When will compulsory third-party car insurance become law in South Africa?

Only 30% of 12 million South African motorists have bought car insurance. Unfortunately, third-party car insurance is yet to be made compulsory in South Africa. Read on further and find out why our country needs to implement compulsory third-party car insurance.¹

Government’s proposal to introduce compulsory third-party car insurance

According to ‘the Sowetan Live’ article of 5 March 2020, the Government announced a proposal to provide compulsory third-party car insurance for all South African vehicle owners in its budget. Unfortunately, authorities did not mention an implementation date.¹

But why is it so important to have compulsory third-party car insurance in South Africa?

The reason for making third-party car insurance compulsory

Even if the owner of the car you damaged has car insurance, his insurance company will still try to recover costs from you. If you cannot pay, the insurer may sue you in your personal capacity and settle for a repayment arrangement – taking a large chunk of your monthly income for years to come. The good news is that motorists can take out car insurance and avoid such unpleasant situations.¹

Is third-party car insurance compulsory in other countries?

Third-party car insurance is compulsory in Australia, Germany, Hong Kong, Hungary, Indonesia, India, Ireland, Italy, New Zealand, Norway, Romania, Russia, Spain, the United Arab Emirates, the UK, and the US. The fact that these governments have considered it necessary to implement compulsory third-party car insurance confirms the South African government’s decision to do so.¹

Is third-party car insurance affordable?

Third-party car insurance costs about 20% of the cost of comprehensive car insurance. According to the Sowetan Live article, such policies were selling for under R50/month in 2020.¹

Who would benefit from compulsory third-party car insurance?

This is a win-win situation for both the insurer and the motorist, with the latter enjoying third-party cover for the first time. Car insurance companies won’t have to continue paying out existing clients for accidents they never caused. This lowering of insurers’ costs due to fewer claims could result in a reduction of premiums.¹

It protects you financially

Third-party car insurance covers damages incurred to the third party’s car that could add up to hundreds of thousands of Rands. Unfortunately, this insurance does not cover damage to your car.¹

Insured motorists would benefit each other

All those buying third-party car insurance for the first time would have to pay a small amount each month. But should they have an accident that’s not their fault, they would be able to benefit by claiming damage costs from the third party.¹

Insured motorists can afford better repairs

Usually, millions of uninsured motorists often need to resort to cheap, sub-standard repairs of their vehicles after causing accidents. This is because that is all they can afford. But if everyone has third-party car insurance, the innocent party involved in an accident can now claim and have access to a professional panel beater – which may previously have been impossible. This trend would raise the roadworthiness of 12 million cars in South Africa, resulting in improved road safety. Better road safety means reduced risk and claims for insurers.¹

Disclaimer

This article aims to demonstrate the enormous benefit of compulsory third-party car insurance to all motorists and car insurance companies. It should encourage uninsured motorists to buy at least third-party car insurance until third-party car insurance becomes compulsory.¹

It’s always a good idea to consult a certified financial advisor when you want to buy an insurance product. In this way you’ll make sure you’ve made the right choice.

Sources:

1. 1. Third-party car insurance will benefit all