Uninsured? Know Your Rights Under Third-Party Insurance Law

A client asked: "I would like to request your assistance regarding how third-party insurance works. My neighbour's car reversed into my parked car in the complex parking lot, causing damage. There was no driver inside my car at the time, and he has admitted fault. I don’t have insurance, but he does, and I am claiming through his insurance. What should I expect in terms of repair costs? What does the law say if they are not willing to pay the full amount for the damage?"

In South African law, third-party insurance, also known as liability insurance, is designed to cover the damages or losses that a third party (you, in this case) suffers as a result of the insured person's (your neighbour's) actions. Since your neighbour has admitted fault, their insurance company should theoretically cover the costs of the repairs to your vehicle.

What to Expect in Terms of Car Repairs Costs

1. Assessment of Damages: The insurance company will typically send an assessor to evaluate the damage to your car. They will determine the cost of repairs based on the assessment. The insurance company may also ask you to obtain a quote from a panel beater or a repair shop that they approve of.
2. Settlement Offer: Based on the assessment, the insurer will make an offer to cover the repair costs. This amount should ideally cover the full cost of repairs to restore your vehicle to its condition before the accident.
3. Excess Payment: While this is more relevant to the policyholder, the insurance company might have an "excess" clause in their policy. This is a predetermined amount that the policyholder (your neighbour) must pay out of pocket before the insurance covers the remaining costs. You should not be responsible for this excess, as you are the third party.

If the Insurance Company Is Not Willing to Pay the Full Amount

If the insurance company offers to pay less than the full cost of the repairs, you have a few options:

1. Negotiation: You can try to negotiate with the insurance company to cover the full amount. Provide them with any additional quotes or evidence that supports your claim that the full amount should be covered.
2. Demand Letter: If negotiations fail, you may consider sending a demand letter to the insurance company, formally requesting them to pay the full amount. This letter should detail the incident, the damages, and the amount you're claiming, and it should assert your legal rights.
3. Legal Action: If the insurer still refuses to pay the full amount, you can take legal action. In South Africa, you can file a claim in the Small Claims Court for amounts up to R20,000 without the need for a lawyer. For larger amounts, you may need to take the matter to the Magistrate's Court or the High Court, depending on the claim's value.
4. Ombudsman for Short-Term Insurance: Before taking legal action, consider lodging a complaint with the Ombudsman for Short-Term Insurance. This body can mediate disputes between consumers and insurers at no cost. The Ombudsman's decision is not binding, but it can put pressure on the insurance company to settle.

Legal Considerations

• Negligence and Liability: Since your neighbour admitted fault, the legal principle of negligence applies. Under South African law, the person who causes damage due to their negligence is liable for the full extent of the damages.
• Duty to Mitigate: You also have a duty to mitigate your losses. This means you should take reasonable steps to avoid unnecessary expenses or further damage after the incident.

If the insurance company is uncooperative, consulting with a legal professional might be a good step to ensure you receive fair compensation for your damages.