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Third party insurance for SA vehicle owners

30.05.2014

VEHICLE collisions are almost a certain reality for nearly all South African motorists. In fact, driving on our roads, you have one of the highest probabilities in the world of having an accident.

With deteriorating road conditions and increased traffic congestions, motorists are faced with a daunting task of simply getting to and from work on a daily basis without having an accident. It’s so bad that transport-related deaths account for one third of unnatural deaths in SA.

According to the Automobile Association (AA), around 65 percent of vehicles on our roads aren’t insured; a rather scary statistic considering the vast amount of our monthly salary that goes towards transportation, whether it be fuel, vehicle repayments or insurance.

This ultimately means that should you be involved in a vehicle accident and your car is damaged, you’ll most likely have to pay for the damage. Or, if you’re insured, (which we hope you are), you’ll then have to claim through your insurance company. But this means you’ll lose any cash-back bonus you were hoping for. However, if you don’t have the funds to repair your pride and joy, you will be stuck car-less while fighting a losing battle with the person at fault.

It’s for this reason that the debate around compulsory third party insurance as a minimum should be implemented for all vehicle owners in South Africa. This will help victims to get their car repaired and back on the road. Because, let’s be honest, victims shouldn’t be burdened with the stress of fixing their vehicle, when they weren’t at fault. Motor industry experts have stressed that South Africa is one of the few Southern African countries with developing economies that don’t enforce compulsory comprehensive insurance on vehicle owners.

Taking a quick look around at vehicles in car parks, a lot of them do look un-roadworthy, sporting worn tyres and cracked windscreens. It’s even worse on the roads, with exhausts bellowing out black smoke as heavily overloaded bakkies chug along.
The main cause of ten percent of accidents - as stated on ArriveAlive’s website - is due to vehicle error, which is anything from burst tyres to poor maintenance. However, a large percentage of collisions can be attributed to human error - as much as 85 percent. These include anything from skipping a traffic light, to driver fatigue or driving under the influence of alcohol and/or narcotics. It’s no wonder then that South Africa is in the top ten for the worst driving conditions in the world. The question then is: how do we make third party insurance compulsory?

Gary Ronald, head of public affairs at the AA, states: “The hindrance for compulsory third party in South Africa is affordability with regards to insurance plans as we would first need to accumulate a fund to pay out third party claims, a fund which at this stage does not exist. There then begs the question of where this fund would originate from - the government or from commercial industry bodies? If all drivers were to pay a compulsory fee of say, R50 per month, of the 960 000 crashes we have per year, the fund would be bankrupt before we began, hence the need for seed capital to the fund to make third party payouts viable.”
This highlights why insurance is rather costly in South Africa, because of the low numbers of vehicles insured and the high risks of driving and chances of theft. So, should every motorist be forced to pay a monthly third party insurance premium? At least you’ll then be covering the third party/ies.

One of the ways proposed to collect financing would be to include an added fee onto our annual licence fee. The problem then remains, what happens to those who don’t pay their vehicle licence fee but still use their car to commute?
Probably one of the better ideas is an arrangement whereby, when you purchase your vehicle, you pay a once-off fee and your vehicle is insured for any third party claims; much like the carbon emissions tax. It’s definitely something government seriously needs to consider and hopefully it will be viewed in a serious light now that the cabinet has been reshuffled.

With countries like the UK and Italy successfully implementing third party insurance, we need to believe it will become a reality so as to improve our transport system. Furthermore, it will give road users peace of mind knowing that the other vehicles they share the road with are also covered.

We would like to know about your insurance nightmares so please send us your story to: autodealer@caxton.co.za

Article written by Stuart Moir
30.05.2014
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