The hard and unfortunate truth of driving in South Africa is that the vehicle next to you might not be insured. It is estimated that only 35% of vehicles in South Africa are insured! It is at present not a legal requirement that all motor vehicles must be insured. This amounts to a serious threat for the cautious and insured driver involved in an accident with an uninsured driver.
In terms of the existing legal framework, if a driver has been found by a court of law to have caused the accident, the driver or owner who has suffered damages has a right to sue the wrongdoer for damages. Many of these wrongdoers have no security and are incapable of paying for the costs incurred by the innocent party!
Government comment on the need for compulsory car insurance
Road Safety legislation might however change the status quo. The Transport Minister Sibusiso Ndebele’s has announced that government was “considering making third party insurance a requirement in South Africa”.
“It’s going to take a while… we’re still in the very early brainstorming stage on this,” transport ministry spokesman Logan Maistry has confirmed. The insurance being considered is for damage to vehicles, and should not to be confused with the injury and death cover that drivers, passengers and other accident victims currently have in terms of the Road Accident Fund, paid for by a levy on fuel sales.
The transport department has confirmed the intention to consult stakeholders, including the private insurance sector on the matter.
Compulsory car Insurance and Financial Implications
One of the most important considerations will be the financial impact that compulsory car insurance will have on vehicle owners. The Department of Transport has confirmed that the Treasury would have to be consulted so that any scheme would be “funded and managed on a sustainable basis.”
One of the objectives will be to make the insurance cover affordable to all vehicle owners. A compulsory insurance strategy still has to be developed – taking into consideration the financial status of motor vehicle owners, the current fuel levy system operated in South Africa and the proposed harmonisation of motor vehicles’ third party insurance being discussed at Southern African Development Community level.
It appears at this stage that the insurance being considered by government will involve a basic level of damage cover, with motorists being able to top this up with private cover.
Private Sector Car Insurers and Compulsory Car Insurers
The Automobile Association has suggested that commercial companies should take the lead on compulsory third party insurance for motorists. Commercial companies have the knowledge, structures and systems to provide invaluable expertise on how to structure a system of compulsory car insurance in South Africa!
It has been revealed that the South African Insurance Association is also currently doing research into how compulsory third party insurance could be initiated.
We believe that the public should be made more aware of the nature and importance of car insurance. A better understanding will not only lead to increased protection from financial loss, but also benefit road safety in South Africa!!
We would like to urge all vehicle owners to view the following sections:
• Car Insurance and Road Safety
• Car Insurance Advice / Education and Road Safety in South Africa
• Car Insurance Blog