Online Reporter
WHEN Tonderai bought a pre-owned vehicle from his cousin in December 2023, he was overjoyed.
The car was in perfect condition, and the price was fair.
He paid the full amount and immediately took possession of the vehicle.
Confident that everything was in order, he went ahead and insured the vehicle under third-party insurance.
In December 2024, tragedy struck.
The car was involved in an accident and Tonderai was deemed to be at fault.
He reported the claim to his insurer, but after reviewing the paperwork, the company declined to pay.
The reason shocked him: Although he was now the de facto owner, the vehicle registration was still in the seller’s name.
As such, he had not regularised ownership in terms of the Vehicle Registration and Licensing Act [Chapter 13:14].
This story is fictional, created to illustrate a common and costly oversight among motorists.
Yet it mirrors many real cases where claims are rejected not because the damage is in dispute, but because ownership had never been properly transferred.
The Vehicle Registration and Licensing Act [Chapter 13:14] requires new car owners to register a change of ownership within 14 days of acquiring the vehicle.
This requirement is not merely administrative; it establishes who legally owns and bears the risk for the vehicle.
Furthermore, the Road Traffic Act [Chapter 13:11], as amended through the Finance Act 7 of 2021, provides that if a change of ownership is not completed within the first two terms of insurance, the insurer may “refuse to honour the policy of insurance”.
Failure to transfer ownership can have serious consequences.
From an insurance perspective, transferring ownership is crucial because insurance contracts rely on a principle called insurable interest, the idea that one can only insure property if they stand to suffer a financial loss should it be damaged or stolen.
If ownership has not been transferred, insurable interest has not been legally established. Even though the “new owner” may be using the vehicle and paying premiums, the insurer is within its rights to reject any claim because, technically, the policy was issued for an asset belonging to someone else.
To avoid these pitfalls, motorists must treat the change of ownership as a priority immediately after purchase.
Once registration is updated, notify your insurer so that your policy reflects your legal ownership.
The Insurance and Pensions Commission (IPEC) continues to receive complaints where insurers reject settling claims for vehicles still registered under previous owners. Insurers can only settle claims consistent with the law, and this requires that ownership be properly documented.
Motorists should also be cautious when buying vehicles through informal channels or from relatives. Always insist on a formal change-of-ownership agreement and proof that the seller has cleared all outstanding obligations.
It is equally important to maintain accurate and up-to-date information on your insurance policy.
If you sell your vehicle, notify your insurer immediately so that your cover can be cancelled or transferred.
Failure to do so can expose both buyer and seller to legal and financial complications should a claim arise later.
For policyholders who are still in the process of transferring ownership, ensure that your insurance accurately reflects the current status of the vehicle.
Discuss the situation with your insurer and provide documentary evidence showing the sale and the transfer application. Many insurers are willing to guide policyholders through this process, but the key is communication.
Owning and insuring a vehicle are inseparable responsibilities.
Tonderai’s story is a lesson to every motorist: Paying premiums is not enough.
If the registration is not in your name, the car is not legally recognised as yours, and your insurance cover may be invalid. The simple act of completing the ownership transfer could save you thousands of dollars and months of frustration.
IPEC reminds motorists that compliance with the Vehicle Registration and Licensing Act is not just about avoiding penalties; it is about protecting your financial interests, your reputation and your peace of mind.
About IPEC
IPEC is a statutory body established in terms of the Insurance and Pensions Commission Act [Chapter 24:21] to regulate the insurance and pensions industry for the protection of policyholders and pension scheme members.
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