Moving the goalposts
Amendment needs your attention
IT’S WELL KNOWN that the Road Accident Fund (RAF), which has provided compensation for victims of motor vehicle accidents since 1942, is in trouble. It currently has a deficit of R20bn, threatening its future viability. That was no doubt the thinking behind the Road Accident Fund Amendment Act (Number 19 of 2005) that came into effect on 1 August 2008. It aims to reduce the expenditure of the fund.
Glenrand MIB, in its Client Monitor circular to clients, notes that while cover is reduced under the fund, it’s also augmented in a few respects. What’s importantly needed is for medical scheme trustees to establish exactly what a scheme will cover (and may not cover) under the Amendment and to inform members. Individuals will also have to look at their full insurance cover in relation to the Amendment. Medical top up cover may be required if not fully covered by the medical scheme.
One material change to the RAF introduced through the Amendment is that claims are now capped at R160 000/year. “The RAF protects you should you negligently injure or kill someone while driving your car,” says Rod Pearson at Glenrand MIB. “Instead of them suing you for their injuries, their claim lies against the RAF. Now their claim will be limited to R160 000/year for loss of income – or support for their surviving dependants – without any option to sue you at common law for the balance of their loss.” Pearson says that’s a seriously contentious issue.
Deneys Reitz partner David Kapelus underlines that, saying there’s “no right of action by such injured person, or a dependant of a deceased breadwinner, against the wrongdoer” except in circumstances where the RAF is unable to pay any compensation.
However, as the Amended Act stands now, Kapelus says a person’s full common law damages – in respect of loss of earnings, medical expenses that exceed the public health tariff, general damages and loss of support – aren’t recoverable in circumstances where: • The person earns more than R160 000/year. The person undergoes medical treatment in the private sector at a cost in excess of the public health tariff. The person doesn’t suffer a serious injury, therefore excluding general damages. The total loss of all dependants exceeds R160 000/year. Pearson describes medical treatment at public hospital rates as “seriously inadequate”, though the RAF will pay more for emergency treatment. The capped R160 000 will also be adjusted quarterly for inflation.
What do individuals do in the light of these changes to the Act? He says there’s a need to ensure that risks such as those listed below are covered: • Your medical aid includes road accidents and that limits are sufficient to cover you at private hospitals, should you wish, especially for emergen- cy medical treatment. You have adequate medical aid top up. You have adequate life, personal accident, income protection and hospital plan cover. You insure for law suits you may have to wage. It might sound daunting but individuals, and especially medical scheme trustees, must make sure there’s sufficient cover to meet the Amendment.
SHAUN HARRIS email@example.com