Third Party Insurance Question

[Hosehead]

How does this work? Person A buys a third party policy on his 12 year old Toyota and pays R90 per month. One day he side swipes a parked car by accident to avoid a head on collision.
Parked car is a 5 year old Jaguar owned by Person B with comprehensive coverage.
Police make a report at accident scene. No liability is discussed.
Now Person A is contacted by Person B's insurers to ask if he/she has insurance coverage and with whom.
Person A advises the name of his/her insurers.
Some time goes by and Person A gets an SMS from the insurers of Person B requesting that he/she (Person A) make a claim on his/her third party insurance otherwise insurers of Person B will take legal action against Person A.
Why would Person A need to make a claim? Person A has third party which covers damage to affected party (Person B) but Third party insurance does not cover any costs of Person A (damage or injury) so what is the rationale behind being requested to make a claim?
Second Part. What if Person A refuses to do anything. What are the legal implications for damages?
Who pays costs?
Is third party worthwhile at all?

 

[Carbon_Fibre]

You are not making any sense. Obviously, you, agh excuse me, Person A must submit the claim to Insurance company under 3rd party coverage. How else would Person A's insurance know it was a valid claim?

I think its quite obvious that Person A needs to inform his insurance company of the accident and the potential liability within 30 days of incident and again once Person A has received letter of demand or summons, etc.

If Person A does nothing, Person B's insurance co. will issue summons against Person A, then if still not paid by either Person A or Person A's insurance, B's insurance co. will get a judgement and warrant of execution against A's property.

 

[Carbon_Fibre]

Is third party worthwhile at all?

YES ABSOLUTELY. IT SHOULD BE LAW THAT EVERY VEHICLE OWNER HAS AT LEAST 3RD PARTY INSURANCE. It is law in many countries.

Imagine A (with no insurance) knocks into Mr CEO's new Maserati, CEO's insurance co. will sue A for every last cent he has plus get a court order from A's employer to take a portion of A's salary every month until debt is paid (and with compound interest of at least 10% - that could be f@cking long time)

 

[Creag]

Some time goes by and Person A gets an SMS from the insurers of Person B requesting that he/she (Person A) make a claim on his/her third party insurance otherwise insurers of Person B will take legal action against Person A.

You run the risk of your insurer rejecting any claim lodged if not reported in reasonable time - usually 30 days.

Why would Person A need to make a claim? Person A has third party which covers damage to affected party (Person B) but Third party insurance does not cover any costs of Person A (damage or injury) so what is the rationale behind being requested to make a claim?

Whilst Person A cannot claim any compensation for the damage to own vehicle, Person A is still responsible to notify own insurer that there has been an occurrence which could give rise to a claim by the third party (i.e. Person B).

Is third party worthwhile at all?

If you cannot afford premium for comprehensive cover, Third Party Only insurance is the absolute minimum.

The damages you cause by driving your vehicle are your responsibility and you are ultimately responsible for the reimbursement of it.

The accident described is relatively minor and you could easily recover from that financial outlay.

But what if the accident caused involved a petrol tanker and it crashed into a Mercedes Benz, etc and one of the vehicles crashes into a building. Without adequate insurance the property damage you cause will sink you financially, possibly, for life. Try recover from that without adequate insurance.

 

[Bronzed_Skarab]

Agree with carbon_fibre. The question is bizarre. Just follow the steps required and let your insurer pay the claim.

 

[Hosehead]

Interesting responses. So it is clear that third party insurance is necessary but do most taxi drivers with a 12 year old Toyota Hi- Ace actually have it? and if they do and have an accident in the above scenario; and they don't claim what is the point of some CEO suing them if they don't bother claiming because they have nothing and their taxi had no damage but the person B's Jaguar was scratched badly? (Person A has no money or assets-except for their taxi)

 

[Carbon_Fibre]

I can't remember exactly, but something like only 30% of vehicles in SA have either comprehensive or 3rd Party insurance. That's a damn scary thought.

When some idiot in a clucker knocks into your new XF, your insurance company can't really get much (if anything) oout of the idiot. It's been happenning for years, so the Insurance companies have already factored this into our premiums i.e. We pay more for comprehensive insurance.

 

[Creag]

Interesting responses. So it is clear that third party insurance is necessary but do most taxi drivers with a 12 year old Toyota Hi- Ace actually have it? and if they do and have an accident in the above scenario; and they don't claim what is the point of some CEO suing them if they don't bother claiming because they have nothing and their taxi had no damage but the person B's Jaguar was scratched badly? (Person A has no money or assets-except for their taxi)

http://mybroadband.co.za/news/business/12079-Telkom-may-trim-management.html ... it depends on the taxi operation, but there is a growing trend for taxi bosses to insure their vehicles. There are specialist (or niche) insurers who do this insurance. Their terms and conditions are naturally higher than for you and me, but their is reward to the taxi boss if goes this route.

Claredon Transport Underwriters are one of the underwriters (they don't hold the risk themselves ... see this)

So it worth checking to see if the taxi has insurance. The driver will naturally either gap it after an accident or lie about insurance, as he'll want as little trouble with his boss as possible.

 

[Creag]

I can't remember exactly, but something like only 30% of vehicles in SA have either comprehensive or 3rd Party insurance. That's a damn scary thought.

When some idiot in a clucker knocks into your new XF, your insurance company can't really get much (if anything) out of the idiot. It's been happening for years, so the Insurance companies have already factored this into our premiums i.e. We pay more for comprehensive insurance.

"...something like only 30% of vehicles in SA have either comprehensive or 3rd Party insurance"

The actual statistic isn't certain, but it has been estimated that only 30% to 35% of vehicles on the road have some kind of insurance. The RTMC (think it was them?) have said that there are about 9 million vehicles on the road in SA and there is an unhealthy number of them that are unregistered or the driver is unlicensed or has an inappropriate license to drive the vehicle.

So you can have a driver licensed to drive a car, but the license he got did not test him on reversing, handbrake starts on a hill, etc. Unfortunately there are loopholes which are being exploited and the Dept of Transport appears to be uninterested in changing the National Road Traffic Act to force drivers to be properly tested before hitting the road.

Regrettably if insurance companies cannot make recoveries against the third party who caused the accident, it just puts more pressure on motor insurance as a whole as well as your premium as you are bound to lose your claim free discount on your insurance

But there are many more problems in our country today, such as drunk driving, vehicles not road worthy, the state of our roads, speed and insufficient enforcement by traffic police. Add all these together and you understand the pressure on the motor insurance as a whole.

Scary statistic I heard the other day on 702, it was said that as a motorist you have a 1-in-10 chance of having an accident in any given year (900,000 accidents for 9,000,000 cars on the road). Obviously if you use the roads in say, Joburg, then your chances are higher than a driver in Kimberley or Poffadder.