Road Accidents and Personal Insurance

The frequency and severity of road accidents are becoming an increasingly worrying statistic and the provisions made by the Road Accident Fund (RAF) for injury or death suffered on our roads are decreasing with each amendment of the Act. This increases the burden on each person to financially prepare themselves for the possibility of a serious motor vehicle accident and the potential repercussions of such an event. But how does one do this?

That road accidents have reached pandemic proportions in South Africa is well known and is dramatically highlighted by the death toll statistics surrounding our national holiday seasons. In the past Easter holiday season more than 1200 people died on our roads. The frequency of these road accidents make it clear that we should be prepared for the repercussions of motor vehicle accidents which range from injury and disability, to death.

In South Africa all road-users have a security safety net in the form of the Road Accident Fund (RAF). In short, the RAF indemnifies the person(s) who caused the accident and compensates the injured and/or the family of fatal victims for special and general damages.

The procedure to institute a claim is relatively straightforward although it can be time consuming. Accordingly, it is wise to approach an attorney specialising in personal injury cases to assist you in providing advice regarding the merits of your claim as well as to assist you with the process of claiming and what you can claim for.

One of the main concerns with the RAF is that continuous amendments have influenced the ‘pay-out-amount’ to claimants, and not in a beneficial way. For example, a claim for non-pecuniary loss is only possible if a serious injury can be proved. This is further complicated by the regulations published in May 2013 describing what constitutes a serious injury and what not, with the list of what is serious, becoming smaller and smaller with each amendment. Another example is compensation that can be claimed for the loss of income. Section 17(4)(c) of the Road Accident Fund Act determines that annual loss of income cannot exceed the amount published in the Government Gazette. This amount is currently capped at R207 528-00, which is less than R17 300-00 per month. Persons earning in the higher income ranges will accordingly still only receive this amount, irrespective of the fact that a previously earned salary could have been much higher. So have funeral expenses been stripped to the bare minimum to cover only the necessary and actual costs regarding a cremation or burial.

Understanding the role and scope of the RAF is therefore of importance to all road users. The reality is that unfortunately the RAF can no longer extensively provide financially for victims and their families. Therefore, even if the RAF does pay out, the amount could in all probability be insufficient to cover the full extent of the damage or losses suffered and this gap between the pay-out and your true expenses could be vast.

Minding this gap is paramount. The obvious way to protect oneself against such loss is to consider broadening one’s personal insurance to make provision for this potential gap. Not only should you make provision for life insurance, but also for funeral costs, unemployment due to incapacity or temporary loss of income due to injury. Personal credit insurance is also something to consider, but of lesser importance if you have already taken out a second life insurance policy to cover your debts. You may also wish to consider consulting a financial planner to assist you in planning your estate and determining the levels of insurance required to avoid being over-or under-insured should an unfortunate accident occur.

July 25, 2013
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