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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181 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.

  14. Good day Sir/ Madam
    I would like to know what procedure to follow if the insurance has written off my car and I want to fix my vehicle I do not want them to write it off at all.
    Thank you for all your help

  15. Elize

    my car was recently involved in a hijacking and at the time of the hijacking my boyfriend was driving my car, he had to work late and was driving back from the gautrain.The insurance finalised the hijacking part now they want to prove that my boyfriend is the regular driver and asking us for work access records, gautrain records and hes estate access as well from the time our policy started. i only signed a form giving them consent of sap records, medical records and financial. now they are going and get etoll records. my car is stated for private use but i dont understand why do they need all of this. its very frustrating. they even went and out and found records of cancel insurances in the past. are they allowed to do this us? please help? i feel like its a violation of privacy.

  16. I have had my car insurance policy since 2012 and unfortunately due to recent fortuitous incidents, I have had a claim in the past year and another claim this year. I had no problems with the first claim – the process was concluded telephonically. This time I had to be interviewed by an “Assessor” telephonically and in person, provide my whereabouts / telephone records etc. and receive veiled threats about being cancelled . I find this to be rather inconsistent and I am not even sure that it is correct procedure to expect me to sign consent for this information on submitting a claim, when tis was not expected on taking up the policy. I am not sure if you are able to advise on this matter?

  17. Stacy

    Hi I drove into someone’s garage door.My foot went on the wrong peddle.My isn’t damage the Garage door was half broke..I agreed to fix the door however she want to go legal steps.Can I win?

  18. My car was collided on by a 16 year old driver without a drivers licence on the 1 July 2016. The car he was driving was not road worthy its road worthy expired in 21 August 2014. The incident was reported to the police the same day Excident Report Number was given to me. The car he was driving is not insured. My insurance company expect me to pay access of R8000.00. How should I handle the case. The damage cost around R111 000.00. How should the situation be handled.

  19. i have a car that was smash at the back and i made a claim from my insurance my insurance is refusing to pay because they say i said during the time i was taking insurance i had with my previous car an insurance for conservative 7 year they said i lied .what can i do now to make them pay .



    A house break in left my family, recoverying from an ex husband’s addiction, in a worse position, when the very conversation I had with their consultant has no trace, and used as a reason to decline my claim. The problem with consultants who will remind you that the conversation is recorded, is done so to benefit the company either way. Unfortunately Joe Public has no control over this unless we wise up & record conversations ourselves.

    My car goes to my regular machanic for an engine overall. The machanic is hospitalised & I am told he is dying. I call Iwyze immediately to remove my car but could not remember the last 2 digits of my car registration no thus, according to the consultant, my car cannot be towed. The machanic dies hours later and my parts are stolen. Over 2 months, while my car is in Iwyze possession, the process delayed for various reasons but never told its because they waiting on a police report, I am eventually told “we can’t entertain your claim”. This because I failed to remember I once owned a microbus, which incidently was not insured. My car is ceremoniously dumped at my home. The engine block now rusted from the more than 2 months wait. Off I send an email, no response to date. The costs has become unaffordable for me, but surprise….I just checked my bank statement….cover for July was taken. Unfortunately too late to reverse the payment. lwyze would probably seek, no matter how long it takes, a reason not to repay me.

    This makes me wonder…. What is the difference between the accussed in my rape, housebreaking & fraud cases and the fat cats of Iwyze?? Does their high priced legal team make them any different to the legal aid lawyer of the accussed?? Truth is, fat cats in Gucci suits and the accussed in his tracksuit are the same. They all live off ill gotten gains without remorse or apology which makes them equal in my eyes.

    So everytime I am forced to take a taxi to the trial of the acussed and struggle to replace stolen household goods, I will be doing so without begrudging or cursing you, accepting that you are part of the evil world, just another institution and person with no moral compass, and thank God that regardless, but by the grace of God, I have a high standard by which I live, that I will never treat your kids, grandkids, etc likewise should they be in my classroom. An expensive life lesson I have learnt. Silly me, actually accepting a more expensive package of insurance cover, even with my 5% discount,  because it was “Old Mutual”.

    However, for the unsuspecting potential victim, especially women in a similar position as myself, I will use every platform available to warn people. Point of reference??  Feel free to ask the lazy, rude Saps officers and the accussed in my criminal cases.

    Take your hard earned money, and find a reputable insurance company. Iwyze is not an option. There are companies, though only a few, who will treat you differently and provide you with a great service.

  21. hallo i had a minor accident with my car and im not insured,can the other party go ahead and fix their vechile without informing me and their insurer claims it from me.

  22. On the 9/06/2016I was involved in an accident on and reported and registered the claim at the accident scene. 6 days later after having heard nothing from my insurance, I called the insurance to follow up on my claim. I was surprised to hear from the claim department that there was no record of my claim and the where about of my car were unknown, despite the insurance having sent the tow company n smsed me the details on my cell phone. The claim technician I spoke to also mentioned that even if I hadn’t reported/registered the claim, the towing company/ Road assistance department was supposed to have reported the accident to them according to the insurance standard procedure . I was told to re register the claim n was assured to investigate where my car had been towed. The assessor was then appointed 2 days later( 9 days following the date of the accident).
    2 weeks from the date of assessment.,after persistently calling to get feed back of the claim, I was shocked to be told that my claim had been repudiated based on zero mm treads /un roadworthy rear tyres and that my car was written off.
    Furthermore I had to on several occasions beg the insurance to email me assessor’s and /loss adjusters reports and repudiation letter.
    The insurance eventually managed to email me a repudiation letter written incorrect date of accident and wrong initials and a assessor’s report. I’m aggrieved by the following issues:
    1.The manner in which they handle my case, not even once where they called or send me smses updating me of the progress / status of my claim. I’m the one who always called and left messages without them coming back to me.
    2.Mysterious disappearing of records of my claim,
    3.Hearing from the insurance that my car where about were unknown.
    4.Tyre treads they reported that do not fit the description of the tyre pictures taken by me at the accident scene. NB my car had done (25 000 km) at the time of the accident. The same car had gone for a service 4months before the accident at 16500 km, where the job card reported both front tyres to be 5mm n both rear tyres to be 4mm.
    5.Quality of the assessors report they sent me,with no pictures including tyre pictures(the important evidence in which they base the repudiation on. I happened to personally speak to the assessor, where he clearly confirmed that the report he sent to the insurance consisted of tyre pictures, car damages pictures and detailed notes. All this information was not included on the report the insurance sent me. The insurance insisted that the report they sent me was the original and only report they received from assessor.
    The conversation with the assessor confirming that the version of the report I have differs to the one he sent was telephonically recorded and can be provided as proof .
    Provide advise how to submit this recording without getting myself in to trouble,as the assessor’s consent was not obtained for this.
    Does sending the insured(me) the edited or amended version of the assessor’s report a legal practice?
    6.Refusing to send me the loss adjusters/mechanical investigators report. Am I not entitled to this report as well?
    7.A day after they mailed me repudiation letter,the insurance also mailed me a letter saying that I instructed them to cancell my short term comprehensive insurance of the same car with effect from 31/01/2016.( Fake my policy cancellation letter).
    After I provided them with the proof that I’m legally insured with them and proof of payments for the last 6 months. They then changed the story saying that the letter was mistakenly sent to me. They meant to send it to the policy administration department instructing them to cancel my policy as the car was written off. They also acknowledged that they made mistakes in terms of dates as they meant to write with effect from 30/06/2016. Mind you this policy cancellation letter mistake is only adressed in the feedback they sent to me after I lodged a formal complaint to complain department. To date, the insurance has not sent me the corrected version of policy cancellation letter and they didn’t debit the premiums of 15/July2016. The money was certainly available…it’s not like the debit order bounced. they did however debited the premium of 15/june 2016.
    NB Is it allowed for the insurance to cancel my claim without my knowledge in the middle of the dispute?? Will this not impact on the process of my dispute??
    8.I strongly suspect my tyres were tampered with? As they were not zero mm when they left the accident. This probably happened during the time my car where abouts were claimed to be unknown.
    I went through all internal dispute resolution process without any positive outcome.
    9.They also decided not to contact independent witnesses who can confirm the good condition of the tyres prior to leaving the scene.

    Kindly advice about all the above stated irregularities which occurred with my claim from the legal aspects ( motor insurance law / act, FAIS, OSTI etc) as I need to strengthen my facts on the complaint letter and evidence prior to sending it to the Ombudsman for short term insurance.

    Will be waiting to hear from you
    Thank you.

  23. Shaz
    Sorry I thought my comment didn’t go through.

    Patienty waiting for the response..

  24. dorianne

    If your car is recovered do you have to accept it back? Although there is not much damage I cannot sell this car now as it is deemed recovered stolen? what are my legal rights please

  25. Benjamin

    I had an accident a while back. I organised the towing service because i knew the guy. The insurance company then went and removed the vehicle from the guy i organised and moved it to their premises. They have since rejected my claim. Can they now legally charge storage fees. Even though they took the vehicle without permission or consent without even informing me?

  26. My insurance was cancelled due to me providing wrong information due to me forgetting some things ,how can I obtain furture insurance for my vechicle.
    Deon Lodewick

  27. Phindile

    I just want to know this i made an agreement in May 20 with a certain car insurance the consultant told me that before my first premium which was on june 31i need to send my car to glass fit of which it is out of my town so had to drove to ladysmith from dundee i went there inspection was done sms received on my phone as notification from that insurance as to they got photos of my car on my way back to dundee someone caused an accident i call them they told me that my car is not insured so i must see it my self.i call break down they tow my car was normal travel 3 km from home to my place of work then back home everyday but on that specific day i went for inspection as an requirement of insurance but i am hurt because they asked to cancel the other one i had at tha particular now they asked dispute letter because they rejected my claim

  28. S Naidoo

    Hi, I been in an accident whereby my car had been written off, it was not my fault as another vehicle had collided with me from the rear. I had purchased the vehicle from brand new on February lasr year, I paid an deposit of R45000,00 and instalments of R2700 for the last 17 months. My insurance is now offering me only R11000.00 after settling the bank. I feel that is not fair as I was not in fault. I had provided my insurance with all the particular of the driver of the vehicle that collided with me.
    My insurance is only covering R133000.00 and if I had to purchase another vehicle of the same model, it is selling for R159000.00.
    Can I ask my insurance for a replacement of another vehicle. Instead of cash?

    Please advise.

    S Naidoo

  29. Tracy

    Good Day

    My car was stolen, and recovered 2 weeks later. It is said to be in a “good” condition. Can I as an insured person , refuse to take back the car, but rather opt for a payout from from my insurer? How would I go about this? Thanks

  30. Thabisa

    I would like to know what happens to the premiums I have been paying if I decide to sell the car to buy another one and have never made a claim to my insurance? And the insurer doesn’t have a cash back or pay back option? Shouldn’t they pay it back cause it’s my money and they are not insuring the car.


    I am pensioner in my late 70’s and have recently been subjected June/July 2016 to what I consider to be very unethical treatment by Discovery Insurance and the people they appoint to assess and negotiate a claim settlement. I was side-swiped by a out- of- control/unlicensed\uninsured driver. My car was towed to a coach works on instruction of Discovery and before the assessors had even looked at the car we received an email stating it was going to SMD Stickland. At this point neither my husband or I knew who or where SMD Stickland was. By using the internet we discovered it was a facility where wrecks and stolen vehicles are sold. The car in question is a Renault Modus Dynamique 2006 with 90.000 Klms on the clock and in very good condition. The side swipe did body damage to two doors a front panel and slight dent to front bumper but no mechanical damage at all. The assessor estimated R54,738.00, declared it undrivable (which it was not) this resulted in Discovery saying it was a write-off and not economical for them to repair. They offered me R47,500 settlement, a similar car on the internet would have cost R70-80,000.
    At this point Discovery were unwilling to negotiate. However I pointed out a few facts ,came up with a quote of R28,182 for repairs. After many days of hard negotiation they agreed to let me have it back and get it repaired myself. This whole process took 5 weeks. It gave my husband and I many sleepless nights and we were without the car for that time,very inconvenient. The tow truck driver who was accredited by the AA apparently demanded R9,000 for towing it all of 4 Klms. Fortunately we did not have to pay any of this, it was just an employee of the coach works who gave us this information.
    The purpose if this email is to draw attention to what I am led to believe is not sound practice . I would like to know why this claim was handled so badly.. Did they have the right to write-off my perfectly repairable car without first discussing it with me ? Also should they not have made every effort to put it back on the road ? This is what insurance if for, not so as they can write off an perfectly repairable vehicle,get a return on the wreck, which no doubt, falls into the hands of someone who can fix it and put it back on the road to make a profit. Meanwhile I would be required to pay a lot more for a replacement,
    Thankfully I did get it back, it is now repaired and going beautifully for the R28,182. Makes you think!!! and makes us sad, as pensioners, with limited income, we were put through all this 5 week trauma and almost forced to give up our car. Your comments on the sound or otherwise practise metered out by Discovery and their appointed staff would be appreciated. I also should mention that we found it difficult too to get past the call centre employee who was the first person to declare our car was a write-off and destined for SMD Stickland before the assessors even had a look at it. Also one part of the assessment was done by an employee of the Coach Works , not sure if this is good practise either. I really feel this whole thing should be brought to the attention of someone way above the call centre employees who seem to have too much power for my liking.Your assistance, and advice on this matter would be very much appreciated. Many thanks Alexandra.

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