Do I need to be concerned about Motor Third Party Insurance as a passenger or pedestrian?

By Justice Peprah AGYEI

The National Road Safety Authority (NRSA) has confirmed that from January to August 2024, the total number of accident cases reported on Ghana’s roads was 8,653, and the total number of vehicles engaged in road traffic accidents was 14,654.

Though the numbers are somewhat high, the authority explains that there has been a reduction in all indicators except persons killed, which shows a 12% increase. (Over 14,000 Road Traffic Crashes in Ghana from January to August 2024 – Starr Fm, n.d.)

Between January and September this year, 1,817 lives have been lost through road accidents. An 8.35 percent increase on the 1,677 lives lost during the same period in 2023, according to the National Road Safety Authority (More than 1,800 Lives Lost to Road Crashes in 2024- Ghana Road Safety, n.d.)

Comparably, as of December 7, 2022, The overall number of deaths from Covid 19 in Ghana reached 1,461. (Ghana, n.d.)

The primary reason many countries, including Ghana, have made it mandatory for motorists to insure their vehicles against third-party injuries, deaths, and property damage is the rising risk of road accidents and the significant impact they have on innocent victims. In Ghana, this requirement was introduced in 1958 through the Motor Third-Party Insurance Act, 1958 (Act No. 42), which ensures that victims of such accidents are compensated for the harm they suffer, protecting both the victims and the drivers.

However, the Act clearly outlined exceptions and other circumstances under which pedestrians or passengers cannot file a claim if there are no insurers or insurance policies available to claim from.

According to the provisions of the Act, it is illegal for any person to use, or allow another person to use, a motor vehicle on a road unless there is a valid insurance policy or security in place that meets the requirements for third-party risks under the Act.

If someone violates this provision, they will be committing an offense. Upon summary conviction before a Resident Magistrate, the offender could face a fine of up to 250 penalty units, imprisonment for up to 12 months (with or without hard labor), or both a fine and imprisonment.

The motor third-party insurance covers legal liabilities arising from accidents caused by the insured vehicle. In simple terms, “third party” refers to anyone other than the vehicle owner or driver. The insurer will provide compensation for:

• The vehicle owner or anyone driving, using, or in charge of the vehicle with the owner’s consent, as well as any authorized passengers getting in, on, or out of the vehicle, for:
  • Death or bodily injury to any person
  • Damage to property belonging to someone other than the insured
• Death or bodily injury to members of the insured’s household or any other occupants of the vehicle.

Additionally, the policy provides compensation to the driver for bodily injury or death resulting from the accident.

But there are the following exemptions according to the Motor Third-party Insurance Act 1958 (Act No. 42);

1. to the user of a motor vehicle owned by or exclusively employed in the service of the Government while the motor vehicle is being used for the purposes of the Government; or
2. to the user of a motor vehicle, other than a passenger vehicle, owned by a person who has deposited and keeps a deposit with the Accountant-General the sum of two hundred thousand cedis in respect of the motor vehicle at any time when the motor vehicle is being driven by the owner or by a servant of the owner in the course of employment; or
3. to the user of a motor vehicle at any time when it is driven for police purposes by or under the direction of a superior police officer as defined in the Police Service Act, 1970 (Act 350); or
4. a person or class of persons declared by the President to be exempted from this Act; or
5. a motor vehicle or type of motor vehicle declared by the President to be exempted from this Act.

A common question is: what happens if I am involved in an accident in one of the exempted scenarios? As a motor accident victim, where can I seek compensation? How much compensation am I entitled to in such cases? Are the public and victims aware of the procedures for claiming compensation, and which institutions are responsible for providing it?

The same Act also specifies certain conditions under which an insurance company cannot reject a claim related to third-party risks. However, it excludes one condition: if the driver does not have a valid driving license.

This means that if a vehicle is involved in an accident and the driver lacks a qualified driving license, pedestrians and passengers involved in the accident will have no right to claim compensation from the insurance company, even if the vehicle itself has valid insurance coverage.

In such cases, victims can file claims through the Motor Compensation Fund administered by the National Insurance Commission. However, the question remains: will this provide sufficient compensation to meet their needs? And will the amount they receive be the same as if they had filed a claim directly with the insurance company?

One final concern regarding motor third-party insurance is the limit on injury and death benefits. For injury claims, the following factors will guide the calculation of compensation awards:

1. Medical Expense
2. Temporary Disability
3. Permanent Disability
4. Loss of Earnings
5. Nursing Assistant
6. Loss of Educational progression and Career Loss
7. Dependents of a victim of a Motor Accident

In addition to the individual limits, there is an aggregate limit per accident as shown below:

No.	Type of Vehicle	Aggregate Limit (GHS)
1	Private cars for individuals	150,000.00
2	Passenger carrying (Taxi)	150,000.00
3	Passenger carrying Minibus	350,000.00
4	Passenger carrying Buses (up to 45 passengers)	500,000.00
5	Passenger carrying buses, coaches (up to 65 passengers) 700,000	700,000.00
6	Others	350,000.00

 

My concern is that, under the same cap, the scale of disfigurement is determined by a medical doctor, with a maximum compensation of up to GH? 50,000.00, subject to negotiation.

In cases where multiple victims suffer burns and disfigurement in an accident, what happens to them given the aggregate limit on compensation? What compensation can an individual expect if medical expenses, temporary disability, permanent disability, and loss of earnings are all taken into account?

The key question is: is the aggregate limit sufficient to cover these expenses and losses and will the victim be compensated fairly?

There are opposing arguments against making insurance compulsory. It is argued that a major disadvantage of compulsory insurance is that it may make governments too dependent on the insurance market. (Faure, 2006)

Research was done in other jurisdictions, and below are the findings. Here are some examples of who is responsible for paying various types of compulsory insurance:

• Unemployment insurance is mandated by the federal government and primarily funded by both federal and state governments.
• Social Security is also mandated by the federal government, with contributions from both employers and employees.
• Medicaid is mandated by each state in the U.S., with funding primarily provided by the state.
• Workers’ compensation is mandated by the state and primarily paid for by employers.
• Mandatory retirement plans (annuities) for public employees are required by states and funded by both employers and employees.
• Professional liability insurance is mandated by relevant professional associations and typically paid by employers.
• Comprehensive auto insurance is required by special agents and paid by the insured (auto loan borrowers).
• Basic auto liability insurance is mandated by states and paid by the insured individuals. (IMC_2013_01_Chen.Pdf, n.d.)

If insurance companies impose caps on benefits and are unable to accept certain claims, and if the Motor Compensation Fund is insufficient to cover the required payments, alternative funding options should be explored. These could come from the state or the general public, who are ultimately the beneficiaries of motor liability insurance.

One potential solution is for insurers to design a policy allowing third parties to take out their own coverage, from which they can claim after reaching the insurance cap, ensuring they still receive compensation for any remaining expenses. This Auto Liability Insurance could be available to third parties involved in motor accidents, excluding the vehicle owner or driver.

Regarding the issue of non-payment of compensation to third-party victims due to an unlicensed driver, I propose that any amendments to the Motor Third-Party Insurance Act of 1958 (Act No. 42) should address this concern.

Passengers and pedestrians have no legal obligation to inspect a driver’s license before entering a vehicle or walking on the roadside, and should not be penalized for an issue beyond their control.

If we cherish our industry as we say, let’s do it now or never!!!!!!

The writer holds insurance chartered status in three jurisdictions: the United States of America (CPCU), the United Kingdom (ACII), and Ghana (ACIIG).. He has over 17 years of experience in the insurance industry. 233 (0) 208498571

[email protected]

Ref:

Faure, M. G. (2006). Economic Criteria for Compulsory Insurance. The Geneva Papers on Risk and Insurance – Issues and Practice, 31(1), 149–168. https://doi.org/10.1057/palgrave.gpp.2510063

Ghana: Daily coronavirus deaths 2020-2022. (n.d.). Statista. Retrieved December 22, 2024, from https://www.statista.com/statistics/1199101/daily-coronavirus-deaths-in-ghana/

IMC_2013_01_Chen.pdf. (n.d.). Retrieved December 22, 2024, from https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/5179/IMC_2013_01_Chen.pdf

More than 1,800 lives lost to road crashes in 2024- Ghana Road Safety. (n.d.). Retrieved December 22, 2024, from https://www.gbcghanaonline.com/general/road-crashes-lives/2024/

Over 14,000 road traffic crashes in Ghana from January to August 2024—Starr Fm. (n.d.). Retrieved December 22, 2024, from https://starrfm.com.gh/2024/09/over-14000-road-traffic-crashes-in-ghana-from-january-to-august-2024/

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