Don’t go it alone in third-party cover
It’s no open-and-shut case, even if it seems you’re innocent
If you're insured and involved in a car accident for which you think you are not to blame, don't try to go it alone - especially if you have third-party-only cover.
A few years ago, Capetonian Londiwe Buthelezi decided to downgrade her insurance to third-party only.
A monthly premium of around R350 for comprehensive cover on an ageing Hyundai Getz didn't seem worth it. "The value of the car was decreasing, but the premium was rising. In the event of a total loss, I would get less than the previous year though I'd be paying more in a premium."
Being a good driver, she reckoned that third-party insurance would be adequate. With third-party insurance, you don't have cover for damages to your vehicle when you're involved in an accident; your insurer covers you for damages to the vehicle of the third party - anyone, apart from you, whose vehicle was damaged by you in an accident.
In August, the driver of an oncoming vehicle turned in front of Buthelezi. She smacked into the side of the other car, resulting in damages of about R65 300 to the third party's car and about R26 000 to hers, according to an assessor's report.
Wrongs and rights
Since Buthelezi wasn't at fault, she decided not to claim from her insurer, Auto & General: "I couldn't claim from Auto & General because I'm only covered for third-party damages. Even if I was comprehensively covered, claiming would damage my claims record, resulting in a bigger premium."
So she notified Auto & General that she had been in an accident and wouldn't be claiming.
She expected the third party's insurer to cover the damages to both cars in full, since the other driver was at fault and had comprehensive cover.
But she was notified by the other party's insurer that the claim would be settled on the basis of "apportionment".
A letter from Brolink, the third party's insurance broker, referred to a case where the court held that an approaching driver was 25% negligent for not observing the oncoming vehicle executing a right-hand turn in front of them and subsequently not taking evasive action.
The matter was settled on a 75/25 apportionment in favour of the approaching driver, even though the defendant never saw the plaintiff, the letter said.
On this basis, the insurer decided to cover 75% of the damages to Buthelezi's car (about R19 000), less 25% of the damages to the other party's car (about R16 000), leaving her with about R3 000 to fix her car.
Buthelezi refused the settlement offer.
"Accepting Brolink's offer would effectively mean that I, the person responsible for 25% of the collision, am liable for more than 80% of my damages.
"While I accepted that they would apportion blame, I thought a fair settlement should leave me out of pocket for 25% of my repairs bill, not 86%.
"If I have to pay that much, why pursue a third-party claim in the first place and why is that cover even sold to owners of old cars?"
Insurance done right
Auto & General spokesman Martin van Wyk says although Buthelezi opted to fight her case on her own, the insurer was willing to step in and negotiate on her behalf.
"We weren't prejudiced by the fact that she decided not to claim; she hasn't signed a settlement. So we will process the claim. That's precisely what we're here for. It's why you pay for insurance - so that you have an insurer in your corner when you find yourself in a situation like this."
He says Auto & General will contact the other party's insurer and seek to understand how they calculated the settlement offer.
"They worked on a case-law calculation - the standard calculation with a right-hand turn - but we will look at the damage on our client's car and the specific merits of her case. It may be fair, but it might be a 90/10 liability in her favour.
"Whatever the case may be, we're there to assist our customer to get the best possible settlement."
Someone's got your back
Buthelezi was covered for third-party damages only, but Van Wyk says they will also seek to cover the damages to her car.
Buthelezi says: "The way I see it is that if Brolink had submitted a third-party claim for the 25% directly to Auto & General, my insurer would have regarded it as third-party claim. But not if it comes from me. Brolink shouldn't have clawed back from my settlement. They should have submitted a counter third-party claim."
When asked why it didn't submit a third-party claim directly to Auto & General for the 25% liability, Brolink's Linda Lubbings said Buthelezi did not claim under her policy "and we therefore do not have a claim back from Auto & General".
Had Buthelezi been in an accident with a Mercedes or BMW, the cost of repairs could have been even higher; if apportionment was applied, she could have been liable for a considerable claim from the other party, even if she was only partially at fault.
Rowland Ramalingam, head of specialist claims at Santam, says third-party insurance covers your full legal liability. Even if the other party came after you, your insurer would cover you.
Colin Mchunu, a senior manager of insurance at Alexander Forbes, says that in Buthelezi's case it was unwise to decide not to claim from her insurer.
"Insurance companies understand each other and would have negotiated."
The company covering the party that was mostly at fault might have agreed to pay 75% of Buthelezi's damages, leaving her to come up with the difference, he says.
Buy the very best accident cover you can afford
Insuring a car is costly. When money is tight, you might be tempted to cut back on your cover. If you drive an old car with a low replacement value, the temptation to forsake comprehensive cover in favour of third-party-only cover can be greater still.
"Comprehensive cover is the best cover because your insurer has a contractual obligation to cover you whether or not you're at fault, subject to the conditions of your policy. However, with a third-party claim, it's not a contractual claim; it's a delictual claim, which means the insurer you are claiming from is entitled to apportion blame," says Rowland Ramalingam, head of specialist claims at Santam.
"Delictual disputes arise when there is no contract underlying the dispute," said attorney Richard Bollaert of RMB Wands Attorneys in a 2016 blog post.
"It is most commonly associated with an act or a failure to act, and whether or not that act or failure to act is negligent or intentional needs to be considered. Examples of delictual disputes are motor vehicle accidents, most commonly associated with a negligent failure to act, such as failing to stop at a traffic light."
Colin Mchunu, a senior manager of insurance at Alexander Forbes, says cutting back on comprehensive cover is a bad move because the chance of being in a crash is high in South Africa, and 65% of drivers - or eight million drivers - are uninsured.
Ramalingam warns consumers against buying insurance on price or premium alone; insurance ought to be bought based on the cover that it provides.
Some insurers might offer a lower premium but charge higher excess.