Adrian Kalule*
1.0 INTRODUCTION
Uganda’s Motor third party Insurance Policy and its governing Law by way of close analogy provides accuracy with the storyline behind the 1925 novel by American writer F. Scott Fitzgerald, The Great Gatsby. This great literature thriller is a poignant critique of the American dream, that promises limitless opportunities. Gatsby’s tragic failure, just like Uganda’s Motor third party insurance Policy, exposes the Dream’s illusory nature and nothing less of the consequences of chasing an unattainable goal.
Just as to Gatsby, the illusion that affection and possession of a highly and socially placed woman would validate his worth and legitimatise his place among the Elites, Uganda’s Motor third party Insurance Policy, too, does fall short of similar social and economic hallucinations. From its central objective, the Motor Third Party Insurance basically covers financial losses arising from accidents. To be exact, that financial loss must be arising from bodily injury or death as a result of the accident. However, sanctified this objective seems, it is met with consequences ordinarily arising from pursuing the seemingly, not-so-often attainable objectives of this insurance policy.
From its on-set, the Motor Vehicle Insurance (Third Party Risks) Act makes a rather non-negotiable requirement for all Vehicle owners to pay for this insurance. The short title states as follows in part; Act to make provision for compulsory insurance against third party risks in respect of the use of vehicles.[1]
The question this Article interrogates at great wave-length is as to whether this Act with all its objectives, produces unrealistic expectations especially towards those its supposedly meant to benefit – the insured in technical terms. It further provides a bird’s-eyes view of the challenges met by the Insured (Vehicle owners) from the Third-Party Insurance Policy. It concludes with recommendations.
2.0 BACKGROUND
Uganda’s Law on Motor Vehicle Insurance dates back as far as 1st July 1989 with the commencement of the Motor Vehicle Insurance (Third Party Risks) Act. The Law was revised in December 2000 and consolidated by the Law Reform Commission of Uganda. To date, this is the law governing vehicle owners in Uganda and Third-party Claims that might arise from road accidents.
2.1 THE APPARENT UNATTAINABLE GOAL IN UGANDA’S CURRENT MOTOR VEHICLE INSURANCE (THIRD PARTY RISKS) ACT
For context, it is important to start with identifying the scope of the application of the Act. Section 3 of the Act provides for the scope of the Third-Party Insurance Policy in Uganda. It states the policy must be by a licenced insurer, and continues to state as follows;
… insures persons or classes of persons as may be specified in the policy in respect of liability which may be incurred by him or her or them in respect of death of or bodily injury to another person caused by or arising out of the use of a vehicle on the road; except that a policy in terms of this section shall not be required to cover liability in respect of the death of or bodily injury to a person arising out of and in the course of employment of the person, by a person insured under the policy.[2]
What this technically means is that this policy covers liability that arises from any form of a vehicle accident occasioning bodily injury or even death of a “Third Party.” Section 1 of the Act defines a third party to mean a person or persons or classes of persons not privy to the policy of insurance taken out under section 2 of the Act.[3]
2.2 THE NATURE OF RISK COVERED
The first stance at the illusive promise of the Third-Party Motor Insurance Policy is seen in both section 1 and section 3 of the Act as these provisions are so limited when it comes to the risk covered. The liability covered is limited to two situations, which are, bodily injury to a third party and in worst case scenarios death of a third party. The Act does not cover for damage caused to the property of a third party which many times may arise in the face of a vehicle accident. This ideally means that in the event of an accident where only property is damaged, the compulsory insurance policy that is meant to cover against financial losses arising from accidents would not help the “Insured” at all thus the policy being illusive in away.
The strict interpretation of this provision is manifest in decided cases for example in the case of Agua Plumbing (U) Ltd v United Assurance Co. Ltd that emphasised the following;
“On the other hand, ‘a Third-Party motor vehicle insurance policy” (here in Uganda) covers the insured only in respect of death or personal injury occasioned to a third party as a result of an accident which the motor vehicle of the insured causes. It does not cover the insured in respect of damage to his/her motor vehicle sustained on the road or, damage his/her motor vehicle may cause to any other motor vehicle or property.[4]
2.3 THE STATUS OF CARS OWNED BY GOVERNMENT
Additionally, Section 2 of the Act is even more problematic when closely analysed. It states that no person is permitted to use a vehicle on a road unless there is in force in relation to the use of the vehicle by a person, a policy of insurance in respect of third-party risks that complies with the Act. The only problem with this provision is the exception it provides to vehicles owned by the Government of Uganda.[5]
The purpose of insurance would try to score two great shots here; covering financial loss against the insured, and ideally restoring/treating the injured in an expedient manner in the context of accidents. It would rather be far fetched for government to insure itself in such seemingly minor motor accidents due to its “deep pocket” if one chose to use the doctrine loosely in this context. However, if this is considered from the point of view of an accident victim, it offers some sort of decentralisation when it comes to government handling such nature of claims of persons affected by such incidents.
By the very nature if injuries sustained from accidents that many at times would require expedient treatment, it becomes necessary for such victims to get a faster way of getting money or resources for their medication as opposed to filing an ordinary suit against the Attorney General for damages and compensation. This option becomes even more undesirable for the indigents that might not have the resources to sustain a civil suit.
Accidents involving cars owned by government have been in apparent in our recent history with very citable examples. A clear example was seen in the case of Paul Byekwaso v Attorney General,[6] a case that succeeded on Appeal from High Court to Court of appeal concerning special and general damages arising out of an accident involving of the appellants car and the respondent’s car belonging to the Ministry of Defence.
3.0 THE ASPECT OF HANDLING CLAIMS
The Act is restrictive when it comes to third party claims. This is vivid in section 39 of the Act that expressly states;
“In all third-party claims in respect of damages to property of, the death of or bodily injury, to any person, arising from any accident, the third party shall proceed against the owner, or the driver or the council, as the case may be, and not the insurer.”
What this essentially means is that a third party/ victim of an accident is left with the only option of going after the owner of the vehicle since section 9 of the Act requires the owner to give notice of the accident to the insurer in writing availing all particulars as to the date, nature and circumstances of the accident. The provision further entails that the owner of the car shall provide any required information pertaining to the accident whether or not any claims have actually been made against the owner on account of the accident.
Additionally, Section 9(2) further stipulates that the notice in writing of every claim made, or action brought against the owner on account of an accident shall forthwith thereafter be given by the owner to the insurer. Whereas this provision sits well with the privity doctrine in contract law that creates rights and obligations only as between the parties to such contract,[7] it defeats the whole purpose of exception to the doctrine in matters pertaining to contracts that confer a benefit to a third party as the case with Insurance Claims.[8]
This may come with a challenge on the side of the third party/ victim of the accident who may not directly claim from the insurance company/insurer. This becomes even worse in situations of non-compliance by car owners who may for one reason, or another fail to address these claims to the insurer as per section 9 of the Act. Such situations are not alien to the state of affairs, and as such Evis Bassudde’s ordeal comes to mind, a victim of the 9th of March 2019 road traffic accident, that involved a collision of an Isuzu truck and a commuter taxi, leaving him fractured and admitted to International Hospital Kampala. His story exposes the unfair bit of this section of the Act as he observed below;
“I decided to look for the owner of the vehicle that caused the accident. When i eventually found him and shared my frustrations, he agreed to report to NIC. However, he didn’t even know that he had an insurance cover with NIC. He did not even know where NIC was located. He said further that he had just bought the third-party insurance from a certain petrol station. We just buy it because the police will arrest you if you don’t have one, he added. But do people ever eat this money from insurance? It seems to be their deal to eat free money, he told me.”[9]
As a result, many victims of accidents/ third parties who are the indirect beneficiaries to this policy are left to the mercy of compliant car owners to report to the insurer for prompt action.
4.0 RECOMMENDATIONS
The law needs to be revised to address the following concerns:
To broaden the scope of the liability covered under this law to include property of third parties involved in accidents.
To cater for insurance covers against government owned vehicles.
Section 39 of the Act needs to be amended in order to cater for direct third-party claims against the insurer as an exception to the privity doctrine.
The Insurance Regulatory Authority (IRA) as the key regulator of the insurance industry needs to ensure strict and swift handling of insurance claims amongst the different insurance companies to ensure restoration of public trust in this policy. This will on the other hand counter perception biases among people who often view this policy as a coercive policy against vehicle owners.
5.0 CONCLUSION
The Great Gatsby pursuits were to be met with dire consequences closing his life story with his tragic demise that ultimately ends his dream. Similarly, Uganda’s motor third party insurance policy is not to go scot-free of consequences. The Motor Vehicle Insurance (Third Party Risks) Act of Uganda is met with glaring gaps that do not necessarily address some of the current needs as this Article highlights. Failure to address some of these gaps leaves no option but to suffer the consequences of the unattained objectives of this Act. Just as to Gatsby, death was the ultimate fate, to Uganda’s vehicle owners, continuous and mandatory payments for this insurance policy, with limited or no benefit in some instances, is their ultimate fate for the rest of their lives unless a change happens.
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* Lawyer, currently pursuing my Post Graduate Bar Course Studies at the Law Development Centre.
[1] Uganda Motor Vehicle Insurance (Third Party Risks) Act Chapter 214; Short title.
[2] Section 3 (b) of the Uganda Motor Vehicle Insurance (Third Party Risks) Act.
[3] Section 1 (k) of the Uganda Motor Vehicle Insurance (Third Party Risks) Act.
[4] Agua Plumbing (U) Ltd v United Assuranssce Co. Ltd Civil Suit No. 431 of 2002, Judgment by Hon. Justice F.S Lugayizi (as then was) delivered in the commercial court on the 15th day of March 2004.
[5] Section 2 (2) of the Uganda Motor Vehicle Insurance (Third Party Risks) Act.
[6] Paul Byekwaso v Attorney General (Appeal from the judgement and orders of the High Court of Uganda sitting at Kampala) dated 05/09/2001 in HCCS No. 1057/2000).
[7] Dunlop Pneumatic Tyre Co ltd v Selfridge Ltd (1915) Ac 847.
[8] A close analogy would be the UK Contracts (Rights of Third Parties) Act 1999 that was specifically enacted to make provision for the enforcement of contractual terms by third parties. The Act further provided a two – fold test ie where the contract expressly provides for it and secondly where the contract purports to confer a benefit on such third person.
[9] New Vision, Getting 3rd party insurance compensation, a camel & needle affair, Sep 22, 2020, accessible on <https://www.newvision.co.ug/category/business/getting-3rd-party-insurance-compensation-a-ca-NV_5676> (Accessed on 28/09/2024).
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