South Africa designates a portion of the money earned from the sale of petrol into the Road Accidents Fund. This money is then used to compensate third parties involved in road accidents.
The history of car insurance South Africa goes as far back as 1942 when compulsory
motor insurance was enforced. The aim of this insurance was to ensure that accident victims could recuperate costs and damages that were caused unlawfully by motorized vehicles. The primary goal of this legislation was to provide protection to people not in or on a particular vehicle like pedestrians.
In the 1960s several companies were liquidated which provided car insurance. South Africa then established the Motor Vehicle Accident Fund to act as re-insurer of companies which undertook compulsory Motor Vehicle Accident insurance.
In 1986 the compulsory motor insurance system with its statutory annual premiums was discarded in favor of a levy on petrol. Certain insurance companies were appointed as agents of this Fund. However, this agency system had numerous flaws and was phased out between 1993 and 1997 paving the way for the current Road Accident Fund which came into effect on the 1st of May 1997.
The current system indemnifies the driver or owner of a motor vehicle from liability in the case loss or damage inflicted on another person involved in a road accident. Cover is only provided for the losses incurred due to bodily injuries or death and not for damages to property.