy. My question is: Should the family member have an accident in the car, while its not insured, and the accident is their fault, am I (owner of the car) liable for anything, or is the driver of the car fully liable?

    Thanks for your assistance.

  10. Martin Viljoen

    Good day,

    My vehicle got submerged in a river after sliding off the road into a river on a farm. The vehicle could only be recovered the next day since it got too dark to continue the recovery. After recovery we proceeded to drain and replace all oils, flushed and turned the engine, and removed all seats and carpeting for drying. The following day I lodged a claim with my insurer who told me they would be in contact with regards to towing the vehicle to the nearest assessment centre. In the mean while we proceeded to put back the seats and carpeting and tried to start the car. The car started and ran, with only some minor electrical issues. The car eventually got towed to the assessment centre a week later.
    At the assessment centre, no physical inspection was done on the car and no quote for repairs existed, though I was informed that my car was a write-off. I was informed that the claim has been approved, but they would only pay out R126,000 and I still owed R166,000. I later decided to go to the centre and check whether I could still start the car with the intention to cancel the claim and do the repairs myself, but when I got there I was informed that my car has been towed to an Auction House two weeks earlier!

  11. Andre

    I was driving to visit a friend, 2km’s before my destination, I encountered road works, it was 19:00 hours and dark, the car in front of me slowed down and I collided with him on his right rear bumper, I then collided with the chevron boards placed in the middle of the road since there was no road markings. My car left the road and went down a embankment. I was in pain from a back injury, and did not even think to call anybody. Luckily a person arrived and ask if he can phone an ambulance, I replied yes. The breakdown driver arrived and asked if he can tow my car, I asked him if he was an authorized tow from my insurer, he said yes, I told him to tow the car. I was taken to the hospital, on the way the ambulance guy gave me a “Drip”. At the hospital I told the doctor I had a back injury, she wanted to pull blood but I told her there was nothing wrong with me except my back, she made me sign a letter stating that I refused to pull blood, The insurance wrote the car off, and now refuse to pay out my car. R492000.00 The other person did not contact me, nor did the police, the police did not ask me to perform a Breathalyzer test nor to take blood.In my statement I told the assessor that I did not drink, but say the doctor wrote in the file she smelled alcohol. What can I do? how do I proof the Doctor was mistaking? I do I make the insurance obligate my claim? What other legal implications am I left with that may arise from this? Please help!

  12. Petro

    I was in a accident in a parking lot. While I was waiting for another car to leave a parking spot so that I could park my car a car reversed into my car. Who is at fault? I have all of the details of the other cars driver and whe even went together to report the accident at the police station where by both parties signed the report but now it seemes that they are becoming difficult. What to do?

  13. Dawie

    I just want to know my wife had accident with my vehicle drove in to the back of another car my car is already fixed by my insurance.Can i be held responsible for the other party co-payment on their insurance for the damage on their car.

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