Budget 2020 – Third party motor vehicle insurance has been identified as a way that can help the ailing Road Accident Fund stay afloat according to Finance Minister Tito Mboweni.
During his 2020 Budget Speech in Parliament on Wednesday, Mboweni said that one way of getting the heavily indebted Road Accident Fund back into the green would be to introduce compulsory third party insurance.
The Minister did not mention any plans to implement such legislation, but did insist that it was something that should be debated as soon as possible.
It also remains unclear how exactly this would be implemented.
In some countries the mandatory third party insurance is actually included in the on-road licencing fee, which makes for an uncomfortable expense upon renewal each year, but this method would probably be the most practical and effective way of forcing motorists to carry third party insurance, at the risk of having more unlicenced vehicles on the road.
But how much could third party cover cost motorists who are currently uninsured?
This will vary from person to person, but we did a quick online quote on a South African insurer’s website and were quoted R157 per month for the minimum coverage amount of R1.3 million and R164pm for R5 million.
Why is compulsory third party insurance being mooted?
According to Mboweni, the liabilities of the Road Accident Fund are forecast to exceed R600 billion by 2022/23. Although he did not detail any specific intentions, the implication is that third party insurance would compensate the victims of serious car accidents, thereby reducing the amount of people who need to lodge an RAF claim.
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