Did you know that third party car insurance was compulsory in South Africa from 1942 until 1997? It’s an odd thought, because you’re probably aware that there’s no type of car insurance that you’re legally obliged to get nowadays. In fact, the Automobile Association (AA) conducted research which revealed that 70% of cars in South Africa aren’t insured.
That’s 7 out of every 10 cars on our roads which aren’t insured!
This may change, though. There have been rumours circling for a while that the Government has been working on a plan to make third party car insurance mandatory in South Africa. To recap, Finance Minister Tito Mboweni’s 2020 Budget Speech included a reference to the fact that introducing compulsory third party insurance could be 1 way to reduce the risk of the heavily indebted Road Accident Fund (RAF) and bring about a more equitable way of sharing these costs.
Undoubtedly there would be obstacles to overcome for this to see the light of day… The biggest of which is the challenge that accompanies enforcing new legislation. That said, this kind of legislation could have a hugely positive impact on the lives of so many South Africans.
It’s certainly an interesting thought, so let’s review the concept of compulsory car insurance in South Africa.
What cover are we talking about
The reality is that comprehensive car insurance is the best option available on the market. (This is the cover that institutions require you to take out if you’re financing your car by the way.) It covers accidental damage to your own car, accidental damage to other cars and other property, theft, hi-jacking, hail damage, and loads of other incidents.
But it’s the more expensive option out of all the types of car insurance policies available in South Africa. What’s far more likely to brought into legislation is third party only car insurance, which can cost around 80% less than comprehensive insurance.
Third party insurance covers motorists for liability to other people and their property as the result of an accident.
Why uninsured cars are problematic
The compulsory third party car insurance that was previously enforced in South Africa was replaced with the RAF. While the RAF has proven beneficial to those impacted by incidents on the road, providing financial aid for death and bodily injuries sustained in car accidents, it isn’t sustainable.
The RAF is burdened by law to pay for damages for pain, suffering, disfigurement, and loss of amenities of life. But it doesn’t generate its own funding. In short, the RAF is heavily indebted.
It also, importantly, doesn’t have anything to do with paying for the costs of the damage to the cars involved in the incident. Those costs are left to you, or if you’ve chosen to take out and pay for cover, to your insurer.
Why most people don’t get cover
There are several reasons why people in South Africa choose to take the risk and drive about uninsured. For starters, it’s not affordable or they don’t drive regularly and don’t feel the pressure to get insurance. Perhaps the biggest reason, however, is a lack of awareness.
Lots of people are unaware of the high costs of repairs, even if their cars are older. Typically, these people also aren’t aware that there are affordable insurance options out there or how insurance benefits them (like what it pays for if an incident happens).
Here are some reasons in favour of insurance:
It makes economic sense
The cost of insurance is significantly less than being responsible for damage due to an accident with another person, especially when you consider the fact that car insurance can be affordable if you find the right policy from an insurer you can trust.
Financial protection
As a driver on the less-than-perfect roads in South Africa, you can accidentally cause harm to other people or their property. Even just third party insurance will ensure you can pay for damages you’re responsible for.
We have extremely high road accident rates
Stats released in the 2019/20 Festive Season Road Safety Report highlight that the cars mostly involved in fatal crashes were light vehicles, making some form of cover necessary in order to provide support in case of the very real possibility of an accident.
We all benefit
Compulsory cover could drive down the cost of car insurance for consumers who already have insurance, as well as those who haven’t enjoyed cover.
Whether or not car insurance becomes compulsory in South Africa isn’t something we can say for sure, but what’s pretty clear is that car insurance is a necessity, no matter who you are or what car you drive.
If you want to look at a range of cheap car insurance options, click here. You could even get a commitment-free quote in a matter of minutes!
Posted in partnership with King Price Insurance
