2ND PARTY INSURANCE

2nd party insurance in South Africa

The term 2nd party insurance should not be confused with the Second Party mentioned in an insurance agreement. When you sign a car insurance agreement, you are known as the First Party to the contract. The insurer is the Second Party to the agreement and a person not stated by name in the contract, but who can still be a beneficiary of the agreement, is called the Third Party.

The term 2nd party insurance as applicable to passenger liability

The term 2nd party insurance is widely used to refer to the liability cover for passengers carried in a vehicle. This type of policy covers the risk of a claim against the owner of the vehicle for damages or loss by a passenger while traveling from point A to B. The prerequisite is that it must be a tariff paying passenger.

As such this type of cover is ideally suited for tour operators, busses, coaches, taxis and other passenger carrying vehicles. In a country where thousands of people commute by train, bus, and taxi on a daily basis, this type of insurance is vital. The injured party can claim for damages due to an accident caused by the driver because of negligence on the driver’s part.

Who qualifies as a fee or tariff paying passenger?

Anyone who gets into a vehicle and pay an amount to get to a location. The amount can be in cash, cheque or on credit. It doesn’t matter.

What is considered as negligence on the driver’s part?

Any action or disregard of taking an action that would have prevented an accident and or injuries to the passengers.

How is negligence determined in type of cover?

It must be proofed in a court of law that negligence on the part of the driver was really the cause of the accident. This litigation process can take months, and even years to settle. The legal fees can become enormous and may even lead to the bankruptcy of transport operators and companies.

If a 2nd party insurance agreement is in place, the insurer will fight the battle on behalf of the insured. It stands to reason that anyone who wants to transport people in return for payment should have 2nd party insurance. The driver of the vehicle is not normally covered by the this type of insurance as the driver should claim compensation from the Workmen’s Compensation Fund and usually has a first party insurance cover. All the passengers carried over the period of the cover are however, covered under this type of policy.

What is also included under the indemnity clause?

It also covers the insured against any legal claims resulting from the death or physical injury to passengers carried in the vehicle; those who got on or of a bus; or in and out of the vehicle in breach of instructions received by driver, not to carry passengers. The comprehensive cover offered by Redisure also covers unauthorized passengers. There are upper limits per passenger and occurrence in place for most 2nd party insurance agreements. This limit includes medical expenses of the injured parties and liabilities associated with the deaths of passengers. It is also important to note that an excess is payable unless the excess is waived in return for higher premiums. Lower premiums can be obtained if the insured party wants to pay a larger excess amount (deductibles) when an accident, damage or loss occurs.

The number of passengers determine part of the premium. The reason for this is that a small taxi carrying two passengers and a bus carrying fifty passengers, do not carry the same amount of liability risks.

Redisure offers comprehensive cover that includes third party and protection against lawsuits or claims in the case of unauthorized passengers. When the liability factor is taken into consideration, together with the high incidence of passenger carrying vehicles that are involved in collisions in South Africa, 2nd party insurance is essential for any public transporter.