The Importance of having the correct driving licence and insurance cover, if the vehicle is being used is for “Hire and Reward”
Although dealt with in Section 69 of the National Land Transport Act, there are no regulations set out as yet. However, one has to be aware of the consequences regarding the liability of the driver in the event of an accident.
The most important criteria include determining if the car pool has fare paying passengers or if it is a lift club with no costs. Simply put, when you are a passenger, do you bear the costs or when you are a passenger, do you ride for free?
There are essentially three types of Car Pools and the risk of liability varies and affects them in different ways.
Alternating Car Pool
This may be an arrangement where there are various cars and drivers in a group who in essence share the costs of the transport by alternating the vehicle usage daily or weekly by way of using their vehicles.
It would be prudent to ensure that the drivers of such pool car arrangements have valid drivers’ licences.
It is important to note that if the vehicle has a mass of more than 3,500 kilograms and is adapted for the conveyance of 12 or more people, then a professional driving permit (PrDP) is required, irrespective of whether the passengers are fare paying or not.
This type of arrangement has a limited chance of a passenger liability claim against the driver as the vehicle is not being used for hire and reward.
Designated Driver Car Pool
This car pool generally has one driver and one or more passengers. (This would include au pairs, who are in essence paid for their services).
The driver provides the vehicle and passengers pay a daily, weekly or monthly fare based on expenses such as petrol, maintenance and parking. Here the driver requires a PrDP permit for P-Passengers as this is deemed to be for hire and reward. This would essentially be regarded as a taxi service.
One would be required to have passenger liability insurance as passengers could sue the driver for reckless or negligent driving in the event of an accident which results in death, disability or injury to passengers. Thus, there is a chance of a liability claim being made against the driver.
The vehicle is also required to undergo an annual roadworthy.
Employer Car Pools
Certain employers encourage employees to share the ride to and from work by allowing the use of company vehicles. Employees pay a fare to offset additional petrol, maintenance and insurance costs. No profit is enjoyed by the driver or the company. The passenger liability would thus be covered in terms of the policy limit.
While lift clubbing has benefits for all parties, if you do not have the correct car insurance and cover permits in place, you could be opening yourself up to hefty lawsuits or unpaid insurance claims.
In a Nutshell
If you set up a car pool and you operate for Hire and Reward resulting in a profit, the driver of the vehicle will need to acquire a PrDP.
When licencing the vehicle, one would need to declare that the vehicle is used for Hire and Reward which, as mentioned above, will require an annual roadworthy of the vehicle. It may come as a surprise, but you will also be required to register as a taxi operator and this means that you will have to comply with all of the regulations of the taxi industry.
It is of vital importance to inform your insurance company that you will be transporting people for profit. If you have car insurance, but neglect to inform your insurer that the “purpose of use” has changed, the insurance company would in all likelihood not pay your claim. Using your car as a “taxi” changes the use of the vehicle from personal use to business use and this would also lead to an increased premium.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)
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