The devil’s in the detail: Exploring 3rd Party, Fire and Theft car insurance

Words: Sam Bradley | Photos: Shutterstock

When parking my car in a crowded parking lot, a habit of mine is to try and find a space next to an old beaten up car rather than next to a fancy, top-of-the-range sports car. There are two reasons for this: Betsy the Uno has been my noble companion for many years now and is starting to look a little worse for wear, so she feels slightly inferior being compared to a Ferrari. The second reason is a bit more practical – if I happen to scrape another car and need to pay for the repairs, I would rather not be repairing a Maserati, thank you very much.

It appears that as a South African, fears around driving and road safety (on a slightly more serious note than my parking concerns) are well founded. It is said that about 300 people die on our roads every week (1) - a shocking statistic and one of the worst in the world.

In fact, an international report (2) measuring road fatalities ranked us last out of 37 countries, with a death rate of 27.6 per 100,000 people - well behind the rates of the UK (3.1), Australia (5.6) and the USA (10.4). Apart from the heart-wrenching loss of life (12,211 people in 2012, of which 35% were pedestrians), this also equates to an annual cost of billions of rands to our economy.

Our country's saddening safety record can largely be blamed on our rather laissez-faire attitude to road safety. Only 2% of back-seat passengers wear seat belts, many people drink and drive and a large percentage of drivers use their cellphones on the road. At this point, most readers will be thinking something along the lines of, "Well, it can’t be me, I always drive safely." Statistics to uncover who South Africa’s worst drivers are (and which province they are from) aren’t much help because while Cape Town usually has the most fatal accidents, Johannesburg often has the most speeding fines (3).

Another worrying statistic is that only 35% of cars on South Africa’s roads are insured. This means that for every three cars passing you on the freeway, two of them have no insurance. If you are in an accident, whether it’s your fault or not, there’s a high chance that the other driver will have no insurance and you’ll therefore end up with a rather large bill to pay. It’s at this point that having medical aid, to take care of the possible hospital expenses, and car insurance, to sort out the cost of repairing your vehicle or getting a replacement, will suddenly seem like a very good idea.

However, due to the economic state of our country and with the cost of living rising continuously, the reality is that many people cannot afford car insurance in South Africa or any insurance for that matter. This would be why it’s best to get a number of quotes from the various insurance providers, to find the relevant cover that suits your budget. In addition, it is for this reason that car insurance companies offer another separate form of insurance, known as third party, fire and theft car insurance. The idea behind this is that if you cause an accident, your insurance company will then pay the costs of the other car damaged or written-off in the accident. Your car is not covered for these costs, although you will be covered if you car is stolen or damaged in a fire.

If you are one of the 65% that currently have no car insurance, you need to really hope that you never cause an accident. With no insurance you will not only be liable for your own expenses (car repairs, hospital, etc) but with no third party, fire and theft insurance you’ll also be liable for all the expenses and damages of the other party. And whether you crash into a Porsche or an old Uno like mine will be largely irrelevant, these things tend to get very expensive, very quickly, regardless of which car is involved.

Lately, insurance companies have been making more of an effort to recover the costs from the responsible party. Rene Otto, Chief Executive of MiWay insurance company, recently stated that claiming from a third party who caused the damage is the ‘prudent and responsible thing for an insurance company to do (4).’ You have been warned.

The South African Insurance Association is lobbying the government to make third party motor insurance compulsory (5), but there are many obstacles to hurdle before this becomes a reality. Until this does happen, paying roughly R100 a month to cover yourself from third party liability is an idea well worth considering. Like the Wild West of old, our roads are indeed a dangerous place.

1 - The Road Traffic Management Corporation’s report of 2012/2013
2 - International Transport Forum’s Road Safety Annual Report 2013
3 - Africa's worst drivers - the truth isn't in the data
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