Road Accident Fund caps injury claims
If you’re a middle- or upper-income driver or passenger, prepare to top up your own insurance, because the Road Accident Fund (RAF) is capping injury claims from August 2008, as confirmed by the Constitutional Court in November 2010. If you’re in an accident and your medical and loss of earning costs exceed those set up by the RAF (about R180 000 loss of earning a year and limited cover for medical expenses), you’ll have to cover the shortfall yourself.
Although this 2008 amendment to the Road Accident Fund (RAF) Act was challenged by the Law Society of South Africa (LSSA), the Quad Para Association, the South African Association of Personal Injury Lawyers and the Johannesburg Attorney’s Association, the Constitutional Court found that this restriction is not unconstitutional.
The court’s ruling, in November last year, means that all parties injured on South Africa’s roads will receive compensation for injury or loss of earning, up to the limit set. This means that road users are liable for their own costs beyond the limit set—unless, of course, they have comprehensive death or disability cover.
According to Ian Labram, a manager at Aura Motor, Guardrisk, critical top-up cover will have to come from the insurance market, and he expects to see insurers competing to offer this. Also, third-party insurance is vital.
On the other hand, the average taxi operator is unlikely to take out passenger liability cover, so passengers and drivers will rely completely on the RAF for compensation. When you consider that the RAF is woefully under-funded, and its balance sheet showed a R42,4-billion deficit at the end of March last year, the challenges become clear.
If you don’t have some form of income protection or appropriate cover for motor vehicle accidents, you might want to find the money for that somewhere—or be at risk.
Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information