How to accelerate your Road Accident Fund payout
RAFPay can pay 50% of claim upfront
If you have been injured in a motor vehicle accident and have been awarded a settlement from the Road Accident Fund (RAF), you can access an upfront payment of your money from new startup company, RAFPay.
The RAF pays compensation to you if you were injured in a road accident that was not of your fault, or if you are a dependant of someone killed in an accident due to negligent driving.
South Africa reports around one million road accidents a year with 40 fatalities and 20 people left permanently disabled each day.
These victims approach personal injury lawyers to represent their cases so that they can claim from the RAF. You do also have the option to represent yourself if you wish to do so.
While you are entitled to use a lawyer to represent you, the RAF has been using a panel of lawyers to represent its cases in court. There is currently court action pending to suspend the services of these lawyers so that the RAF can use in-house legal representation.
The beleaguered fund has not been solvent since 1981 and this year reported a massive R17 billion in unpaid claims.
Acting chief executive officer, Collins Letsoalo, last month told media that the average time it takes after an accident until a settlement is reached (a determination of how much money you will be paid out) is five years.
RAF pay-out statistics for 2018/2019
* 229,534 claims were finalised.
* R40bn was paid out.
* A further amount of R11.2bn in claims was finalised but could not be paid out due to cash constraints.
* Average loss-of-earnings claims increased 11% to R767,506.
* The average in-general-damages claims climbed 8% to R462,130.
“Only 5% of cases ended up in front of a judge - the vast majority of cases are settled on the doorstep of the court,” he said.
Once a settlement is reached, you receive a court order setting out how much you are entitled to receive from the fund. It can then take another year or two before you receive your settlement money from the RAF.
Elad Smadja, chief executive of RAFPay, says at that point, RAFPay can advance up to 50% of the settlement to you upfront within hours of you applying and the balance is paid to you when the RAF makes the full payment.
How it works
Smadja notes that the advance from RAFPay is not a loan and does not accrue interest, but there is a time-based fee that works out to between five and 15% of your claim. The RAFPay fee is applied at 2.5% a month.
“A typical example would be a claim of R500,000. The attorney takes a 25% fee, so you would be paid out R375,000. The RAFPay fee is deducted from your R375,000 and is determined according to how long you have to wait for your money after the RAFPay advance has been paid to you,” he explains.
To use RAFPay, you must be using a lawyer to claim from the RAF. This means that when the RAF pays, the money is paid into your lawyer’s trust account.
Your lawyer will then refund RAFPay for the upfront payment and the balance will be paid out to you. The attorney and the RAFPay fees are only deducted when you receive your final payout from the RAF.
“The lawyer is an independent party that can ensure RAFPay is refunded for the upfront payment,” Smadja explains.
The minimum 5% fee means that RAFPay will pay you in total up to 95% of the money.
The minimum amount generally paid at upfront is R150,000. The balance is settled once you have received your RAF pay-out.
Financial advice component
Smadja says many people who claim from the RAF often behave like lottery winners when they are paid and often the money ends up being mismanaged or wasted.
“We offer financial advice and about 40% of clients take us up on that. Where the payment is more than R1 million, we find most often that the financial advice is taken up.
“We partner with Anchor Capital and help you to draw up a financial plan so that your settlement can be allocated or invested responsibly,” he says.
Smadja says the company fields hundreds of calls each month from people who are in desperate financial positions and have often resorted to loans from mashonisas (loan sharks) at very high interest rates while they wait six to 12 months for their pay-out.
What you need to know about claiming from the RAF
The Road Accident Fund will not pay you if:
- You are not physically injured.
- You were the driver, 100% to blame and no other vehicles were involved.
- Your accident was outside the borders of South Africa.
- You are a pedestrian or cyclist and 100% to blame for the accident.
There are important timelines to remember when you lodge a RAF claim:
- Where the identity of the person or driver who caused your injury is known, you have three years from the date of the accident or when your breadwinner died to lodge your claim.
- If the injured is a minor, the three years start running from the date when the minor turns 18.
- Where the identity of the driver who caused your injury is unknown, you must lodge your claim with the RAF within two years from the date of the accident or the date your breadwinner died. For unknown driver cases, if the injured is a minor, you have one year from the date you turn 18 to lodge the claim.
You can claim for the following damages:
- Past and future medical expenses;
- Past and future loss of earnings if you have suffered any loss of earnings due to the accident;
- General damages if you suffered pain and suffering due to a serious injury;
- Past and future loss of support if you are a dependant of the deceased breadwinner; and
- Funeral expenses if you are the family member responsible for paying for the funeral.