Arthur Illmer
3 July 2009
column
Windhoek — Not a single day, if not hour, passes by without a motor vehicle accident occurring in Namibia. The insurance industry is inundated with claims making that side of business rather unprofitable to say the least.
However, it is not only the material damage that is of concern. The injuries, disabilities and deaths resulting from such accidents can have far more devastating financial and traumatic consequences.
To address these consequences of injury or death of a person resulting from a motor vehicle accident we have the Motor Vehicle Accident Fund or MVA fund for short. We are very fortunate to have this safety net that is funded out of a levy on the fuel that we consume.
Unlike countries like Germany, where it is compulsory to insure a motor vehicle before it is allowed on the road, here we find an ever increasing number of uninsured vehicles on the road.
Motor vehicle insurance not only covers material damage but also provides cover for liability that may arise from causing injury to a person with that motor vehicle in an accident.
The MVA fund has the distinguishing feature that no fault principle is involved when admitting a claim. The liability issue can however, come into play when the quantum of damages payable is determined.
This safety net provided by the MVA fund - like any other net by definition - has holes. Closer scrutiny is needed to determine whether it provides sufficient protection for the financial consequences of injury, disability or death caused by a motor vehicle accident.
Firstly, the protection is limited to motor vehicle accidents and such accidents must occur within the territorial limits of Namibia. Secondly, the total amount payable for medical treatment, injury management and rehabilitation is capped at N$1,5 million. Thirdly, a claim for loss of income due to the injury or loss of financial support by a dependent of a deceased in a motor vehicle accident is also capped.
For tax payers that have submitted income tax returns for five years prior to the accident the maximum annual benefit is N$100 000.00, while for non tax payers the maximum benefit is limited to the tax free income threshold of currently N$36 000.00 or N$40 000.00 per year as proposed in this year's budget.
Compensation for pain and suffering from injuries sustained is capped at N$100 000.00 while the death benefit is a maximum of N$7 000.00 less any benefit [aid by Social Security or a pension fund where applicable.
Furthermore it must be noted that the above payments can be substantially reduced or even declined when, amongst others, the person injured or deceased did not wear seat belts, was not properly seated in a car seat, contravened traffic laws or the vehicle involved was not roadworthy or stolen or being used for criminal activities.
When looking at the above restrictions it is very likely that the compensation payable by this fund in the event of injury, disability, loss of income or death arising from a motor vehicle accident may prove insufficient.
Accident, death or disability benefits via normal life assurance are not only affordable but also cover all types of unnatural events and not only motor vehicle accidents and are also not limited to the territorial limits of Namibia.
These types of insurance do not require medical examinations and are thus easily obtainable. The protection can also go beyond age 60 unlike the MVA where protection for loss of income ceases at age 60.
So, despite the laudable benefits provided by the MVA fund, it may be wise to assess one's personal financial situation before such an event takes place.
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