After your recent accident, you found out to your dismay that the car that crashed into yours was not insured. This means that even though it wasn’t your fault, you were still forced to claim from your car insurance for your car repairs. Read on further about this potential issue that South African motorists could unfortunately face.1
Who carries the burden of paying for accidents?1
Only about 30% of all South African motorists drive insured cars, while 70% have no cover. In other words, out of 10 cars standing at a traffic light, 7 of those are unlikely to be insured. If any of the 70% uninsured crash into any of the 30% insured, the 30% must still pay for their damages, even though it should have been done so by the other party. Insurers will try and recover as much as possible from the uninsured party.
What is the impact of this unbalanced situation? 1
It means that the insured and the insurer are forced to carry the financial burden of many accidents. In addition, when the insured are compelled to submit a claim, it may affect their non-claim bonus or equivalent. This situation is exacerbated by the fact that South African roads are known to be among the most dangerous in the world, and thus the risk of having an accident is very high.
Pressure on insurers1
Because insurers are forced to pay out more than what they should, the resulting financial pressure makes it a challenge to maintain premiums at low levels.
What is the solution? 1
The more motorists insure their vehicles, the greater the sharing of the financial claim burden, and the greater the reduction of financial pressure on both the insured and the insurer. But, unfortunately, no one can force the 70% to insure their vehicles unless some basic car insurance is written into law.
Mandatory car insurance1
According to Businesstech1, before anyone can buy a car, the potential owner should be required to take a basic car insurance policy by law. This happens worldwide, but why not here? Car insurance and car ownership go hand-in-hand – if someone can’t afford car insurance, that person shouldn’t be allowed to own and drive a car. This is because that owner is unable to protect the third party should they have an accident.
Compulsory third-party car insurance 1
It’s no secret that South African insurers have been consulting for many years with the Government for compulsory third-party car insurance to be re-introduced. This concept was supported by finance minister Tito Mboweni when giving his Budget Speech in 2020. From 1942 to 1997, compulsory third-party car insurance covered both vehicle damage as well as bodily damage.
It remains to be seen for how much longer insured South African motorists and insurers must wait before third-party car insurance is made compulsory. In the meantime, good cover for your car is still essential.
If you are not insured or would like more information, contact Prime South Africa to find out more about our affordable car insurance products.
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