By: George Jennings & Kobus van Niekerk

Liability insurance forms an integral part of practically all Contract Works and Plant All Risks insurance policies. The use of vehicles on public roads and in public areas are regulated by the Road Accident Fund Act 56 of 1996 which provides for the institution of the Road Accident Fund and matters related to the Fund. The RAF Amendment Act 19 of 2005 came into operation in 2008 and is currently under further review.

The purpose of the Road Accident Fund is the payment of compensation, in accordance with the RAF Act, for loss or damage wrongfully caused by the driver of a motor vehicle during an accident occurring on a South African road.

For the benefit of this article, we refer to certain definitions to shed light on terminology pertaining to our discussion:

“road” includes all works or things of whatsoever nature forming part of, connected with or belonging to a road, the roadway, motor by-passes, sidewalks, traffic circles, traffic islands, curbing, embankments, cuttings, subways, culverts, sluits, drains, dams, fences, parapets, guards, bridges, ferries, causeways, fords, approaches, direction signposts, distance indicators, signposts, directions, warnings and any portion or diversion of a road.

“roadway” means that part of a public road which has been constructed for the use of or is normally used by vehicular traffic.

“trunk road” means a major road that has been specially built for travelling long distances excluding highways.

“motor vehicle” means any vehicle designed or adapted for propulsion or haulage on a road by means of fuelgas or electricity, including a trailer, a caravan, an agricultural or any other implement designed or adapted to be drawn by such motor vehicle.

“third party” means any person who has suffered or died as a result of any bodily injury to himself or herself arising from the negligent driving of a motor vehicle by any person at any public place or road.

“contract site” is commonly defined in terms of the Contract Works policy as: the site upon which the insured contract is to be executed (as more fully defined in the contract documents) together with so much of the surrounding area as may be designated for the performance of the insured contract.

Plant owners and operators can invariably end up with a large liability exposure whilst operating their construction plant and equipment at or on a contract site or whilst driving on a road.

When it comes to the adequacy of limit of indemnity, it is important to evaluate the potential exposure that could be incurred at any one time or incident. Whether on site or on the road, clients need to make sure they comply with all the relevant statutory and regulatory requirements.

It is important to recognise that the RAF Act is restricted to accidental injury to persons only. Any other accidental damage should be insured in terms of a Construction Public Liability insurance policy. Such a policy includes the usage of plant and the tool of trade risk on site or elsewhere. Consort offers comprehensive covers to protect the plant owner and/or contractor against claims arising from the ownership and/or use of plant on site or elsewhere.

A further challenge with construction plant and equipment is when a client/insured hires plant and equipment from a plant owner/operator. In virtually all instances, the hirer accepts the liability risk and when signing the contract, indemnifies and holds the owner harmless of any liability whatsoever or howsoever arising whilst such plant and equipment are in the hirer’s care, custody or control.

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