File picture: Danie van der Lith / African News Agency (ANA).

Johannesburg - Motorists will soon face the possibility of licence suspensions and cancellations after President Cyril Ramaphosa last week signed into law the Administrative Adjudication of Road Traffic Offences (Aarto) Bill.

But insurance industry experts warn that there could be many other implications for car owners, such as higher insurance premiums and potentially catastrophic repair bills, for those that don’t play by the rules.

Three strikes and you’re out

Motorists will lose a certain amount of points for every road infringement committed. This will differ depending on the offence in question. Most speeding fines should cost you between two and four points, but exceeding the limit by 40km/h or driving intoxicated will see six points deducted. 

The points will accumulate over time and for every point exceeding 12 points, drivers will have their licence suspended for three months, only to be gained back at a rate of one point every three months, assuming that no further contraventions occur. 

Three suspensions and you’re back to being a learner driver as the current licence will be cancelled completely.

Insurance implications of Aarto

Many motorists with a suspended or cancelled licence might be tempted to just continue driving and hope not to get caught, but it’s worth noting that there could be some severe financial implications for those that get into an accident. 

We spoke to Old Mutual Insure’s insurance expert Christelle Colman about the implications of Aarto on vehicle insurance in South Africa:

Will this new bill affect my insurance premiums?

According to Colman: “The demerit system could potentially be linked to an underwriting criteria as it does reflect driving behaviour. Drivers with poor record on this system could face higher premiums but that would be at the discretion of each company.”

However, she also pointed out that this could indeed be a good thing for the majority of motorists who are generally law abiding as good drivers will ultimately pay less.

Will the repossession of licenses cause drivers' claims/cover to be forfeited?

“Based on current policy wording, cover will not exist if a driver does not have a valid license,” Colman says. “It will also be very difficult for insurance companies to waive this requirement as it is law to have a valid drivers license.”

What should an insured car owner do when their license gets suspended?

They should notify their insurance company immediately, says Colman. Although the vehicle remains insured, if you drive with a suspended licence and you have an accident, your policy will not pay out. However, it might still permissible to allow another person, such as a family member, to drive the vehicle, depending on the wording of the policy.

If my licence is suspended, could I just lock my car away and have my insurance payments suspended too?

According to Colman, it is still advisable to keep the vehicle insured for things like theft and fire, but it might be worth speaking to the insurer about the possibility of downgrading to a theft and fire policy for the duration of the licence suspension.

How could this new bill affect the insurance industry as a whole?

“The highest risk is that drivers could lose their licenses due to speeding fines (even minor ones) which could potentially mean that the existing motor policies will not respond or that they will not be able to get motor insurance,’’ says Colman.  

“We already have a very high percentage of uninsured vehicles on the road. This will increase uninsured vehicles on the road and will also have a severe impact on the recovery process after an accident.”

However, if implemented correctly, the system will ultimately have a positive impact on the country and road safety in general, Colman added.

IOL Motoring