So we have all had a situation where our property has been damaged in a collision that was not our fault. Once the initial shock turns into disappointment that your pride and joy has been tainted, what happens next?
Most people’s first reaction is to call their insurer, this is an understandable. You pay your insurance premiums so that everything can be taken care of for you, right?
But what happens when you lodge a claim with your own insurer for an incident where you’re not at fault? This seems to be one of those areas of uncertainty, it’s not a dark art really – it just takes someone to call it out and run through it. So read on.
When you lodge a claim with your insurer, whether you’re at fault or not, you are calling on your policy to respond for you. This involves various administrative activities, from the conversation with a claims handler on the phone, through to repairs and completion of the claim. All of these activities come at a cost for your insurer, but are a contracted obligation and promise that your insurer makes to you when you enter into the insurance contract. Stay with me, don’t fall asleep yet!
Now in any business, a cost has to be paid for. In the insurance business, the costs associated with a claim are covered in the following ways:
- By calculating and charging a premium which considers the potential risk posed by the “insured”. This is everything that’s got to do with the person who is applying for insurance and forms part of what we call underwriting criteria. These are manifested in the form of questions for the quote. As we’ve mentioned before, it’s your duty to answer these questions honestly and completely, as they’re what determine pricing and whether coverage is offered to you at all.
- The above premium is invested. Obviously, the premium you pay wont cover the costs of any claims you may need to make, so investing helps to bolster the pool of funds available to payout claims, but it still doesn’t cover the whole cost. Insurance is a community funding scheme, where sometimes the premium i pay will go towards funding your claim.
- When you lodge a claim an excess is charged. This goes towards the cost of the claim, be it the administrative activity or the actual payment towards yours or third party repairs
- If your not at fault, a recovery is attempted from the Third Party or their insurer for the costs of repairing your vehicle. These often won’t be a complete recovery for our costs, this is just the nature of the insurance industry. This is an even higher risk for a company like Club 4X4, because we do offer choice of repairer and cover your modifications and accessories, something that no other insurer in Australia does as comprehensively as we do.
So why does all this matter to you? Well let’s go back to the concept called out earlier; by lodging a claim with your insurer where you’re not at fault, you are asking that policy to respond to your need, and it will. Generally at this stage an excess will be charged, which may be refundable if and when a recovery is made.
Further to this, your claim will be noted on a central claims register that all insurers participate in and use. Yes, it will be noted as a not-at-fault claim, but it will be noted nonetheless. This becomes critical when you apply for insurance in the future. Many insurers will ask you about your claims history, whether it be at fault or not at fault, glass of theft. When you go to answer this question, you MUST note this not-at-fault claim. With some insurers this will make a difference to your premium, to others it wont. Scarily, with some you wont ever know.
We are upfront about this and call out that Not-At-Fault claims are part of our underwriting criteria and will result in premiums being higher. So what you decide to do when you’ve had an incident that’s not you fault becomes all the more important.
What’s the option you ask? Well in my own personal experience, i have always ensured i’ve collected the following from the third party at the scene of the accident.
- Full name and address off their license (or better yet in this day and age you can take a photo of their license)
- The registration number of the vehicle
- Year, Make and model of the vehicle
- Who they’re insured with – if at all
I then take my vehicle directly to my own repairer. He quotes the work and arranges an assessment from the third party’s insurer, then the vehicle gets repaired! This has always been my preferred method as it’s simpler. I don’t have to deal with an insurer, i just get the car fixed.
Now this might not always be the case. Some people wont have insurance; unless you can strike a deal with them then you’ll need to lodge a claim and your insurer will deal with it. In some cases the third party’s insurer will deny liability, again, this is a case where you lodge with your own insurer and they will fight it for you. Other complications may include the Third Party insurer not wanting the vehicle repaired at your chosen repairer. My advice, go directly to their Internal Dispute Resolution (IDR) process, move through that quickly then get onto the Financial Services Ombudsman – it will rarely get past IDR.
So it’s not always clear cut, but my opinion is you always try the simple option first and keep it away from your own policy. At the end of the day if you need it, your policy will always respond and take care of you but as noted above, sometimes there will be consequences.
Hopefully this helps to clarify the grey out there on this topic