COMPULSORY MOTOR THIRD PARTY LIABILITY INSURANCE

What is Insurance?

Insurance is a mechanism of pooling (gathering) money (premiums) from all the policyholders insured against a specified risk to help indemnify (restore) the less fortunate minority of policyholders, who will actually suffer a loss due to a specified risk (peril).

Why Compulsory Motor Third Party Insurance?

Any motor vehicle that’s driven on public roads poses a threat of causing death or injury or property damage to third parties and other road-users through involvement in unpredictable road traffic accidents. The owner of the vehicle at fault becomes immediately liable to compensate the afflicted parties. Such liability may add up to very large amounts money sometimes.

Majority of the motorists will not always have money in the bank or financial resources in reserve to defray such unpredictable liabilities. In the case that the owner of the vehicle at fault has insufficient financial resources they risk losing personal property such as furniture, real estate etc to meet the civil claims of the afflicted parties.

The Government of the Republic of Zambia made motor third party Insurance  compulsory in recognition of the enormous benefits and advantages it gives to both the policyholders and indeed third party claimants. In order to better manage the frequently occurring risks associated with motoring many governments the world over make this third party motor liability Insurance mandatory.

Is motor third party insurance made compulsory by Zambian Laws?

Yes, the Road Traffic Act number 11 of 2002 makes motor third party liability insurance a mandatory requirement for all motor vehicles plying public roads in Zambia.

Does the Road Traffic Act prescribe the maximum compensation?

No, the Road Traffic Act merely sets out the minimum standard that insurance companies intending to issue motor third liability policies must meet. Unfortunately most people including some insurance professionals have misunderstood the statutory limits setting-out the minimum standard of liability cover that any such insurance policy must have to be the maximum or the ceiling for compensation.

In fact if the loss incurred by a third party exceeds the limits of your insurance cover you, the policyholder, will then be expected to pay for the extra over and above what the insurer is liable for under your contract of insurance.

It is therefore wise to ensure that your insurance policy limits are sufficiently realistic to cover the liabilities that you are likely to incur. Of course higher limits will imply that you will have to pay a little more premium. The word “little” is used deliberately because it is far less when compared to what you would have to pay to settle the actual liability in the case that you are under insured.

Current Limits under the Road Traffic Act

Section 88 of the Road Traffic Act prescribes that every policy of motor insurance must cover at least:

·      One hundred and sixty-six thousand seven hundred fee units in respect of a death or anyone injured; and

·      Three hundred and thirty-three thousand three hundred and fifty fee units in respect of any one accident or a series of accidents due to or arising out of the occurrence of any one event.

Currently, a fee unit is equivalent to K180. The above statutory limits will therefore today be translated as follows:

·      The compulsory third party liability policy must pay up to K30,006,000 in regard to death or injury of any person,  and

·      In case of  accumulations of liability the policy will pay must be up to K60,003,000 for each event (occurrence of peril)

Does the Compulsory Motor Insurance Cover medicals expenses?

Yes, the Road Traffic Act stipulates that both in-patient and out-patient medical expenses incurred in the case of injury or death are covered by such a policy of insurance.

Where can I buy this  Compulsory Motor Insurance from?

The Pensions and Insurance Authority (PIA) licences various categories of entities that deal in insurance. You can therefore buy a policy of motor insurance directly from any licensed general insurance company such as:

 Madison General Insurance Company Ltd; Professional Insurance Corporation Ltd; Zambia State Insurance Corporation Ltd; NICO Insurance Company Ltd; ZIGI Insurance Company Ltd; Goldman Insurance Company Ltd and Cavmont Capital Insurance Corporation Ltd.

One can also buy insurance indirectly through the PIA licensed insurance agents and insurance brokers.

Who enforces the Road Traffic Act and Compulsory Motor Insurance?

The Road Traffic Act is enforced by the Road Transport and Safety Agency (RTSA) under the Ministry of Communication and Transport.

However, the Pensions and Insurance Authority is one of the institutions that are represented on the RTSA Board of Directors.

                                                                                                       Index     Next

Want to Check for the Premium Rating Guidelines?  Click here

                 Site Maintained by Pensions and Insurance Authority - PIA