PASSENGER LIABILITY INSURANCE

PASSENGER LIABILITY INSURANCE

To transport paying passengers you need to have PASSENGER LIABILITY INSURANCE (PLI) to cover yourself in case of an accident. As Classic Car owners normally do not use their vehicles to transport paying passengers on a full time basis it does not make sense to Register your vehicle as a taxi and take out full time PLI. SAClassics therefore recomends DAYLY COVER from SATIB INSURANCE BROKERS. This product can be booked online for the day of your event and gets activated once payment is made. Payents are made via online credit card payments .

What is Passenger Liability?

What is Passenger Liability?

A Passenger Liability policy covers incidents resulting from the transportation of passengers by land, sea or air and can often be included as part of a Motor insurance policy. However care must be taken to check that the motor policy wording does not exclude fare-paying passengers, which is often the case. It is unlikely that an underwriter will be prepared to cancel or amend the wording of a standard motor vehicle policy. For this reason Daily Cover policies are specifically for to cater for fare-paying passenger liability.

What is liability insurance?

What is liability insurance?

Liability insurance is a product that is bought by organisations, companies and individuals to cover the risk of a common law claim for damages by someone who is injured or suffers some form of quantifiable financial loss while in the insured’s care. It covers your legal liability arising from accidents or other incidents which might occur at meetings, events, guided tours, safaris, transportation or simply on your premises where you have been deemed to have been negligent. Negligence is simply doing something without a reasonable amount of care, or failing to have done something that might reasonably have been done to prevent the incident from having occurred in the first place. Most liability insurance policies only cover actions brought against the insured entity, unless the policy specifically extends to include ‘all sub-contrators’. This is an important aspect, specifically from a Tour Operators’ perspective, a they often sub-contract the services of Tourist Guides for instance. Unless the policy wording contains this extension, the Tourist Guides would need to have their own liability cover, which should be checked by the Tour Operator, for the reason that any actions instigated as a result of the Guide’s negligence could result in the Tour Operator being found liable by virtue of contractual obligation. The same applies to Tour Brokers who sub-contract the services of Tour Operators

Why do you need it?

Why do you need it?

Without liability cover, organisations are fully exposed to the risk of liability claims, which not only threatens their financial survival, their employees’ jobs and the claimant’s chances of being fully compensated, but also impacts negatively on the general tourism industry and the country at large as a tourist destination. Here one must also consider that even if the action against the organisation is successfully defended in a court of law, the legal fees incurred over the often lengthy process of defending the case can often exceed the amount of the initial action. Again, most liability policies will cover the legal costs incurred in defending the case, but make sure that this cover is not limited.

What's available?

What's available?

Liability policies come in two forms, General Public/Product Liability (GPL) and Passenger Liability Insurance (PLI). The reason that both covers are not offered in one policy is primarily due to the different risk profile or likelihood of occurrence to which underwriters are exposed in each of the cover types. General Public Liability cover is designed specifically to protect the insured against any possible financial compensation claims by clients, guests or the general public where corporate or employee negligence could be construed to have been the cause of an incident occurring. This covers a very broad spectrum of possible incidents ranging from damage to a guest’s personal property to a tourist claiming ‘diminished value of holiday’ due to their expectation of having a sea-facing room (as shown in the tour brochure) and ending up with a view of a brick wall. Obviously the likelihood of such events occurring is quite high but not nearly as high as someone sustaining an injury in a motorcar accident. For this reason most GPL policies specifically exclude incidents resulting from the transportation of passengers by land, sea or air. This is covered under a Passenger Liability policy and can often be included as part of a Motor insurance policy. However care must be taken to check that the motor policy wording does not exclude fare-paying passengers, which is often the case. It is unlikely that an underwriter will be prepared to cancel or amend the wording of a standard motor vehicle policy. For this reason Daily Cover policies are specifically for to cater for fare-paying passenger liability

How much cover is needed?

How much cover is needed?

As a general rule it is far better to be over insured than under insured, but this is directly proportionate to the affordability of the required premium. With insurance being perceived as a ‘grudge purchase’ and the notion that “it will never happen to me” the temptation is to go for the cheapest cover but this can prove to be a false economy. One should bear in mind that the basic principle behind short-term insurance is to place the insured (or claimant) in the same financial position after an event as they were prior to the event occurring. So how much is ‘sufficient’? Both GPL and PLI cover depend on the ‘net worth’ profile of your clients. For example, consider a 40-something, married South African business executive who earns R500 000 a year, is the sole bread winner and has three dependents. He or she slips in the shower at your lodge and sustains a disabling injury to the spine and is unable to perform the same job as done before the incident. After a lengthy (and costly) legal case the court finds that you were negligent for not ensuring that the shower was fitted with non-slip tiles or mats. A possible award to the plaintiff could easily be in the region of R10 million in this example, if one takes into account the costs of on-going medical costs, loss of income and even alterations to the family home to make it wheel-chair friendly. Now consider the event of multiple claimants, or foreign guests whose income and future medical costs need to be calculated in their currency of origin. Quite obviously, the cover amount needed corresponds to the profile of guests that your establishment caters for. In the case of PLI, SATSA recommends a minimum of R5 million cover but this depends on the number of passengers that you generally transport at any one time. Some policies recommend R1 million per seat but this does not make sense as it is more likely that one passenger in an accident will be more seriously injured than others and R1 million will not be enough to cover that one person in a particular seat. Far better to ensure that the cover amount is for all occupants of a particular vehicle per incident, per occurrence regardless of the number of passengers, which the Daily Cover policy does. Of course, the number of passengers does make a difference in calculating the cover amount required. For instance, R10 million may be sufficient for a micro bus but a coach may need as much as R100 million cover, which is not easily obtained from most insurance brokers.

What is Motor Accident Cover?

What is Motor Accident Cover?

CRITICAL REASONS WHY PASSENGER PERSONAL ACCIDENT INSURANCE IS REQUIRED

  1. The cause of this requirement?

The Road Accident Fund Amendment Act 19 of 2005
This Amendment Act came into effect on 1 August 2008.  The Amendment introduces far-reaching changes to the Road Accident Fund (RAF) Act of 1996.
Some of the more controversial amendments are, inter alia:

    1. The exclusion of claims for general damages save for “serious injuries.”
    2. The capping of loss income/support at R201,357.00 (Two Hundred and One Thousand Three Hundred and Thirty Seven Rand), with effect from 31 October 2012.
    3. The exclusion of damages arising from emotional shock which may be experienced by secondary victims.
    4. The abolition of the common law rights to claim damaged (not recoverable from the Fund) from the driver or owner of the vehicle which caused the accident.
    5. The tariff to be applied for future medical expenses.

NB:       It is important to bear in mind that the RAF legislation changes are only applicable to motor vehicle accidents that occur in South Africa.  So operators who are based in South Africa and operate outside of South Africa need to be aware that other Southern African countries generally do not have such restricted legislation in place and accident victims can generally claim meaningful compensation from the wrongdoer or his employer making it vital that Passenger Liability cover be kept in place for vehicles travelling outside the RSA.  It is also important to note that the new Road Accident Fund legislation only applies to legal action following a motor accident.  The right to sue the wrongdoer following injury from any other incidents outside of the motor vehicle still stands in South Africa.  So the need for General Public Liability insurance is as important as ever.

  1. SATIB’s Solution

Of great concern to SATIB, it’s focus being on ensuring correct and adequate protection for the Tourism and Hospitality industries, is the potential adverse reaction from, in particular, foreign operators and guests, where awards previously based on loss of future earnings/future medical requirements etc are now being severely curtailed through the changed Act e.g one previous RAF award was in excess of half a billion Rand – the new maximum if R201,357.00 per annum!  Once the currency conversion is done this will most certainly be inadequate compensation in most instances and there will be no further recourse to the vehicle owner, driver or any other third party!
We have set out to a) cater for the identified shortfalls in cover and those which could still emerge by way of “contingency passenger liability” cover and b) compensate in some way for the potentially massive reductions in awards – this by providing Passenger Personal Accident Insurance cover which will pay an agreed amount, without negligence having to be proven (no fault basis), in the unfortunate event of an incident which leads to injury or death.
The aim is to demonstrate to the guest/agent that as an operator there has been recognition of the limited compensation brought about by changes to the Act and that as an operator there has been an effort made to provide some relief over and above that provided by the State.
In so doing SATIB has utilised the negotiated Passenger Liability insurance premium reduction (reduced risk) to purchase a level of Passenger Personal Accident insurance cover, in most instances this has been contained to the current cost of the existing Passenger Liability cover, however, with the added ability to “buy up” the limits should you so wish.

  1. Difference between Passenger Liability Insurance and Passenger Personal Accident Insurance explained

Passenger Liability Insurance

    1. Potentially massive reduction in awards
    2. Cover specifically excludes staff members as they are unable to take legal action against employers (COID Act similar in effect to amended RAF legislation)
    3. Proven legally liable as a result of negligence on the apart of the insured operator that resulted in injuries to said person
    4. Vital for vehicles travelling outside the RSA

Personal Accident Insurance

    1. On a ‘no fault’ basis, which means that it will make payment to an injured person regardless of fault.
    2. Very simple cover with a capital benefit or sum insured
    3. Paid in full following death or injury, and paid in terms of a sliding scale based on severity of injury in the case of disablement
    4. Includes medical costs to be used to cover such costs resulting from the accident
    5. Is more costly as it will pay on a ‘no fault’ basis

Recommendation from SAClassics

The Safest and best product for Transporting paying passengers for weddings, matric balls ,wine tours etc with your classic car is the product called MOTOR PASSENGER ACCIDENT COVER
We also recommend a minimum cover of 1 000 000 ZAR per person transported

Click here to register and get PASSENGER LIABILITY INSURANCE for your trip

VISIT DAILYCOVER.CO.ZA

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