Who pays what in an accident and when do I get my excess back?

Article MoneyShop.co.za 24/03/19 with I&DRS comments and inserts:

Car accidents are not uncommon in South Africa. In fact, it is estimated that there are about one million road accidents that happen in a year. But do you know who is supposed to pay in case you have an accident?

If you are responsible for the accident you will pay for the damages caused to the car of the other driver. In this case having third-party only or third-party fire and theft insurance, and car insurance would come in handy.

According to Louis Hay, head of short-term insurance propositions at Standard Insurance Limited, third party only insurance is a cheaper vehicle insurance option if you own an older, possibly outdated car which you feel would probably not be worth replacing.

“You must have some form of third-party insurance to cover you if you drive into a Ferrari, which could result in a very expensive repair bill if you’re at fault,” says Hay.

According to Hay, if you want a better cover, third party fire and theft insurance could be what you’re looking for. He says the insurance provides cover for the third party when you are involved in an accident with another vehicle as well as for loss suffered due to fire or theft.

“If you drive into a Ferrari this insurance option will cover the repairs for the other vehicle but will not pay for any damages incurred by your car,” says Hay.

The premiums for these insurances are tied to the value of the vehicle insured, and the risk profile of the driver.

I&DRS Note: Depending on the specific policy, should you have no damage but the third party has sustained damages , you will be liable to pay your excess to the insurer before settlement by your insurance is made to the third party  

What if another driver caused the accident?

If another driver is responsible for the accident, the cost of the damages will be his or her responsibility. However, people don’t always have cash available for such emergencies and it may take a long time for them to pay for the damages caused. Even if they have insurance, it may take time to pay out. Hence you should also have your own car insurance.

This is where comprehensive insurance comes in.  This insurance covers all the events covered by third party, and third-party fire and theft insurances, as well as damages to your own vehicle.

Hay says that even though this is a comprehensive cover, you will still be liable for excess, should an accident occur.

I&DRS Note:  Insurers will attempt to recover the cost of the entire claims damages (including your excess) from third party, however the insurer is under no obligation to recover or even attempt to recover the excess following an accident.

As a service to clients, insurers do their best to recover such excess. However, there are many legal aspects and not all claims, accidents and circumstances are as simple as clients may believe. i.e:

  • Does insurer have ALL correct third party contact numbers, ID, Drivers Licence, information including pictures of scene of accident , and where possible independent witness information. We at I&DRS  have Apps to assist with the required information required at a scene of an accident as do some other brokers and insurers.

  • Is the Third party insured?

  • Can they afford repayment or make  an offer if not insured? Often this not the case when they have not afforded basic Third Party or Comprehensive Insurance themselves.

  • Could the accident have been avoided and not 100% the other party’s fault , therefore the claim damages costs proportionately split (70/30)?

Should a recovery be unsuccessful, insurers have to consider the economic consequences of pursuing matters further in legal costs.

It could therefore take some time before insurers are able to provide your broker with any progress report on meaningful developments and/or the outcome of their recovery efforts.  There is however no guarantee that insurers legal teams will be successful with a recovery against the third party.

What if someone else was driving your car?

Additional excesses may apply when you were not the one driving the car.  According to Vera Nagtegaal, the executive head of Hippo.co.za, the excess will depend on the age of the driver, how long they have been licenced and their claims history.

“If a family member is going to borrow your car and they have an accident, you could incur a higher excess should the driver be younger than 25, depending on the insurer and the type of cover,” says Nagtegaal.

If you ask your employee to use a business vehicle for a work-related task and have a collision, you will also be liable for excesses.

Nagtegaal says if you know that the driver is reckless or unlicensed you must inform the insurance company and enquire about other excesses that may apply.

According to Nagtegaal if it is discovered that the driver involved in the incident drives the vehicle more frequently than the insured or regular driver, it can result in a penalty or the insurer could repudiate the claim entirely.

The importance of being vigilant when you’re driving on the road can never be stressed enough, but accidents happen.

That is why your car needs to be fully insured.