Making a claim on your car insurance
This factsheet is for information only. It is recommended that you get legal advice about your situation.
You may also want to try our Motor vehicle accident problem solver
Anthony had a comprehensive car insurance policy on his brand new V8 car. Three months after getting his new car he has an accident. He believes the other side is at fault.
TO CLAIM OR NOT TO CLAIM?
Before claiming you need to think about whether you should claim at all. Making a claim on your insurance can affect:
- Your ability to get insurance later
- The cost of future premiums
- Your no claim bonus
You may also have to pay an “excess”. The excess is the amount of money you agree to pay in the event of a claim. In the event of an accident (rather than theft), the excess payable may vary according to who was driving the vehicle at the time. Check your policy for details.
You should also consider what benefits you have under your policy:
- are you insured for market value or agreed value (see further below)
- do you get a hire car
- do you have a replacement car benefit
Other factors to consider include:
- Is it certain you are not at fault?
- Is the other party insured or not, and how easy would it be for you to recover your losses?
WARNING: If you choose not to claim, you may have difficulty lodging a claim through your own insurer later. Most policies give your insurer the right to deal with the driver or owner at fault themselves, if you have interfered with or prejudiced their ability to do this, your insurer may reduce or reject your claim.
When to consider not claiming:
- Where there is very minor damage and the cost of repairing the total damage is less, equal to or just over the amount of the excess.
- If you are not at fault and the at-fault party is insured and admits liability, you can consider not claiming on your policy but pursuing the at-fault party instead.
REMEMBER: The damage includes not only repairing or replacing your car, but may also include the repair or replacement of any other vehicle or property damaged in the incident, depending on who is considered to be at fault (or partially at fault). There may also be other costs such as hire car expenses, towing, or lost wages or profits.
WARNING: You may still need to tell your insurer about the accident when your policy comes up for renewal or if you are applying for a new policy. Your certificate of insurance, and each renewal certificate sets out the information the insurer is relying on in giving you insurance for the next year. You have a duty of disclosure to make sure this information is accurate and up to date each year. Otherwise your insurer may cancel your policy as though it never existed and refuse your claim if they later discover they never would have insured you.
CAN I CLAIM ON THE OTHER DRIVER’S INSURANCE?
You cannot “claim” on the other driver’s insurance in the same way as your own insurance. It is not your insurance policy that the claim falls under. Neither you or the other driver’s insurer have any obligations towards each other.
For the other driver’s insurer to be involved, the other driver needs to lodge a claim and pay their excess. The only exception to this is if the other driver has passed away or cannot be found after reasonable attempts. You cannot force the other driver to claim if they do not want to.
Once a claim is lodged, the driver’s insurer stands in the shoes of their customer. They may be willing to negotiate with you, but they do not have to.
They may ask you to give them access to inspect your car or to use their repairer or hire car company. You have the right to refuse and to use your own repairers, but you do need to be very careful to act reasonably and minimise the amount you want to recover, otherwise you may end up out of pocket. If you cannot reach an agreement with the other driver’s insurer, you may need to pursue them in court. Court is risky, and you should get legal advice before considering proceedings.
CAN I DECIDE NOT TO CLAIM AND GO TO COURT?
Yes you can but this can be risky. You may not be able to recover all of your legal costs, even if you win. You may lose, and then you would be liable for your own costs as well as the other party’s costs.
If you try and go back to your own insurer after you lose, or incurred unnecessary costs, your insurer is very likely to reject your claim, or at least reduce it by any extra costs that could have been avoided had you claimed earlier. This is because you have denied your insurer their right to handle the matter as they see best, and they can reduce or reject your claim depending on what prejudice they suffer.
WHAT IF I ONLY HAVE THIRD PARTY PROPERTY INSURANCE?
You may claim on this type of policy if there is any damage to any other car or property. If there is damage to your vehicle, you will need to pay for the repairs yourself. If you believe that someone else caused, or partially caused the accident you may be able to recover your costs from them or their insurance company.
If you are uninsured or only have third party insurance, and need help dealing with someone else’s insurer – see our factsheet here: Fact Sheet: I’ve had a car accident and I’m uninsured!
UNINSURED MOTORIST EXTENSION
Your third party property policy may entitle you to claim up to $3000 (or $5000) for damage to your car. The policy may include a benefit called uninsured motorist’s extension (UME). You can claim if the other driver was at fault, uninsured and you can identify the driver of that car. It is not easy to claim this benefit and if your claim is refused you should seek legal advice. See Fact Sheet: I’ve had a car accident and I’m uninsured!
The remainder of this fact sheet applies where you are lodging a claim through your own insurer. If you are uninsured see our I’ve had a car accident and I’m uninsured! factsheet.
HOW TO MAKE A CLAIM
Ring the insurer and ask for a claim form.
Many insurers now process claims over the phone (If English is a second language you may be safer to claim over the counter.) Your conversation may also be recorded by the insurer.
If possible, get a claim form so you have time to think about what happened so you can describe it clearly.
IMPORTANT: If the insurer tells you over the phone that you cannot claim or your claim will be rejected, this may not be right. YOU MIGHT STILL HAVE A CLAIM YOU CAN PURSUE. GET ADVICE.
DO I NEED TO PAY AN EXCESS?
See our factsheet: Why do I have to pay my excess? Or multiple excesses?
IMPORTANT: Do not drop your claim because you can’t pay the excess. The insurer cannot refuse your claim just because you cannot pay the excess up front. Remember, even if the damage to your vehicle is minimal, there may be other damage arising from the incident that you may have to pay if your claim is not approved.
WHAT TO DO WHEN YOU ARE IN INSURANCE CLAIM LIMBO
See our factsheet here: Help! My insurance claim is taking forever!
If you feel like you are being asked for too much information or documents, or you are being investigated – see our factsheet here: What can I do if I am being investigated on an insurance claim.
WHAT CAN I DO IF MY INSURANCE CLAIM IS REFUSED?
If your claim has been refused read the Fact Sheet – What can I do if my car insurance claim is refused? If your claim is approved, read on.
MY CLAIM IS ACCEPTED BUT I’M NOT HAPPY WITH WHAT THE INSURER IS OFFERING
Most policies will give your insurer has the right to choose to:
- repair the car
- pay you to do the repairs or
- write-off the car (either for the sum insured or replacement value)
Some policies may give you the right to choose your own repairer, but you need to be careful about the limitations – the insurer may be able to decide on how repairs are done, or have rights to make adjustments to your repairer’s quote. You should also read the paragraphs below about the difference between your insurer doing repairs and you doing the repairs.
Your insurer does have an obligation to act in the utmost good faith (ie. fairly and reasonably). This means your insurer cannot insist on repairing your car if it cannot be done safely to its previous condition. You may need to obtain your own expert mechanical evidence about this, to refute any evidence from the insurer that the car is safe to repair. You should also check your State’s roads and traffic authority and laws as these may also set requirements for when a car must be written off.
If there are no safety concerns but you have a preference on whether the car should be repaired or written off, you can still try to negotiate with your insurer. However you need to be reasonable and not expect the insurer to pay the sum insured for a total loss if the car can be repaired.
WHAT HAPPENS IF THE INSURER DOES THE REPAIRS
The General Insurance Code of Practice at s.7.20, provides that if your insurer chooses and authorises the repairer, your insurer is responsible for the quality of the workmanship and materials. The insurer must also handle any complaint about the timeliness of the work or conduct of the repairer as part of their complaints handling process.
So, if the repairs are faulty or incomplete then the insurer is responsible for fixing this.
Your policy may also give you additional rights eg. “lifetime guarantees” for repairs.
It is recommended that you arrange for the insurer’s repairer to fix your car, because the insurer is responsible for making sure the repairs are reasonable quality.
If there are problems with repairs your insurer performed, see our factsheet here: Problems with the quality of repairs arranged by the insurer
WHAT HAPPENS IF THE INSURER GIVES ME THE MONEY TO DO THE REPAIRS
The insurer has no further involvement and takes no responsibility for the repairs.
It will be up to you to find an appropriate repairer, and you will need to deal with any issues that come up between you and your repairer.
Before accepting money for repairs, you must get your own quotes and be satisfied it is enough for you to do the repairs properly.
If your insurer is not offering you enough, or only agreeing to pay some of your claim – see our factsheet here: What can I do if my insurer agrees to pay some, but not all of my claim?
WHAT HAPPENS WHEN A CAR IS WRITTEN OFF
There are two reasons a car will be written off:
- the vehicle can’t be registered again because the vehicle is so badly damaged it would be unsafe to repair it(sometimes called a ‘statutory write-off’);
- the vehicle can be repaired but the insurer considers the cost of repairing the vehicle uneconomical to repair (sometimes called a ‘repairable write-off’).
The insurer has a legal obligation to notify your state’s roads and traffic authority to record this on their register of written-off vehicle.
You need to be very careful if you want to repair a car that has been declared a repairable write-off. There will be additional requirements and costs for you to meet before the car can be reregistered. You should check these requirements before you start repairs, otherwise you may find out later on that you cannot re-register the car.
If the car is a write-off then the insurer will either:
- take the damaged car, and pay you the sum insured; or
- give you the option of keeping the damaged car but only pay you the value of the car less its salvage value.
See our factsheet: Your Vehicle has been Written Off.
AGREED VALUE OR MARKET VALUE?
The amount the insurer will pay you depends on whether you have insured your car for an agreed value or a market value. Some policies provide a new for old replacement car if certain conditions are met.
Agreed value is where you and the insurer have agreed in the policy about what you will be paid if the car is a total loss. For example, if you and the insurer agree that the car is worth $20,000 and then the car is a total loss, the insurer will pay you $20,000 (but see box below).
The agreed value will usually reduce automatically upon renewal of your policy because it is assumed that your car will depreciate (go down in value) over time. It will be difficult to dispute the agreed value (because you didn’t actually “agree”) at the time you make a claim if you have not raised this with the insurer upon receiving your renewal notice. If you think you have been treated unfairly, get advice.
The market value is what your car was worth if you sold it just before the accident. It will normally be less than the purchase price as your car loses value over time as you use it. For example, if you bought your car for $20,000 and two years later the car is a total loss, the market value may only be $15,000 or less.
It can be very difficult to work out the market value of a car.
If you dispute the market value given to your car, get evidence. For example, obtain an independent valuation, find advertisements for comparable cars, or check www.redbook.com.au, glasses guide, or SMH Drive.
IMPORTANT: The insurer can also make some deductions from your payout for your excess, the rest of the year’s premiums, any unused registration and CTP insurance, and may keep the wreck of your car (or deduct the salvage value of the wreck if they let you keep it). For more information, see our factsheet here: My car has been written off by my insurer – what deductions can my insurer make from my payout?
NEED SOME MORE HELP?
See our Getting help fact sheet for a list of additional resources.
If you found this helpful and have further questions, why not try our Motor vehicle accident problem solver.
Last updated: October 2019.