Ethiopian Federal Laws

A PROCLAMATION TO PROVIDE FOR VEHICLE INSURANCE AGAINST THIRD PARTY RISKS

WHEREAS, the occurrence of accidents caused by vehicles is escalating from time to time;

WHEREAS, loss of lives, bodily injuries and damages to properties caused by vehicle accidents are creating social problem;

WHEREAS, it is necessary to establish a system for facilitating the provision of emergency medical treatments to victims of vehicle accidents, and to require owners of vehicles to have third party insurance coverage against third party risks;

NOW, THEREFORE, in accordance with Article 55 (1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:

PART ONE
GENERAL

1. Short Title

This Proclamation may be cited as the “Vehicle Insurance Against Third Party Risks Proclamation No 559/2008.”

2. Definitions

1. “Certificate of Insurance” means a document issued to a vehicle owner ascertaining that the said vehicle has an insurance coverage against third party risks in accordance with the provisions of this Proclamation;
2. “Insurance Company” means a company licensed to undertake an insurance business in accordance with the relevant laws;
3. “Insured” means any person who holds a vehicle insurance against third party risks according to the provisions of this Proclamation;
4. “Insurer” means a company issuing vehicle insurance against third party risks;
5. “Vehicle” means any wheeled motor vehicle, semi trailer or trailer for use on the road with the exception of wheelchair, implement of husbandry and bicycle;
6. “Motor Vehicle” means any vehicle moving on a road by mechanical or electrical power;
7. “Trailer or Semi-Trailer” means a vehicle which has not its own motor power and which is capable of being attached and drawn by a motor vehicle;
8. “Insurance Policy” means a contract whereby an insurer undertakes to pay compensation to any third party for death, bodily injury or damage to property caused by the vehicle of an insured person;
9. “Road” means any highway, urban or ruler street, parking or terminal, bridge or any other passage customarily open for vehicles;
10. “Third Party” means any person other than the insured person, member of the insured person’s family, the driver or any person employed on a vehicle to which an insurance policy applies at the time when an accident occurred giving liability under such insurance policy;
11. “Yellow Card” means a certificate issued for the payment of compensation as per the protocol signed in relation to vehicle insurance against third party risks by member states of the Common Market For Eastern and Southern Africa;
12. “Ministry” means the Ministry of Transport and Communications;
13. “Family” means husband, wife, child or any person who cohabits with the insured;
14. “Person” means any physical or juridical person.
15. “Premium” means the amount paid for an insurance policy.

3. Requirement of Vehicle Insurance Against Third Party Risks

1. No person shall drive or cause or permit any other person to drive a vehicle on a road unless he has a valid vehicle insurance coverage against third party risks in relation to such vehicle.
2. Not withstanding the provision of Sub Article /1/ of this Article the Ministry may determine vehicles to operate on the road without requiring compulsory motor vehicle insurance coverage.

PART TWO
INSURANCE POLICY

4. Issuance of Insurance Policy Against third Party Risks

1. Vehicle insurance policy against third party risks shall only be issued by insurance companies.
2. A policy issued pursuant to Sub-Article (1) of this Article shall cover the compensation payable in the case of loss of life, bodily injury, damages to property and emergency medical treatment caused by the insured vehicle.

5. Restrictions on the Scope of Application of Insurance Policy

1. the age, physical or mental conditions of the person driving the vehicle;
2. the conditions, the horsepower, cylinder capacity or value of the vehicle;
3. the number of persons, the carrying of any particular apparatus, weight or physical characteristics of the goods, that the vehicle carries; or
4. the time at which or the area within which the vehicle is used.

6. Conditions of Insurance Policies

1. Any condition in a vehicle insurance policy providing;
   1. no liability shall arise under such policy; or
   2. any liability so arising shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy;
   shall be of no effect
2. Nothing in sub-article (1) of this Article shall be deemed to render void any provision in any such policy requiring the person insured to repay to the insurer any sum which the latter may have become liable to pay under the policy, and which have been applied to the satisfaction of the claims of third parties.

7. Exclusions From Insurance Policy Coverage

1. death or bodily injury to the insured person or member of the insured person’s family;
2. liability in respect of death or bodily injury caused to a person hired by the insured person and occurred in the course of such employment;
3. damage to the insured vehicle;
4. liability in respect of damage to goods carried on basis of rent or payment on the insured vehicle; and
5. damage to any property owned by or is under the custody of the insured person.

8. Prohibitions

No person may, for the purpose of obtaining a vehicle insurance policy, make any false statements resulted in non applicability of such policy or commit any act which disentitles him to claim under such policy.

PART THREE
INSURANCE CERTIFICATES

9. Issuance of Certificates

1. An insurance company shall issue a certificate of insurance to the insured person at the same time it issues an insurance policy.
2. A certificate of insurance issued pursuant to sub-article (1) of this Article shall include the following particulars:
   1. name and address of the insured;
   2. identification plate, chassis and motor numbers of the vehicle;
   3. the time of commencement and expiry of the insurance policy;
   4. conditions subject to which the policy is issued;
   5. persons or classes of persons entitled; and
   6. name and address of the insurer.
3. The insurer shall endorse on the certificate a declaration to the effect that the policy to which the certificate is issued complies with the requirements of this proclamation.

10. Validity of Certificates

A certificate of insurance issued in accordance with Article 9 of this Proclamation shall be valid for not less than one year from the date of issuance.

11. Duty to Give Information

1. whether the vehicle is insured or not; and
2. the conditions to which the insurance policy is subjected as specified in the certificate of insurance pursuant to Article 9 of this Proclamation.

12. Insurance Stickers

1. Any insurer shall provide insured persons with insurance stickers.
2. In case of a vehicle having windscreen the insurance sticker issued for the vehicle shall be displayed fully on the screen.
3. The insurance sticker for a trailer or a vehicle without windscreen shall always be kept with the driver.

13. Absence of Insurance Sticker

The absence of an insurance sticker shall constitute a prima facie evidence that the vehicle has not been insured and the Police shall have the power to detain such vehicle till the appropriate certificate of insurance presented.

14. Issuance of Copies

The insurer shall, upon the request of the insured person, issue a copy of a certificate of insurance or an insurance sticker where it is lost or mutilated.

PART FOUR
LIABILITIES TO BE COVERED BY INSURANCE

15. Obligation of the Insured

1. collision, roll, fire or explosion caused by the insured vehicle; and
2. the fall of objects carried by the vehicle, its accessories or tools being used in connection with the vehicle.

16. Extent of Liability

1. The amount of compensation due to damage caused by an insured vehicle shall not exceed:
   1. Birr 40,000 (forty thousand) in the case of death;
   2. Birr 15,000 (fifteen thousand) in the case of bodily injury; and
   3. Birr 100,000 (one hundred thousand) in the case of damages to property.
2. Any person who alleges to be entitled to compensation above the limit provided for under Sub-Article (1) of this Article shall have the right to claim the same from the insured person in accordance with the relevant laws.
3. The extent of bodily injury caused to a person by an insured vehicle may be determined by a medical board.

17. Notice of Accident and Claims for Compensation

1. Any insured person shall, unless prevented by the existence of force majeure, give to the insurer notice of an accident caused by the insured vehicle immediately or at the latest within ten days from the date of the occurrence of such accident.
2. Any third party entitled to compensation may submit his claim, together with supporting evidences, directly to the insurer.

18. Duty to Satisfy Judgments

1. Where a judgment is rendered against an insured person in respect of any liability covered by a vehicle insurance policy, the insurer shall, notwithstanding that it may be entitled to avoid or cancel or may have avoided or cancelled the policy, pay to the judgment creditors any sum payable under the judgment including costs and interest.
2. The court that renders Judgment shall issue execution order accordingly.

PART FIVE
INSURANCE FUND

19. Establishment

An Insurance Fund (hereinafter the “Fund”) is hereby established as a permanent financial source to be deposited in a special bank account to be opened in the National Bank of Ethiopia.

20. Objectives of the Fund

1. to provide emergency medical treatment to any person injured by any vehicle accident; and
2. to provide compensation to a third party victim of an accident inflicted by uninsured or unidentified vehicle.

21. Organs of the Fund

1. a Board accountable to the Ministry; and
2. an autonomous Office having its own juridical personality.

22. Powers and Duties of the Ministry

1. follow up the overall activities of the Board with a view to implementing the objectives of this Proclamation and issue directives as may be necessary; and
2. evaluate, periodically, the performances of the Board.

23. Sources of the Fund

1. The Fund shall be drawn from the proceeds of insurance tariffs.
2. The rate of insurance tariffs to be collected as per the provisions of Sub-Article (1) of this Article shall be determined by the Government on the basis of studies conducted by the Board.

24. Disbursement

Disbursements of the fund to be made for purposes specified under Article 20 of this Proclamation shall be made in accordance with procedures established by the Board.

25. Members of the Board

1. The Board shall have members consisting of the concerned Government institutions and insurance companies.
2. Any member of the Board shall be removed from his membership if he fails to properly discharge his responsibilities.
3. The presence of more than half of the members of the Board constitutes a quorum.
4. The Board may adopt its own rules of procedures.

26. Compulsory Representation

Any insurance company shall have the obligation to be represented in the Fund’s Board.

27. Powers and Duties of the Board

1. administer the Fund, and submit annual reports to the Ministry on its activities;
2. issue directives to define the collection and disbursement procedures of the Fund;
3. investigate and give decisions regarding victims of vehicle accidents who could not get the proper compensation;
4. provide the necessary assistance to improve the quality of services of the Office of the Fund;
5. cause the accounts of the Fund to be audited and review the audit reports;
6. study on policy matters relating to vehicle insurance against third party risks and premium amount (payment of insurance coverage) and submit the same to the Government;
7. approve the budget of Office of the Fund.

28. Office of the Fund

1. The Office of the Fund shall be located in Addis Ababa and may have branch offices elsewhere as may be necessary.
2. The Office of the Fund shall have:
   1. a Director General to be by appointed by the Prime Minister’s Office upon the recommendation of the Ministry, and
   2. the necessary staff.

29. Powers and Duties of the Office of the Fund

1. undertake studies on the collection and disbursement of the Fund and implement the same upon approval by the Board;
2. Pay compensation to vehicle accident victims in accordance with Article 20 of this Proclamation;
3. collected data on deaths and bodily injuries caused by vehicle accidents;
4. where necessary and up on obtaining the approval of the Board, authorize one of the insurance companies to perform the activities of the Fund;
5. follow up and ensure the proper implementation of the decisions of the Board;
6. maintain the accounts and records of the Fund;
7. keep records of the meetings of the Board;
8. follow up the timely collection and deposit of the revenues of the Fund;
9. prepare and submit to the Board annual financial reports of the Fund;
10. prepare and distribute regular publications on the collections and disbursements of the Fund, vehicle insurance against third party risks, traffic safety and similar topics;
11. own property, enter into contracts, sue and be sued in its own name;
12. carry out other lawful activities as necessary to its function.

30. Powers and Duties of the Director General

1. The Director General shall, subject to the general directives of the Board, plan, direct and administer the activities of the Office.
2. Without prejudice to Sub-Article (1) of this Article, the Director General shall:
   1. exercise the powers and duties of the Office specified under Article 29 of this Proclamation;
   2. employ and administer the personnels of the Office in accordance with the relevant laws;
   3. prepare and submit to the Board the annual budget and work program of the Office and implement the same upon approval;
   4. effect expenditure in accordance with the approved budget and work program of the office;
   5. represent the Office in its dealings with third parties;
   6. prepare and submit to the Board the activity and financial reports of the Office;
   7. perform such other duties as may be given to him by the Board.
3. The Director General may delegate part of his powers and duties to the employees of the Office of the Fund to the extent necessary for the efficient performance of the activities of the Office; provided, however that prior approval by the Board shall be required in the case of an employee to act on behalf of the Director General for more than 30 days in the absence of the latter.

31. Budget

1. The budget of the Office of the Fund shall be allocated by the Government.
2. The fiscal year of the Fund shall commence on the first day of Hamle and shall end on 30th day of Sene.

32. Audit

The accounts of the Fund shall be audited annually by external auditors appointed by the Board.

PART SIX
MISCELLANEOUS PROVISIONS

33. Foreign Registered Vehicles

1. The driver of any foreign registered vehicle permitted to be driven on the roads of Ethiopia shall posses a valid certificate of insurance and insurance sticker or, where the insurance policy is not issued by a local insurance company, he shall produce a yellow card or an equivalent proof of insurance coverage.
2. The insurance coverage against third party risks with respect to an accident caused by any foreign registered vehicle while driven on the Ethiopian road shall not be less than the amount of compensation specified under Article 16of this Proclamation.

34. Emergency Medical Treatment

1. Any person who has sustained injury caused by a vehicle accident shall be entitled to emergency medical treatment costing up to Birr 1,000 whether he is a third party or not as defined under this Proclamation.
2. Any medical institution shall have the duty to provide emergency medical treatment to a victim of a vehicle accident when approached by such victim.
3. The medical institution shall be entitled to claim its fees for the medical treatment directly from the insurer or from the Fund as provided under Article 24 of this Proclamation.

35. Applicable Laws

The provisions of the Commercial Code and other laws pertaining to insurance shall, in so far as they are not inconsistent with this Proclamation, be applicable with respect to vehicle insurance against third party risks.

36. Power to Issue Regulations

The Council of Ministers may issue Regulations necessary for the proper implementation of this Proclamation.

37. Penalty

Unless otherwise a maximum penalty is incorporated in the Penal Code, any person who violates the provision of this Proclamation or Regulations issued pursuant to this Proclamation shall be punished with a fine from Birr 3,000 (three thousand) up to Birr 5,000 (Five thousand) or with imprisonment from one year up to two years.

38. Effective Date

This Proclamation shall enter into force up on Publication in the Federal Negarit Gazeta.

Addis Ababa this 9th day of January,2008.
GIRMA WOLDEGIORGIS
PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA