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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225 thoughts on “Car Insurance Law

  1. Is a car legally transfered when the paperwork is complete or when money has changed hands.

  2. Renisha

    DON”T PAY CAR INSURANCE, rather save the ‘monthly premium’ monies and get it done privately. It’s not worth the hassle and even worse when you are not at fault but have to cough out money due to another driver’s negligence!!!!!!!!!!! Insurance companies are a total rip-off…

  3. Kevin

    I was involved in an accident in January this year. A truck drove into the back of my car. My vehicle was not insured at the time of the accident. It is only now 10 months later that the other parties insurance has responded to my request to payout on dammages.

    I have since repaired the vehicle however at a much cheaper rate to ensure that it is driveable as i use it for work. The quotes submitted from approved panel beaters are much higher.

    The insurance now assessed the repaired vehicle and where provided with pictures of the damages to yhe car. Can they reject the quotes provided as I repaired through non approved dealer due to lack of funds at the time.

  4. In Dec 2014, I bumped my bakkie (slightly on the bumper). By then I was separated with my husband who sometimes dove and was also covered to drive the car. I called the insurance, I never reported the incident to the police as no one was injured and it happened in my garage. When I took the car in for assessment I learnt that the car had wires that held the light (which I never knew about; so hadn’t told the insurance when I first called to report the incident. After the assessment I was called several times by the insurance, telling me that I lied and don’t I want to change my statement while I can of which I refused. They threatened to cancel my insurance, and said they have it on records that I lied which I requested for them to send so that I can give to a lawyer and they never did. At the end of December, weeks after my claim I received a call and a letter from the insurance telling me that my insurance has been cancelled because I lied. Now I am not able to get cover from any insurance company, where and how can I be able to contest this?

  5. Nokwanda

    Hi. Someone scratched my bumper and drove off so I thought I will sort it out as it looked minor but 4days later my mirror gave in when I tried to adjust it. The to repair is now going to be too high. How long do I have to log a claim with the insurance?


  6. we have been bumped by a taxi from behind, the driver gave us the taxi owners details who has been duck and diving to meet with us. what is the quickest manner to get him to pay access so that we can take our vehicle in for repairs as the taxi vehicle is not insured


  7. D Singh

    My car has hail damage. The assessor came out and assessed the car. Informed me that the quote was incomplete as a lot of dents were not reflecting. Referred me to another panel shop which I did go to . I now have two quotes. There is a R 2000.00 difference in the quotes. I have requested to have the claim paid out to me so that I can repair my car with a preferred panel shop and at a time that is suitable for me. I did inform my insurance that I’m prepared to sign an indemnity and I will provide them with a certificate of completion once the car is repaired. They have declined this saying that they do not pay out claims for vehicle damage.
    Can they do that? What are my rights as a policy holder?

  8. hi Iam Stheh my car was involved in an accident and my insurance company told me my car is written off.after few days they tlsent me a statement of settlement and they are going to pay 80 somerhing thousand of which i will stil be owing a bank 100 something thousands and they are going to sell the car and keep the money for themself…..i dont understand this

  9. what are my rights when my claim is being validated by an assessor. Can the Assessor make requests to interview my friends and family who were not present at the accident scene? is there any legal website or legislation that explain this?? do insurance investigators need to follow a code of conduct? if so, where can I find it??

  10. Julieann

    HI there
    i had a minor accident yesterday in my mini cooper – i was side swiped by a dude who didn’t stop at the stop street and hit the passenger side. it wasn’t my fault – and i dont want to claim from my insurance because they excess is probably more than the repairs cost – and i also only have the car for 2 months now and i am still in the 90 day waiting period with my insurance whereby i have to pay an additional excess!
    if i dont want to claim from my insurance – can i get this dude to pay for the damages because it was clearly his fault – what do i do?

  11. Careen Hunter

    My car was broken into inside a pay parking garage. The passenger door lock was smashed and the door broken. The central locking was damaged and goods were stolen from the vehicle. The theft and damage was reported to the shopping centre security department and police station. This happened on the 17th July 2016. We have been without our Subaru Forrester since the 17th July 2016 and it is now the 29th November 2016 (over 4 months). We are very frustrated with our insurance company and the panel beater and Subaru agent for taking so long to repair this vehicle? We did not have a hire car option on our policy so we have been without a car for over 4 months. What is the time limit allowed? What recourse do we have? We have sent emails and made telephone calls to all concerned daily, and weekly since the 17th July 2016.

    Kind regards


  12. Lebo

    Good day,I was driving on the highway when the H100 bakkie hit my car at the back. It was a company bakkie and they said their insurance covers third party. I have no insurance at all. We went to police station and everything was submitted to the insurance. What i would like to find out is: the car is written off and its financed. What will happen now? Will the insurance pay the amount I owe to the bank and lose even the car? Or what will happen?

  13. Thabo Mecwi

    Hi, Iam Thabo my Insurence gave me a 30 days notice informing that thy cancelling my policy I.e car Insurence due to many claims.But I only make two claims in one year with full premium and the two claims are two different vehicles with different drives.So I feel like this is a blacklist because I won’t get any Insurence because of been cancelled by an Insurence.Can you please advice me

  14. 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. My car is finish paid .The retail value of R70 000 will be paid out by insurer. To replace and put me in the same position it will cost me R100 000 + for another car.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.

    Can I ask my insurance for a replacement of an similar vehicle and claim the balance from the driver who had collided into my vehicle.Feel unfair if I need to take vehicle finance for the balance where I had no car instalment

    Please advise.


  15. hi
    I was on the car accident on the 25th of November were I was hit by a truck toward anyother truck while we were waiting to be directed because there was an accident infront of us. there gentle men did contact his company aletting them about the accident that he just cause and I was ask some questions and taken to hospital for check- ups. they following day I contacted my insurance which was not working on weekend and I contacted them on monday late around 16:00 afternoon and the guy company has not contacted me then. I claim to my insurance which they didn’t give me any problem they pay only for the settlement, now the company has contacted me requesting documents which are requested by their insurance . Is it possible to claim twice using a same car? what would happen because medical bills and the new feature on the car where not paid by my insurance e.g tires

  16. Tanya Beyl

    Good day
    Can someone please assist me:
    My vehicle was stolen and the insurer paid up the owed amount to the bank.Nothing was paid out to me as it was still on High Purchase.However i didnt have to pay the insurer anything.
    7Years after that my car is recovered.Im contacted as the owner of the vehicle to identify it as mine,with all details of who to contact and where the vehicle is.
    Awaiting your reply
    Kind Regards
    Miss T Beyl

  17. Nkosiyabo Nono

    I’m the third party claimant, my car not insured and bumped by a passing vehicle from behind and agreed to have made a mistake and exchanged the particulars. As his car was insured he promised to go for a claim and rightly so he went ahead and I submitted all the required documents and later he was asked to pay access which he did a month a go and now his insurance company is reluctant to acsess the funds to me. What do I do pls help

  18. Alessandro

    Is an insurance company allowed to deny a claim just because the claim was made more than 30 days after the incident?

  19. Siphesihle


    I would like to know that if I reverse the payment of my premium in order to cancel the policy, will the Insurance company list me as a bad payer to credit bureau?

    My former insurance company wantsto charge a prorata for canceling a poliy after the month has started.

  20. Geoff

    Hi I had an incident with my vehicle and it still rideable the insurance did not want to tow it but they towed it to be auctioned without my concent it was assessed and I was told is is a total lossas per the quote they provided they then told me to get a second quote I then got 1 and the second quote they the price came under the value of my car and R15000.00 less than the 1st quote. The still refuse to repair my vehicle what % of the damage repairs is declared a total loss. Then the insurance tell me the car is not insured to be repaired it is only insured to be written off.what is this they dont give me any options and their customer service is bad. Please help. Before a I make a big mistake

  21. Tish

    My husband had an accident with my car 09/12/2016
    The car is written off and insurance is gonna pay the settlement.

    Am I going to get some money back for deposit


  22. Kim

    I.was involved in an.accident and the claim was rejected on the bases of a witness advising I was not the driver and that we were under the influence because.We looked disoriented.
    The vehicle had rolled twice before coming to a stand still.
    Is this a honest rejection, or can.I take this further.
    I also.have information that the security at my work was bribed with a cold drink.for some.information?????

  23. For the time I kept my former vehicle, 4 years from 10/2016 to 10/2016, the premium was raised in summary for about 100%, which is to my perception already excessive, considering that there was no claim or change in contract conditions and this was about 4 times higher than inflation. In October 2016 I replaced the vehicle. The new premium was already 30% higher compared to the former one, although the value of the car, when new was similar. After 3 months I was informed about the outcome of their yearly review, ending up with 49% increase after these 3 months. Resulting from some email exchange, they are now offering me an “only” 31% increase, which is still outrageous. Still, there was no claim or any change in insurance conditions.

  24. Berlius

    Good day

    My Bakkie was stolen and they only damaged the inside of the vehicle. Now the insurance wants to right it off. They have not given me any quotes or given me the option of finding a better quote, also I haven’t received any report of the assessor or the insurance. They are only willing to give me a buy back option.

    Is this legal? Can I take my bakkie for a second quote and have the insurance pay for the repairs if the price is fair from the second quote?

  25. Emmanuel Hlatshwayo

    can be penalized for claiming twice in the same year?

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