Laws Governing Car Insurance in South Africa

What are the laws governing Car Insurance in South Africa?

The Financial Services Board regulates the insurance sector on behalf of the Government, ensuring correct enforcement of legislation.

Among the Laws governing Car Insurance they Uphold are:

  • Short-term Insurance Act (Act 53)
  • Policy Holder Protection Rules (Short-term Insurance, 2004)
  • Financial Services Ombudsman Act (Act 37, 2004)
  • Financial Advisory Intermediary Services Act (Act 37, 2002).


Not only do these laws safeguard the rights of policyholders, but they also specify the rights of the insurance providers and other affected parties.

Short-term Insurance Act: This piece of legislature provides guidelines for short-term insurance providers as well as brokers, dealing with agent commissions and policy structure.

Policy Holder Protection Rules: Put in place in 2001, this law ensures proper practice and sound financial principles from the time a policyholder signs up to when it comes to enforcing it.

Financial Services Ombudsman Scheme: This law provides a mechanism for recognition of voluntary schemes, setting the standards a system needs to meet to be legally recognised.

The Ombudsman: Clients who have issues or complaints with their policy can turn to this body for assistance. As an independent entity, they will deal with the issue as fairly and as cost-effectively as possible.

Financial Advisory Intermediary Services Act:This law provides for advice to intermediaries in the insurance value chain. The law assures policyholders of getting intermediary services and that a broker is properly regulated.

It also establishes codes of conduct to which financial services providers, including insurers, must adhere. This law carries clauses protecting policyholders from receiving incorrect advice.

The law includes measures of recourse they can follow in case this happens. The act specifies penalties for intermediaries who fall short. On top of this, the FIAS explains the role of the Ombudsman and its formation.

You need to Understand the Laws governing Car Insurance

Laws governing car insurance

As a car owner in South Africa, and especially one with a car insurance policy, you need to be aware of these laws. A policy is a contract between you and the insurer stating both your obligations.

This ensures that in the event of a loss of a specified kind, the insurer handles the liabilities involved, depending on the kind of policy you have. Be it a loss from theft, damage by fire, natural disasters or road accidents.

To be sure of compensation in full whenever a loss occurs, read the fine print in the contract. You should also give accurate information so as not to create a loophole for non-compensation.

A good understanding of your contract, including any exclusions, together with knowledge of the country’s laws regarding short-term insurance will ensure that you get the best out of your policy.

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All info was correct at time of publishing November 9, 2018