Published Date: July 17, 2023

The past few weeks have been engulfed with flames of truck arson attacks in South Africa. Over 20 trucks have been torched in various provinces including Mpumalanga, Limpopo, Kwa-Zulu Natal, etc. While the sudden rise in these incidents is undoubtedly worrisome, one must bear in mind that truck attacks are not a novel phenomenon in South Africa – the destruction to trucks and their operations are a rather common occurrence. The State Security has been found wanting, albeit there has, to date, been 3 (THREE) reported arrests linked to these incidents. It goes without saying that the truck arson attacks are a huge concern to insurers. The struggles of insurers, given the recent years’ major events, are well documented. It has only been from last year, 2022, where there has been positive developments and good signs of recovery for the insurance industry. As such, these incidents are undoubtedly hinderous and destructive to recovery and growth of the industry. This being the case, this piece will briefly consider the type of insurance claims that may arise from truck arson attacks and the possible measures which the insurers may consider implementing to limit their liability.

Possible claims

Whilst many from the outside may merely look at the damage caused to the trucks and think that is where it ends, one incident of a torched truck may result in several losses amounting to millions of rands being lost in the process. The following examples are not exhaustive – there are further examples of claims that may flow from a single incident of truck arson. The most obvious insurance claim that results from such incidents is a claim for the damage to the truck in terms of the fire section of the policy. There is also likely to be business interruption claims in terms of the business fleet policy, as the damaged truck cannot continue with business. Resulting from such an interruption, there may be claims for loss of income. In some instances, there may be claims for damage to the goods in transit. In addition, there may be personal injury claims where either a truck driver and/or an assistant has suffered bodily injuries as a result of the incident. In most severe cases, there may be deaths which may result in life insurance policies being triggered.

Impact on the insurers

The above discussion paints a picture, albeit briefly, of how much of a dilemma the truck arson attacks are to insurers. What may be of a greater concern is that there is no end in sight to these incidents. Whilst there seems to be efforts from the law enforcement side to hold the perpetrators accountable, it is highly unlikely that these efforts will birth the outcome that stakeholders desire the most i.e., bring a sudden halt to these attacks. What the insurers have in their control, however, is the ability to limit their liability. There are several ways which can be explored in this regard including, inter alia, not insuring trucks at all; excluding liability for routes that are regarded as “high risk”; raising premiums on “high risk” routes; impose stringent security conditions in the policy; imposing higher premiums generally (not only for “high risk” spots). The insurers are at liberty to impose conditions that will limit their liability to a bare minimum. Such limitations and exclusions became prevalent at the height of Covid-19 where insurers were specifically excluding Covid-19 in terms of the policy. It is, however, worth stating that insurers cannot summarily make such drastic changes to the terms of the policy. Depending on the policy wording, insurers will only be able to make such changes at the time of renewal of policy or, upon giving notice to an insured. To sustain their businesses and insurance industry at large, it may be necessary for the insurers to consider applying stringent limitations.

To resolve the ongoing destruction of trucks requires a concerted effort from all the stakeholders, including the government. Whilst there are discussions and suggestions on the way forward in dealing with this issue, the insurers are at liberty to consider ways in which they can limit their liability. If and when the situation gets better in future, and there is a concrete practical solution, the insurers will be able to revisit their stance and the insureds will be in a better position to reopen negotiations for more favourable terms of the policies.

Mtho Maphumulo
Senior Associate | Litigation Attorney