Third party insurance covers the insured person for any claims made by a third party. If you are involved in a motor vehicle collision, and you are at fault, you will not only have your own car’s damage to contend with but will be liable for the damage to the other vehicle and any injuries sustained by those traveling in the car.

Third party insurance covers you against this liability. Although third party insurance is not restricted to motor vehicles, this is the area in which it is most commonly used and most often abused.

• Third party insurance is routinely covered in comprehensive motor insurance; in addition there are three types of ‘stand alone’ third party insurances available to motorists in South Africa:
• Third party with theft and fire, which covers you for the damage caused to another vehicle and, in addition, covers your own vehicle against damage caused by fire and against theft.
• Balance of third party is the most limited insurance you can buy voluntarily and it covers only the damage caused to another vehicle
• Compulsory third party liability or the Road Accident Fund which pays out for injuries sustained in an accident by the third party and is paid for by a portion of the fuel taxes.

According to the South African Insurance Association (SAIA) about 65 percent of South African motorists are not insured. Two reasons they give for ensuring that you have, at the very least, third party cover, are, firstly, the financial implications of having to pay for the other vehicle’s damages if you are responsible for a collision, and, secondly, If you are involved in an accident for which you are not to blame it is unlikely that you will be able to recover the costs if the other driver is uninsured if you do not have the dubious benefit of an insurer to act for you.

After the honeymoon is over.

So, you purchase your third party insurance, and all your problems are resolved? Well, no! Apparently approximately 67% of insurance complaints received by the Ombudsman every year relate to motor vehicles. Of these the majority are concerned with third party insurance.

One of the major problems is the difficulty involved in the follow-up procedures when making a claim. Checking on claims has become so strict that the insurance investigator leaves the clients feeling as if they are suspected, at the very least, of falsifying their claims, and despite extravagant promises and even phone numbers dedicated to customer service; attempts to contact the insurance company with a complaint or a query are often doomed to failure.

This lack of customer relations is evident in some of the recent complaints recorded by dissatisfied clients. Following a third party claim lodged with Zurich Insurance, a customer had this to say: “… when I enquired … he was very rude and said he would not pay what I ‘wanted him to pay’”.

A client who lodged a third party claim through SANLAM complained that he left four messages with them, none of which were ever returned, and an Auto and General client states that “the service has been so poor and inefficient that I am constantly re-routed to a message service, or the call cut”

If you happen to be on the receiving end of a third party claim, don’t hold your breath either. First of all you are responsible for any excess payable on your vehicle when you submit the claim, even if you are not at fault.

You may then claim this amount back from the other party. However, although the insurer promises to attempt to recover the payment free of charge there are many exceptions, for example, excess cannot be recovered if:

• The insured doesn’t have any third party details
• The third party doesn’t have any income or assets to attach
• The legal costs outweigh the recovery costs
• The third party can’t be traced
• The merits of the claim don’t justify the recovery.

One of Mutual and Federal’s clients discovered first hand just how dubious a benefit it is to have an insurer to act for you when he failed to recover the excess he paid out on his car. He expressed his frustration in his insurers ‘dragging their heels’ in starting the process and their ‘lack of urgency … to facilitate the recovery of the excess amount.’

Conclusion:

It is no wonder, then, that South African insurance companies are “negatively perceived by many people” but the argument that “(r)eputable companies suffer from bad publicity generated by their less savory counterparts” does not hold water given the prestige of the companies cited above. Third party insurance might be an essential ingredient of car ownership today, but, if you are paying the premiums, make sure you are not also getting third class service!