July 7, 2019
The implementation of compulsory third party car insurance in South Africa has been raised by the short-term insurance industry for many years. At the time of writing, it appears that there is nothing on the horizon to indicate that some development is imminent. There are pros and cons to having compulsory third party car insurance – let’s examine them.
Please consider this article as only information, because car insurance is not a straightforward subject. For this reason, it is recommended that you seek professional advice from a registered financial advisor when considering to buy a car insurance product.
A 2014 article1 stated that human beings tend to think that car insurance is not necessary, especially when the risk of loss appears ‘low’. This kind of thinking belongs to the 65-70% of uninsured motorists in South Africa. Compulsory third party cover would override this attitude, for the good of all. Studies have shown that when such cover is not compulsory, motorists are severely financially impacted by accidents, to the extent that many cannot recover from such catastrophes.
When there is no compulsory car insurance cover, the right of insurers to claim back from guilty, uninsured parties is taken away. 1
From 1942 to 1997, South Africa had a compulsory third party cover in place. This was replaced by the Road Accident Fund (RAF), which covers only bodily injury and death of third parties, it does not cover damage to property. Thus, currently, the pressure to have compulsory third party insurance could not be greater.1
A study came to the conclusion that it would be the most beneficial for South Africa that third party car insurance should be made compulsory. This would only apply to damage of third party property, while bodily injury and death would still be addressed by a much-improved RAF. 1
It only makes sense that when third party insurance is compulsory, owners of cars can have their damaged cars professionally repaired. This means that owners can have their transport quickly reinstated which is great for the economy.
It is understandable, that the owner of a crashed uninsured vehicle cannot privately pay to have the car professionally repaired. The cost of spare parts alone is prohibitive. What happens in such cases is that cars are ‘patched up’ and not repaired properly. The result is that such ‘repaired’ cars are re-introduced onto our roads, possibly unroadworthy, and thus posing a great risk to all motorists.
Having such compulsory basic car insurance that only covers damage done to the third party’s car, means that when an accident is your fault, you have to repair damages to your own car out of your own pocket.
Unfortunately, in most cases, compulsory third party insurance does not cover your car when lost through fire, theft or hijacking. 2
We have read how important it is to protect yourself financially when you own a car. You can contact PMD and purchase affordable car insurance by going online with their Online Insurance Purchase Platform. From the comfort of your home or office, the whole process does not take long and is not difficult. You can complete everything at any time that suits you. You don’t have to phone anyone, but there is a call-back facility, as well as extra audio and video materials made available for you to use. Learn more about car insurance.