TAKUDZWA HILLARY CHIWANZA
The possibility/probability of something dangerous and adverse happening, resulting in monetary loss, bodily injury/death, or property damage is a phenomenon in which the law of insurance has had profound immanence across the world. Central to the law of insurance is the mitigation of pecuniary [1] loss upon the materialization of risk.[2]
As such, the law of insurance exists and functions for the purposes of indemnifying/compensating the party which has suffered economic losses for the particular economic value insured for. Having one’s property insured ensures risk distribution and risk-transfer: risk management.[3]
Introduction: Risk Arising From Using Motor Vehicles
With the advent and prevailing widespread use of motor vehicles for a plethora of daily concrete and practical purposes, humanity is presented with an infinite array of risks or possibilities of grave dangers—chief among them being accidents that result in bodily harm/injury, loss of life, and property destruction. This becomes exacerbated where such accidents arising from motor vehicle use result in injuries or loss towards third parties.
The materialization of risk (the possibility of danger becoming actual danger resulting in injuries or loss) on third parties must be mitigated against through a conflation of insurance and delict principles. This is to protect the generality of the public from such economic losses by ensuring that insurers assume liability to compensate third party victims exposed to such risks and who suffer economic loss of a specified type.
The existence and operation of compulsory third-party motor vehicle insurance thus comes to the fore. It is a special form of property/indemnity insurance that utilizes the pooling of resources by insurers in the hope that the handful [third parties] who suffer damage or economic loss can be compensated in the attendant claims.[4]
The relevant piece of legislation ensuring the mandatory protection of third-party victims is the Road Traffic Act [Chapter 13:11]. [5] This law makes third-party motor vehicle insurance in Zimbabwe compulsory—in essence, it makes third-party insurance a basic insurance policy held by the owner or user of a motor vehicle against loss or damage to third-party property, bodily injury, or death. Statutory third-party insurance from the use of motor vehicles is thus an ineluctable and serious feature of insurance law in Zimbabwe.
The Provisions of the Road Traffic Act [Chapter 13:11]
It is imperative to highlight what Part IV of the Road Traffic Act outlines in relation to statutory or compulsory third-party vehicle insurance. Section 23 (2) (a) makes provision that a statutory third-party insurance policy shall insure third party victims in where such liability arises in respect of “the death of, or bodily injury to any person.”
Section 23 (2) (b) of the Act provides for indemnity/compensation for third-party victims regarding property destruction. Before the promulgation of this law (as amended in 2000), third-party victims whose property had been damaged from a vehicle accident could only find their redress via Aquilian Action/the law of delict through the courts of law, which was a prejudicial and cumbersome process hindering the effective delivery of justice.[6]
Before the current Road Traffic Act, there were liability limitations in respect of providing third-party compensation to claims in respect of the passengers in the vehicle concerned – they were not covered under statutory policies.[7] In the contemporary, liability now extends to third-party victims inside the vehicle, although under carefully calculated monetary limits as specified in the Act [8] and [in the context of the contemporary] in SI 293 of 2020.[9]
Although there are monetary limits in our jurisdiction (typical of many jurisdictions across the world), it is important to highlight that today’s statutory policies now include passengers inside the vehicle as compared to the old position. SI 293/2020 makes room for these monetary caps in respect of third-party victims inside the vehicle claiming compensation in the event of an accident resulting in body injuries—for instance liability in respect of a passenger suffering bodily injury or death shall not exceed USD $1,000 in respect of any one such person killed or injured.[10]
Since compulsory third-party vehicle policies require the undertaking of a statutory policy for a motor vehicle to be operative on Zimbabwe’s roads, every motor vehicle/trailer must display an insurance disc “in a conspicuous place” and failure to comply attracts a criminal penalty in the form of a fine not exceeding level four (not more than ZWL$20,000) [11] or imprisonment not exceeding three months. Or both a fine and imprisonment.[12]
The introduction of penal sanctions in respect of insurance discs buttresses the ineluctable legal reality of compulsory third-party cover as per Section 22 of the same Act. This has been further strengthened with the electronic cover note system to deal with uninsured drivers who get away without statutory third-party covers.[13]
Why Third-Party Vehicle Insurance Matters
Even though the realm of insurance law is essentially a private affair underpinned by the fundamental tenets of contract law—freedom of contract, privity, sanctity of contract, capacity—state intervention in this aspect is indispensable. The state must step in the private realm of insurance to provide third-party cover.
“Liability assurance” justifies the existence of delict law – ensuring that compensation is paid to injured persons; in this instance, in insurance law, such insurance policy [liability assurance] assures third party victims of “actual compensation” instead of a brutum fultum (an empty or ineffectual judgment) in which the vehicle owner is incapacitated to pay despite the existence of a court judgment.[14]
The state acts in the general interests of the society as a whole – third party cover shifts pecuniary losses from the personal capacities of the driver to a capable insurer.[15] The contract of insurance in statutory third party cover is wholly a private affair – with the sanctity of contractual freedom encapsulating the [legally capitalist] notion that “one is free to enter into a contract without government interference.”[16] Inasmuch as it is private (in that the vehicle owner freely chooses her insurer of choice for third-party cover), statutory third-party insurance is a state-regulated affair.
Limitations and Room for Legal Reform
The biggest limitation of the amended Road Traffic Act is its statutory limits as regards the monetary compensation an insurer may disburse for the purposes of compensating third-party victims.
The third-party victim is legally confined to the amount set out in the Act and Statutory Instrument as outlined above – if the amount claimed exceeds the statutory limit, then the injured third-party has to resort to common law rights to bring forth delictual damages from the driver/user/owner of the vehicle.
The insured will have to “contribute to make good the loss beyond the policy limit.”[17] It just results in inordinate, obdurate delays for the third-parties as insurers repudiate claims and courts take long to settle. The mischief of avoiding the lengthy processes of the courts of law has not been effectively cured.
Furthermore, the Road Traffic Act does not expand the period for prescription – the period for a third-party victim to claim indemnity from the insurer is still constricted to a paltry two years.[18] This becomes untenable considering how insurers are averse to “inviting claims” for the purposes of profit maximization.[19]
The third party is thus disadvantaged as they have to navigate the legal terrains of third-party insurance claims in unreasonably hasty periods of times.[20]
What cannot be doubted however is the primary need and significance to compensate third-party victims in cases of motor vehicle accidents so that the responsibility to pay is shifted from the individual motorist (who may be financially incapacitated to provide such monetary relief) towards insurance companies which are more capable of providing such upon a validly legal claim being made.
REFERENCES
[1] Loss of a monetary nature/economic loss.
[2] L Tshuma, The Legal Regulations for Compulsory Motor Vehicle Insurance, 1991-92. Vols 9-10. Zimbabwe Law Review. 31
[3] Ibid.
[4] T Nyahuma and E Chiguvu “Legal Matters: Motor Vehicle Insurance and the Law” The Sunday Mail 25 October 2015. Accessed July 7, 2021. Section 22 (1) of the Road Traffic Act [Chapter 13:11] makes it compulsory for motor vehicle or trailer users to be insured against third-party risks. https://www.sundaymail.co.zw/legal-matters-motor-vehicle-insurance-and-the-law
[5] Part IV of the Road Traffic Act [Chapter 13:11].
[6] Road Traffic Act No. 48 of 1976. The “minimum third party insurance” covered under this only physical injuries to third parties outside of the insured’s [the owner/user] vehicle. Passengers carried for hire/reward were compensated subject to specific financial limits.
[7] Ibid.
[8] Section 23 (3) (b) of the Road Traffic Act [Chapter 13:11]
[9] Road Traffic (Prescribed Amounts for Statutory Policies of Insurance) Notice, 2020 (SI 293/2020). The Minister responsible for the Act has the power to increase these monetary limits from time to time.
[10] Section 3 (a) (i) of the Road Traffic (Prescribed Amounts for Statutory Policies of Insurance) Notice, 2020 (SI 293/2020).
[11] Criminal Law (Codification and Reform) (Standard Scale of Fines) Notice, 2021 (SI 25/2021).
[12] Section 27 of the Road Traffic Act [Chapter 13:11]
[13] S Samu, “The effectiveness of Compulsory Motor Insurance Questioned.” Sam Samu article on LinkedIn. Accessed January 12, 2023. https://www.linkedin.com/pulse/effectiveness-compulsory-motor-insurance-questioned-sam-samu/?trk=mp-reader-card
[14] G Feltoe, A Guide To The Zimbabwean Law of Delict, Legal Resources Foundation, 2006. 124.
[15] Tshuma (n2 above) 33.
[16] I Maja, The Law of Contract in Zimbabwe, The Maja Foundation, 2015. 22.
[17] Nyahuma and Chiguvu (n4 above).
[18] Section 25 (b) (ii) of the Road Traffic Act. This section specifies the rights of injured third parties to proceed against insurers.
[19] Samu (n13 above)
[20] B Mahere, “INSURANCE LAW IN ZIMBABWE – COMPULSORY THIRD PARTY INSURANCE.” Philips Law. Accessed January 11, 2023.https://phillipslaw.co.zw/index.php/2021/05/28/insurance-law-in-zimbabwe-compulsory-third-party-insurance/
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