RAF Amendment Act changes could hold serious implications for transporters

Road accident fund

Road Accident Fund Amendment Act Changes.

The (RAF) Amendment Act, which took effect in August 2008, has created various challenges transportation for as well as confusion users most, and operators notably on the problem of thirdparty indebtedness. With no clarity or legal precedentsetting event since the Act took effect, transporters are lulled into a false sense of security without realising the serious implications the Act holds.

Aon South Africa has warned an evaluation of the meanings of the RAF Amendment Act demonstrates the changes have farreaching meanings for transportation operators and South African road users. It is crucial that transportation providers carefully evaluate their threat within the aftermath of these changes.

“The key changes within the RAF are that it now makes it the duty of every person to buy their very own proper additional cover in respect of revenue protection, medical costs and handicap, raising the question whether passenger liability insurance for the transportation provider is currently crucial. Some companies have even considered cancelling their cover within this regard to streamline costs. The decrease in premium would be insignificant,” describes Andre du Sart of danger advisors and insurance brokerage company Aon South Africa.

Du Sart advocates that cover is kept for these reasons:

The transporter could still be sued, incurring significant legal defence expenses.

The transporter might be liable for damages for secondary emotional shock. Secondary emotional shock of somebody who’s not the third party, but has observed the injury, is not recognised under the changes. This might be somebody who sees the injury occur or somebody who learns about it after the event. This might have a deep effect on the lives of relatives, other copassengers, kids and other parties, or so the possibility of secondary emotional shock claims exists.

The transporter will nonetheless be responsible in respect of property damage, I.e. clothes, personal effects, etc.

The fund might be not able to pay.

You may incur obligations beyond SA’s edges, in which case the Fund does not have any obligation.

Thirdparty RAF claims are restricted to a prescribed amount of specific damages (medical costs of loss and gains) and to settlement only for serious injuries, under what used to be known as general damages. The RAF is creating a listing of injuries that’ll not be regarded as serious, that will probably be promulgated once the listing is finalised.

Medical expenses under the RAF are restricted to a tariff for emergency treatment along with the reasonable price of treatment and hospitals (roadside transportation). ambulance assistance and. Passenger Liability cover pays future medical costs as they appear and they’re paid in full, I.e. are not susceptible to a tariff.

Loss of income claims under the RAF is currently capped at R204 904 per annum, and this also applies for loss of support.

“Superficially, it might seem the demand for cover is decreased, but the truth is the transportation operator could still be sued directly, entailing legal expenses and can still incur obligations where the RAF will play no buffer function. Aon firmly advocates that businesses don’t call off their thirdparty indebtedness cover. There are still many open issues across your business that can be left by the amendments exposed and at risk. We recommend that transporters should at least get cover for a great many crisis and other clinical and hospital treatment needed as a consequence of the motor accident at private rates, that could be part of medical aid cover,” proposes Andre.

The truth is the fact that RFA compensation is quite small, unlike the complete services supplied through Aon’s Isithuthi insurance, a product designed especially for the passenger transportation business. Premiums prices are insignificant and yet supply the peace of mind which includes understanding that the greatest possible management of your own passengers comes in the occurrence of an injury.

What’s More, the fund has a right of recourse against the owner if he, or the driver

with all the owner’s knowledge or permission:

was under the influence of alcohol or drugs

didn’t hold a valid driving licence and PDP

failed to report the accident within the 14day period permitted

intentionally gave the fund bogus information concerning the accident

if the owner was truly oblivious, the fund has the right of recourse against the driver. “The changes to the RAF signify a huge erosion of common law rights which have now been legislated away or reduced to insignificant proportions – sooner or later somebody involved in a serious situation is obligated to challenge this and, if any rulings are made retrospectively, any operator that chose not to keep this cover could end up facing a fiscal disaster. Understanding the complex legalities and implications for transportation operators of the changes is an arduous job and cancelling your thirdparty cover represents a tight rope walk without a web at best,” concludes Du Sart.

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