Govt Plans To Take Over Third-party Motor Vehicle Insurance
The Government plans to take over the running of third-party motor vehicle insurance with effect from April 2024.
Presenting the 2024 National Budget on Thursday, 30 November, Finance, Economic Development, and Investment Promotion Minister Mthuli Ncube said motorists were finding that insurance companies “have no motivation to compensate” for losses incurred because they were “profit-oriented”. He said:
Third party insurance for the private and public motor vehicles was established under the Road Traffic Act in order to cushion against losses through road accidents and property damages.
Road traffic accidents are now ranked as the most prevalent cause of deaths and injuries across the globe.
Whilst insurance is an appropriate mechanism to cover liability costs, it has, however, proved difficult to enforce third party liabilities since private insurers are profit oriented, hence, have no motivation to compensate for the losses incurred.
In that regard, I propose that the government assumes third party motor vehicle insurance to private and public motor vehicles as is the case with other countries in the region.
Ncube said the prescribed compensation limits provided through the Road Traffic Act are inadequate as they are restricted to death, permanent disability, and medical and funeral expenses. He said:
I, therefore, propose to broaden the scope of third-party insurance cover under the Third-Party Motor Vehicle Scheme to include the following: medical benefits; rehabilitation; injury grants; funeral grants and loss of income.
The scheme will be operational with effect from April 1, 2024.
Every vehicle on the road is required by law to have insurance, and the most common is the third party scheme.
Third party insurance provides coverage for damages or injuries caused by the policyholder to a third party, and does not cover damages to the policyholder’s own vehicle or injuries sustained by the policyholder.
Meanwhile, Ncube did not say anything about comprehensive insurance cover, the more expensive scheme which not only covers third-party liabilities but also the insurance holder’s vehicle.
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