Is Car Insurance a Legal Requirement in South Africa?

While having car insurance isn't a legal requirement for South African drivers, it could stand between you and months of legal, financial and medical hardship if you’re uninsured and experience an event, like a car collision or severe hail damage from a storm. Discover what could happen if you drive a car without insurance and how getting a car insurance quote from Auto & General could cover you in hours.

Do you legally require car insurance in South Africa?

No, car insurance is not currently a legal requirement in South Africa. The AA estimates that 60% to 70% of vehicles on our roads are uninsured. The law doesn't require South African drivers to purchase car insurance if they buy a car with their own funds and have an up-to-date and applicable car licence. However, Auto & General wants to remind you that a car without insurance is not a good idea. Uninsured drivers often assume that even if they aren't insured, they can count on the Road Accident Fund to pay or compensate them should they have an accident. In reality, you can't make a claim or are limited in how much you can claim if you caused the accident or were the only one involved. Even if you can make a claim, it can take up to six years to settle it and even longer to receive a payout. You'll also need to pay a lawyer to investigate and lodge the claim, collect evidence, monitor the investigation and chase a settlement. This can also involve the issue going to trial, prolonging its resolution even further.

Good driving won't necessarily keep you safe, either. South Africa has a high rate of traffic accidents[3]. This, unfortunately, means that you can observe traffic rules and laws but still end up with vehicle damage or injuries because of other drivers on the road. Add hijacking and car theft to these stats, and you will realise how important it is to protect yourself with an insurance policy.

When will you need to have car insurance?

If you finance your vehicle with a bank for private or business use, you must take out comprehensive car insurance. Most people are motivated to pay this monthly insurance premium as they understand that should they write off their vehicles, a lack of insurance could see them paying the bank back for losses based on the loan's outstanding amount. With rising interest rates and strict financing requirements, many people are motivated to purchase a pre-owned car. It means that roughly three pre-owned cars are sold for every new car sold. Strictly speaking, business vehicles bought for cash or owned in full don't legally need car insurance. However, business car insurance is strongly recommended because they're business assets governed by liability laws. If a business car breaks down or is written off, it will compromise your ability to earn an income. It can be expensive to replace or repair. Any accidents caused by your business vehicle could result in injured employees or third parties taking action against your company, thus rendering your business liable for damages.

The risks of driving a car without insurance

The consequences of not having car insurance can have a serious financial impact Imagine the following scenario: Mandla runs a successful phone repair business and has recently hired his first employee, Greg. To accommodate the increased demand for his services, he allows Greg to run a business errand. Mandla wants to keep costs low, so he doesn't insure this car. Unfortunately, Greg is involved in a car accident. While he and the driver are unharmed, both cars are written off. As Greg caused the accident, Mandla is liable for paying for the other driver's damages and replacing his much-needed vehicle so he can continue running his business. If Mandla had been insured, he would have been covered for this event

Discover more about Why you shouldn’t cancel your car insurance. 

Car insurance plans for all budgets

While comprehensive insurance will give you the widest coverage, it could also cost more than you can currently afford, which is the reason why Auto & General offers four distinct coverage types to meet every need and budget:

• Comprehensive car insurance — covers all accidents and damage to your vehicle, and third-party vehicles, as well as property damage. It also covers theft and damage from the elements and fire. 
• Third-party fire and theft insurance — if you are involved in a car accident or collision, which damages anyone else's car or property, this will cover you. It will also cover you for theft, accidental or deliberate fire damage to your vehicle.

Third-party-only insurance — covers the damage caused to a third-party vehicle or property in the event of a car accident or collision. BetterCar insurance — is an option allowing you to replace your car with a similar model that's one year newer or give you an amount in cash. It only applies to vehicles eight years old or younger.

Get a car insurance quote from Auto & General

By now, you can determine the answer to the question, 'Do you need car insurance?' The wise answer is yes. Protect your car and finances by applying for a quick and hassle-free car insurance quote online from Auto & General.

--------------------------------------------------------------------------------------------------

[1] AA: Don’t take the insurance bait: cheaper is not always better 

[2] Road Accident Fund

[3] WITS: South Africa bottom of the class for road safety? 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.