April 21, 2018
Many South African motorists have car insurance for their cars? But why don't all motorists have car insurance? In South Africa, only about 35% of all motorists are insured, which places driving in this country on quite a risky footing.1 Why should this be so? What will it take for all motorists in South Africa to buy car insurance? Let’s read on and find out.
Seeing about 65% of all cars on South African roads are uninsured, 1 it places a huge financial burden on the car insurance industry as well as on insured motorists. In most cases, insured motorists will have to submit an insurance claim regardless of whether they caused the accident or not.
Some motorists don’t bother with car insurance, because they reason their cars will still get them to work and back without it. They may well change their minds, though, once they’ve been involved in an unforeseen accident
Especially if motorists cannot afford car insurance, they may justify this precarious situation, because they only use their car once in a while, and drive short distances to fetch the kids from school, and back. What they don’t realise is that it is a well-known fact that most accidents occur close to home.3
Typical human thinking is usually along the lines that I will never be involved in a car accident, because it only happens to the ‘other guy.’ We all know that in a real world, no one can guarantee an accident-free life, and we never know when and how it will happen. These motorists are so sure about being immune to accidents, that they don’t even bother to get an insurance quote.
One cannot blame the average motorist for not knowing about repair costs, when they have never been involved in an accident. But, you don’t want to discover this when it is too late. No matter if the car involved is new or old, car repairs are expensive, period. The tragedy is that damage to an uninsured car could be a financial disaster for most people. Who can afford to pay R30 000 out of one’s own pocket to get a damaged car back on the road?
Many motorists have old cars, either by choice, or because that’s all that they can afford. Such owners are not exactly going to stress about every minor dent or scratch that comes along. As long as their cars can make it from A to B without seriously endangering the lives of any occupants, that is all that counts to them. What such motorists fail to realise is they are not covered for third party insurance for any damage caused to other cars. Smashing into a brand-new Mercedes will make most motorists’ worry when they hear about the repair costs associated with high end vehicles. It may well mean that they won’t recover from such financial trouble for a very long time.
Perhaps, the only way to address those issues why motorists generally won’t insure their cars is to make the cheapest and most basic form of car insurance compulsory.
Third party car insurance is currently not compulsory in South Africa, unlike in many other countries. Not having compulsory third party insurance is like a double-edged sword. Not only does car insurance become progressively more expensive because 35% of motorists are carrying the costs of the other 65%, but the increasing insurance costs will put off more and more motorists from insuring their cars in the first place.
The South African Insurance Association (SAIA) has been pushing for the implementation of compulsory third party in South Africa for a long time now.4 A 5 November 2015 article by BusinessTech5 mentions a report, requested by the SAIA, about how Compulsory Third Party Motor Property Insurance (CTPMPI) will address road safety and the huge cost of the many accidents occurring in South Africa.
PwC completed a report on compulsory third party insurance in 2016. The report covered international experience regarding CTPMPI, as well as the results of a South African survey conducted with all relevant role players.6 Likely costs that would be involved with CTPMPI were also discussed.
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March 25, 2020