Financial strain awaits uninsured motorists after crashes

SA’s Road Traffic Management Corporation (RTMC) says as many as 800,000 accidents occur on SA’s roads annually, but despite this many SA car owners are uninsured.

As much as 65% of SA motorists have no cover, notes the AA, which means there’s a high chance that a crash will occur with an uninsured driver. 

Covering the cost of damage or a complete vehicle write-off can be financially taxing if you are uninsured, especially when the costs are compounded by the damage caused to another party’s vehicle.

Third-party car insurance can alleviate some of this financial burden if a motorist causes an accident. Typically, it covers motorists for loss or damage caused to a third party’s vehicle, property such as cellphones, GPS equipment and laptops. 

Third-party insurance is not yet compulsory in SA, but it was from 1942 until 1997. Delivering his 2020 budget speech, former finance minister Tito Mboweni said that introducing compulsory third party insurance was one way to reduce the risk of the heavily indebted Road Accident Fund (RAF) and bring about a more equitable way of sharing these costs. Though, he said, it would face major challenges including affordability and enforcement.

As the policyholder who causes a crash, you are referred to as the first party. The second party is the insurer, and the person suffering the loss or damage due to the accident is classified as the third party. Liability in a third-party car accident is determined based on several factors, including the rules of the road and evidence gathered at the scene of the accident through a process of investigations usually involving witness statements and the SA Police Service.

The reality is that due to a tough economic climate, the average SA motorist simply cannot afford to cover the cost an accident.

Siyakha Masiye, spokesperson at MiWay Insurance, says: “South Africans need a financial safety net that can protect them from the legal liability that could arise if they are found to be responsible for causing damage to someone’s else’s vehicle.”

“Though third-party insurance doesn’t provide the same level of cover as a comprehensive car insurance policy, it does offer a great level of value and is the most cost-effective option,” says Masiye.

Benefits of being insured

• If you have an accident and it’s your fault, you must pay for your own car’s repairs and those of the third party. The right insurance will cover these costs. 
• If your car is stolen, the right insurance cover could replace the stolen vehicle.
• Not insuring a car on which you still owe money negatively effects on your creditworthiness and you may struggle to get a loan for another vehicle or other forms of credit.