Insurance broker Glenrand MIB has warned that there could be enormous monetary, legal and insurance risk implications if you operate a vehicle as part of a lift club.

Is profit involved?

AA spokesperson Gary Rondle says: "Statistics on the number of lift clubs are impossible to come by. Lifts clubs come and go. Essentially however we have detected increased numbers of such clubs and sadly, while we support them in principle as a way of reducing congestion and lowering household costs, many are almost certainly illegal in terms of the Road Transport Act.

"The key aspect here is whether profit is involved, in which case, under Chapter 6 of the Road Traffic Act, the owner providing the service has to register as a taxi operator and become subject to all the rules and regulations of that function, including having to hold a professional driving permit and testing the vehicle annually.

"Also a new development is that all taxi operators are having to convert their current permits to licences, further complicating the lift club issue."

As for the insurance implications, Rod Pearson, divisional executive director for Glenrand MIB Risk Services, says: "Lift clubs are clearly an important part of the daily routine of many parents' lives. They help the thousands of families who have to battle through the traffic to deliver their loved ones to school gates every day and who find it increasingly tough to settle their petrol bills at the end of the month.

"The financial arguments for lift clubs obviously make considerable sense. But as the driver in such an arrangement, you could be open to crippling claims if your passengers were to be injured due to your negligence.

Do your passengers pay a fare?

"It’s all to do with whether transportation takes place as 'fare paying' passengers which is a frequent exclusion to motor policies.

"Take for example, what may loosely be called a lift club for your colleagues. If they all chipped in a few rands to pay for the petrol, your insurance company would probably not have a problem should there be claims as this is not ‘fare paying’ according to one court case.

Check your cover

"However it’s wise not to take even that as a given and you should check the wording of your particular policy and seek an endorsement of your normal motor cover to be safe, even if it means a slight increase in your premium. Some covers automatically allow such use as long as there is no element of profit.

"It’s also wise to consider the quantum of the cover available under your normal motor policy in that typical passenger legal liability covers maybe around R2- to R5-million. This may prove to be woefully deficient. Additional cover is available via an inexpensive additional policy which can increase your cover by R10- or R20-million, for a premium of only R10 to R15 per month.

The worst case scenario

"Take a worst case scenario where, say, half a dozen kids are injured in an accident while you were transporting them to school. You could then be faced with multiple claims running into millions for everything from pain and suffering to loss of future earnings. The claimants could sue you in your personal capacity. There’s been a recent Namibian claim by a passenger in a 4X4 for N$220m on which the court award was N$80 million!

"There is only paltry cover under the Road Accident Fund (RAF) Act: R25 000 with slightly enhanced cover if the club complies with the definition in the act in terms of, for example, ‘reciprocal conveyance’ by each member of the club. In other words, where each club member takes turns in providing the service.

"Revisions to the RAF legislation will remove this restriction but although they have been signed by the State President, they are not yet effective.

Consider getting a professional driving permit

"Take care not to breach other legislation. For example, have a professional driving permit in addition to your license where this is required — for instance where your vehicle contains more than 12 persons or is designed to do so, or carries fare paying passengers.

"On the other hand, just as drivers should be clear on where they stand in terms of insurance cover for transporting passengers, passengers can establish whether the driver to whom they trust themselves or their loved ones is indeed properly covered to avoid a potentially nightmarish scenario. And have good medical aid and personal accident cover yourself!"