I’ve had a car accident and I’m uninsured!
Case Study
Joe owned an old Holden. He was driving to visit a mate when he had an accident. He had been driving along happily listening to music when he suddenly saw a car appear in front of him. He could not stop in time and ran straight into the car in front. He exchanged details with the other driver.
Joe didn’t have any insurance; he had only registered the car and paid the green slip.
Joe has now received a demand for $5300 from BIG INSURANCE COMPANY for the accident. Joe is really annoyed. There is no way he can pay the money, as he is unemployed.
If you have had a car accident also look at the brochure from Legal Aid NSW “Have you crashed your car? What to do about property damage.” Found at www.legalaid.nsw.gov.au
Also see Getting Help below for more information.
Who is at fault?
Generally, any driver who does not take reasonable care is at fault. This can sometimes mean both drivers are at fault. You need to work out whether:
- You are at fault (and can be made to pay for any damage you caused)
- You are not at fault
- You and the other driver are both at fault (and can be made to pay for any damage you caused to the extent you were at fault – for example if you contributed 50/50 to the accident you can only be made to pay for 50% of the damage, and can claim 50% of the cost of repairs to your car).Remember that the value of the cars will determine the outcome of an apportionment of liability i.e. if your car is not worth as much as the other car you may still lose, for example, you hit 2007 BMW in your 1994 Ford laser. The damage to your Laser is assessed at $2,600 and the damage to the BMW at $12,500. 50% of $ 12,500 = $6,250;50% of $ 2,600 = $1,300. Therefore you owe $6,250-1,300 = $4950, in addition to paying to get your own car fixed!
You can ring Law Access on 1300 888 529 for further assistance.
If you are not at fault or only partly at fault
You will need to make a claim or part claim on the other driver and/or owner of the other car.
This will usually involve:
1. Sending a letter of demand and
2. Commencing a claim in Court (if the demand is not paid) OR
3. Making a claim in the General Insurance Division of the Financial Ombudsman Service (FOS) if:
(i) You are not at fault
(ii) The damage is less than $3000
(iii) The other driver is insured (and claims on their insurance) (See below for more information)
As you will usually be claiming against an insurance company always get advice as insurance companies can be very intimidating. Also remember that if the case goes to Court it is unlikely that a legal centre or Legal Aid will represent you. The insurance company will be represented and will seek legal costs if they win the case. It may be worth trying to reach agreement with the insurance company rather than going to court.
Getting help with a claim
1. Ring Law Access 1300 888 529
2. Make an appointment to see your Local Court Chamber Registrar
3. Check the brochure “Have you crashed you car?” at www.legalaid.nsw.gov.au
Making a claim in FOS
If the other party is at fault, the damage is under $3000 (or you are prepared to accept this amount) and the party at fault is insured you can make a claim in FOS. As it is free, it is recommended that you do make a claim through FOS if you can.
You can make a claim in FOS by ringing 1300 780 808 or going to the website at www.fos.org.au
If you are at fault
You need to pay the reasonable costs of repairing the damage to the other car. As soon as you receive a claim you need to act promptly. The usual process is:
1. You receive a letter of demand
2. A debt collector may also contact you
3. You may receive a Statement of Claim from the Court.
4. If you do not file a defence to the Statement of Claim the other driver the plaintiff), or their insurance company, will get judgement against you automatically (usually after 28 days).
5. Once it has judgement the insurer can use Court powers to get you to pay, for example, garnisheeing your wages, seizing property and/or making you bankrupt.
Ideally, you want to make an arrangement to pay when you receive a letter of demand so you can avoid Court action against you.
I have received the letter of demand, what do I do now?
If you agree you owe it and the amount claimed seems reasonable, then you have two options:
Option 1 – Pay the amount claimed
If you can pay the amount claimed then this is the quickest way to resolve the letter of demand.
If an insurance company is pursuing the money then it will often negotiate a discount if you can pay straight away. It is worth trying to offer less as a lump sum or offer to pay the full amount by instalments.
If the insurance company agrees to a lesser amount you should confirm this in writing.
Sample Letter
Date
Insurance company
Address
Re: Accident on __ / __ / __
I refer to your letter dated __ / __ / __.
I also refer to our telephone conversation on __ / __ / __.
In that telephone conversation you agree to accept $??? in full and final settlement of your claim.
I confirm that I will pay the amount of $??? to you by __ / __ / __.
I confirm that once I have paid this amount I have no further liability to you.
Option 2 – Make a repayment arrangement
If you cannot afford to pay the amount claimed all at once you will need to negotiate a repayment arrangement. Under Clause 3.11 of the General Insurance Code of Practice the Insurance Company must offer you the opportunity to pay the debt by instalments if you are in financial hardship. Do not make a repayment arrangement you cannot afford!
To try to make a repayment arrangement use the following letter:
Sample Letter
Date
Insurance Company
Address
Re: Accident on __ / __ / __
Your ref: _____
I refer to your letter dated __ / __ / __.
I am in financial difficulty due to: (numbered indented list)
(a) being currently unemployed or recently unemployed
(b) illness (give details)
(c) family breakdown
(d) drop in income (give details)
(e) ongoing financial difficulty due to other outstanding debts
(Choose all that apply)
I refer you to Section 3.11 of the General Insurance Code of Practice.
I wish to make a repayment arrangement of $___ per month till the debt is repaid.
If further information is required please let me know.
I assume that you will not take any further action while you are considering my request for a repayment arrangement. If this assumption is not correct please advise me in writing immediately.
If the repayment arrangement you are requesting is going to be difficult to afford and/or take a long time to repay (say over 3 years) get advice before offering the repayment arrangement. If you are on a low income such as Centrelink payments, get advice before you enter into any repayment arrangement. See below under the heading “What if I cannot afford to repay the debt claimed at all?”.
You should also consider seeing a free financial counsellor for assistance with making a repayment arrangement. Phone 1800 007 007 for a referral to your nearest free financial counsellor.
What if they don’t agree?
Persist in trying to negotiate! Also get advice!
If the debt collector or the insurer unreasonably refuses your request you can ask for the repayment arrangement to be reviewed through the Internal Dispute Resolution process at the Insurance Company. If that request is refused you can also complain to:
Code Compliance – General Insurance
Financial Ombudsman Service
GPO Box 3
Melbourne VIC 3001
Ph: 1300 780 808
This will often help with getting a repayment arrangement.
What if I cannot afford to repay the debt claimed at all?
Get advice from a financial counsellor or legal service. It may also be possible to get the debt waived by the insurance company if you are ill and/or in extreme financial difficulty. Try the sample letter below:
Sample Letter
Date
Insurance company
Address
Re: Accident on __ / __ / __
I refer to your letter dated __ / __ / __.
I am in serious financial hardship.
My sole source of income is Centrelink benefits.
I cannot afford to pay the amount claimed because I have the following ongoing expenses: [give brief details].
I also want you to consider the following:
[details of any illnesses or anything else affecting your ability to repay] (if applicable).
I refer to sections 3.10 and 3.12 of the General Insurance Code of Practice which deal with financial hardship.
Victoria only: I am aware that I am protected by Section 12 of the Judgment Debt Recovery Act (VIC).
South Australia only: I am aware that section 5 of the Enforcement of Judgments Act 1991 prevents any order which would impose unreasonable obligations on a judgment debtor.
I assume you will not take any further action while I am waiting for your response to my request. If this is not correct please advise me in writing immediately.
If you do not get a response or your request is rejected you could try the next sample letter:
Sample Letter
Date
Insurance company
Address
Re: Accident on __ / __ / __
I refer to my letter dated __ / __ / __.
I contend that your failure to respond to my letter/rejection of my request means we have failed to reach an agreement within the terms of section 3.12 of the General Insurance Code of Practice.
As no agreement has been reached, I request that our dispute be referred to your Internal Dispute Resolution Department within 14 days of the date of this letter.
I assume you will not take any further action while I am waiting for your response to my request. If this is not correct please advise me in writing immediately.
If the above letter does not resolve the matter, you can try the next letter:
Sample Letter
Date
Code Compliance Manager – General Insurance
Financial Ombudsman Service
GPO Box 3
Melbourne VIC 3001
RE: General Insurance Code of Practice (the Code)
Conduct of [insurance company]
I wish to complain about the conduct of [insurance company]. I believe that [insurance company] has failed to comply with sections 3.12, 6.2 and 6.6 of the Code because the insurer failed to respond to the dispute within 15 days as required by clause 6.6 of the Code.
Please investigate the alleged breach of the Code.
Attach copies of your previous correspondence with the insurer, and details of any phone conversations, including if possible the date, the name of the person you spoke to the what was said to the best of your recollection.
What if I think the amount being claimed is unreasonable?
Be realistic. Remember fixing cars does cost! Also remember that the insurance company will also want to minimise the cost of repairs. If you still think the amount being claimed is unreasonable send a letter in reply:
Sample Letter
Date
Insurance company
Address
Re: Accident on __ / __ / __
I refer to your letter dated __ / __ / __.
I wish to dispute the amount being claimed as it appears to be excessive.
Please provide a copy of the repair invoice detailing the repairs made.
I assume you will not take any further action while I am waiting for the requested further information. I also assume that I will have 14 days to review the invoice once it has been provided. If this assumption is not correct please advise me in writing immediately.
When you get a reply, review the further information carefully. If you still believe it is excessive then you need to say why and provide evidence, if possible (e.g. another quote). You may want to request that the amount of repairs be reviewed by the Internal Dispute Resolution process at the Insurance company – but remember that as an uninsured driver the insurance company does not have to agree to this process.
REMEMBER: If you are arguing that the amount claimed is too much, this means you still owe some of it. Be prepared to pay, or start paying, the amount you know you owe.
What if I get a Statement of Claim?
Ring The Insurance Law Service on 1300 663 464 for advice.
Need some more help? See Getting Help for a list of additional resources.
