By Herman Liebenberg, Insure City Insurance Brokers (Pty) Ltd

Liability insurance is a standard feature in most insurance policies, although the coverage limits can vary. In many cases, policyholders can choose to increase their liability cover by paying an additional premium.

At its core, liability insurance protects you — the insured — against claims made by third parties for damages or injuries for which you may be held legally responsible. These incidents can result from accidents, negligence, or even simple carelessness. For example, we have recently seen several claims where third-party vehicles were damaged by falling trees, malfunctioning gates, or automated booms. While these examples illustrate how liability insurance works, it is important to remember that each claim is unique and assessed on its own merits.

A Practical Example: Two Types of Cover in Action

Let us consider a common scenario to highlight the difference between liability insurance and standard vehicle insurance:

Scenario:
A vehicle owner is driving out of a body corporate’s exit when the gate malfunctions and closes on the vehicle, causing damage to both the gate and the vehicle.

Liability Insurance in Action

The body corporate has comprehensive insurance that includes third-party liability. The vehicle owner also has comprehensive cover but chooses not to claim from their own insurer. Instead, they file a liability claim against the body corporate’s insurer.

The insurer then investigates the incident, reviewing reports and other evidence. After a thorough assessment, they determine that liability is to be shared, as both parties could have prevented the incident — 50/50. As a result, the body corporate may only recover 50% of the repair costs, or in some cases, each party may be advised to cover their own damages.

It is important to note that this process can take months, or even years, to resolve as insurers work to establish fault and negotiate settlements.

Vehicle Insurance in Action

Now, imagine the vehicle owner simply claims from their own insurer. Their vehicle could be repaired and back on the road within a couple of weeks. Meanwhile, the vehicle owner’s insurer would continue to investigate liability and recover costs from the responsible party via a liability claim.

This approach ensures minimal disruption for the vehicle owner, who can move on while the insurers handle the complexities of the liability process.

Key Takeaway: Why Does the Correct Cover Matter?

Liability claims are often lengthy and complex. Therefore:

• Be accurately insured: Body corporate schemes and homeowners’ associations need to ensure that they are protected against any unforeseen liability matters that could arise unpredictably.

• Tip for vehicle owners: Make sure you have adequate vehicle insurance, even if you believe another party is at fault. It is the best way to avoid unnecessary delays, stress, and financial strain in the event of an accident.