not-at-fault

The truth about Not At Fault claims

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

 

Happy Touring

 

Comments 24

  1. Alan Johnston

    In the past I have lodged an accident report only in case I have needed to use my own policy (had to use once).
    Is this still available as a backstop or just report it if third party reneges.

    1. Post
      Author
      Kalen

      yes definitely. Actually i forgot to mention i do always get a police report done myself – its a 5 minute process and it means it’s lodged. Good call Alan

      Kalen

  2. Peter Flavel

    Hi Kalen, Just a small tip to all. Every body owns a mobile phone these days. In the unfortunate occasion you are involved in an accident use it to quickly photograph the persons license, his vehicle registration number, damage to his vehicle, damage to your vehicle. If safe to do so photograph the accident scene. All takes just a few minutes instead of painstakingly writing everything down. cheers, Peter

    1. Post
      Author
      Kalen

      Peter,

      A great tip! In this day and age technology can be a hindrance and pain, but there’s no doubt it’s a fantastic tool for things like this.

      Thanks so much and hope you’re well down there in South Australia!

      Kalen

  3. John M

    Not long ago my wife was involved in an accident she was not at fault. She went through her own insurer. The result, the policy was paid out less the unexpired registration and the policy was cancelled.0

    I would understand that if we followed the advice above and made the claim on the guilty party’s insurance, we would at least have an insurance policy to transfer to a new car, the only issue would then be the payout based on the “market value” of the car.

    1. Post
      Author
      Kalen

      Each insurer is different, but given your wife claimed on her own insurance, that will be noted as a “not at fault” claim and will be a mark against her on a central register. This mark may need to be disclosed depending on the underwriting criteria of other insurers and may see her premium be higher than if she had worked with the at-fault party’s insurer directly.

  4. Peter

    Food for thought. If you use the third party insurer once you sign for the the completed repairs paperwork that’s it. No warranty on the repair job. Claim a no fault through your ensurer normally means a life time warranty on the repairs.

    1. Post
      Author
      Kalen

      Yes, good point Peter,

      If you still choose to go through the 3rd party, you can select a repairer who warrants the work though.

      Cheers

  5. Peter Hanson

    This is an interesting article that seems to convey to the 4×4 insured not at fault driver to avoid using your insurance company to handle these type of claims! This brings a number of questions for me and I am sure 4×4 insurance clients to ponder : 1st why would a driver of an insured vehicle want to keep any previous history of not at fault accident repairs to your vehicle away from your insurer at any stage by using the above method of approach. 2nd if you are confident your insurance company will cover you properly for any not at fault claim why would you not use them if they have a lifetime warranty on vehicle repairs carried out under their approval as I hope is the case with 4×4 insurance. If the excess on a no fault claim is all we are trying to avoid this seems like a convoluted way of trying to achieve this. I sincerely hope this will not pave the way any claims I might make and handled as I have only recently moved my coverage over to 4×4 insurance as I tend to be loyal to any company I deal with until I feel the product does not live up to claims or expectations and then I will NEVER use that company again. I am sure this is not the case with 4×4 insurance but will monitor customer comments on their experiences and make my decision to re-insure my vehicles in twelve months time. I have been driving for over forty years and have never made a claim or accident in my many vehicles owned over this period.

    1. Post
      Author
      Kalen

      Peter,

      You always, always have the option to come to Club 4X4 and have us take care of the whole thing for you. The article isn’t designed to deflect, rather inform, of the following.

      1) When you lodge a claim, whether you’re at fault or not it is registered as a claim on your record; with your insurer and in a central register that all insurers have access to. This means that depending on the underwriting criteria of the insurer, your premium may in fact go up in the following year even though you were not at fault.
      2) Different insurers have differing underwriting criteria, where they may ask for the number of claims you have made. Flowing from the above, you will need to list the at-fault AND not-at-fault claims you have lodged. This puts further strain on premium in the same way it would at renewal time depending on your insurer.

      These are realities that many people don’t know about. We just wanted to bring them to the fore and be transparent and educative.

      Hope that helps to clarify the intent of the article

      Kalen

      1. Peter Hanson

        Hello Kalen, thankyou for replying and I understand what you are stating so if a customer has a number of no fault claims listed against his or her name and because of this the factors applied by insurance companies across the board the annual premium for this customer will rise. Then it is the insurance industry as a whole that needs a kick up the bum and change this inequity. Anyone can understand that an insured driver making claims for at fault accidents should have their annual premiums increase accordingly especially if this maybe the same driver that has smashed into the rear of you car at the traffic lights. But in essence you are indicating the poor soul that has the back of his car punched in should also be penalized for being in that position in the first place, hardly a fair system used in the insurance industry and this needs to change so we all need to start lobbying!

  6. Greg

    So if I make a no fault claim and you can’t recover costs from third party I still pay the excess with 4×4?

    Reading the pds you will also discount wear condition on things like tyres?

    Looking to reinsure in next week and considering 4×4.

    1. Post
      Author
      Kalen

      Hi Greg,

      If you do decide to claim with us – you pay the excess and we take care of the whole thing for you – including repair of your vehicle. We then aim to recover from the Third Party, or their insurer.

      Tyres are a consumable and aren’t actually covered by us in a claimable event, nor will they be with any insurer we know of (if you find one please let us know!)

      Give us a call on 1800 CLUB 4X4 (258 249) to get a quote and more information!

      Kalen

  7. Peter B

    Interesting article. This is the first time in probably over ten years that our family have had to make a motor vehicle insurance claim. In the space of 6 months two of our vehicles have been run into. So, both them were treated as “no-fault claims”. Independently my wife and I both asked would claims effect our no claims bonus. In both cases, the answer was NO. We have just purchased another 4×4 and have insured it with Club 4×4. Same question was asked – firstly do we have to notify of a no-fault claim (yes) and secondly will it effect our no claims. Answer was no it does not. I guess it is a technical point, but one I would like to have clarified especially in relation to Club 4×4. So, the effect isn’t on our no claims but it does effect the premium separately? In other words your premium is going up its just you technically will have no change to how the no claims bonus is applied?

    1. Post
      Author
      Kalen

      Hi Peter,

      You are 100% correct in your understanding of the situation.

      When developing the product we decided to depart from the concept of a “no claims bonus”. There were a few reasons but most notably because when we surveyed the market we found that achieving a maximum no claim bonus was readily available from most insurers and almost used as a hook to sell. Also, we found that the premiums were not discounted to the % that the achieved No Claim Bonus quoted.

      We decided to ask the questions around claims history and apply our own criteria around discounting relevant to each individual’s history. As a result, claims that have been lodged, be it with us or your previous insurer, whether at fault or not are considered underwriting criteria and will make a difference to your premium. Obviously a not at fault claim doesn’t carry the same weighting as an at-fault one, but it is a factor nonetheless.

      The point of the article is to bring light to this fact, as we aren’t the only ones who do it. Many other insurers do but don’t explain i; you may simply get an increase at renewal driving you to either rationalise it as an increase or shop around.

      We would rather be honest and explain it and your option to mitigate it.

      Cheers

      Kalen

  8. Steven Gerhardy

    Thanks Kalen. Insurance is all a bit of an unfathomable black box to most of us so some info about one part of it is very useful.

    If as you say all claims are “noted on a central claims register that all insurers participate in and use”, then why do insurers ask us to list past claims when we are getting a quote and why do they go on about full disclosure as being so important? Surely the register would be a more reliable source of claims history than relying on people’s honesty or memory.

    Also, even if I don’t involve my insurer and the third party’s insurer pays for my repairs, won’t that insurer add that claim to the central register? So the fact that I had a not at fault incident will still become known to my insurer (and any others I seek quotes from) if they consult the central register.

    Another area that could do with some explanation is around windscreen claims, particularly chips or cracks from stones thrown up by passing traffic. They are the only claims I’ve made for decades but when getting a quote I often don’t know whether to declare these or not. Are chips/cracks from flying stones considered to be an “at fault” or not at fault incident? Also when getting quotes on-line the options for describing past claims often don’t include windscreen replacement. To include it under “Other” which could cover anything up to a total write-off without having the chance to say it was just a windscreen claim would surely result in the risk and cost of future claims being overstated (and hence higher premiums).

    But again, if windscreen claims are recorded on a central register maybe I shouldn’t worry. Or should I?

    Steven

    1. Post
      Author
      Kalen

      The stance we’ve tried to take is to make it more understandable Steven, so thanks for the further questions!

      So the registry is available yes, but the process of checking at quote time would mean a significant delay in getting a premium – it does take a day or so to get reports through. Web quotes for example wouldn’t be possible as there is not provision to pull the data automatically. Where an insurer chooses to use it is at claims time to make sure the information on the policy matches – which is why full disclosure is so important.

      Regarding the third party insurer lodging your interaction with them; that in fact is not a claim. A claim is when you ask your insurer to act on your behalf, asking your policy to respond. In the THird Party insurers case, the claim will be the one lodged by their own insured. So if you don’t ask your policy to respond it wont be logged.

      Windscreen claims are in fact claims on your policy, so in the process of getting a quote you should always divulge all claims you have made. If you prefer to do quotes online, make sure you read the question asked very carefully, sometimes it will say “at fault claims only” other times it may say “all claims including not at fault”.

      My general rule of thumb is divulge everything you think may be necessary, that way there is no chance of surprises down the track!

      Hope that helps

      Kal

  9. Darryl Newling

    Hi,

    As stated above claims are registered on a central register that all insurers use.

    Why do insurance company’s ask customers to recall past claims?

    Surely in today’s technology this shouldn’t be to difficult to access at the time of quote/renewal.

    Why not list previous claims on policies? Would help my memory. Now where did I put that policy?

    Can past claims history be accessed by customers?

    Regards
    Darryl

    1. Post
      Author
  10. Alec CAUGHEY

    Before changing to 4 X 4 insurance I would want to read reviews from persons who have made claims, given the large volume of very bad reviews to 4 X 4 parent company Holland Insurance

  11. Rob

    Both the article and many comments refer to photographing the other driver’s licence. As an insurer you should well know that the only details you need to provide another driver after an accident are your name and address. You don’t have to produce your licence and you have no right to demand the other driver show you theirs.

    Many people will become aggressive or defensive if you demand it, perhaps worried about identity theft. There is no telling how they may react if you try and photograph it! In fact, if you provide a photograph of someone’s licence to your insurer and they accept it, they may commit an offence under the Privacy Act.

    Name and address is all you are required to give or entitled to demand, although you may do more if you wish.

    1. Post
      Author
      Kalen

      We disagree Rob. How do you know that the other person doesn’t give you fake credentials?

      The way we recommend it is to be open and give them your license first, this usually spurs the same response. Also, always get the registration number and make and model of the vehicle, if all else fails this is a way to identify the person (unless it’s a stolen car or it’s been borrowed – the drivers details are even more important in this case).

      If you find yourself in a situation where the other party is becoming aggressive then call the police (which you should do whenever any of the cars is no-driveable anyway).

      Remember, if you cannot identify the person who is at fault, the claim will be lodged as if you are at fault – much like an animal strike or a single vehicle accident.

  12. John Barry

    I had an accident years ago when a drunk driver collected me on the left and tried to escape but lost control and hit a lamppost. He was charged by the police, not for being drunk but on 9 other accounts,
    I reported accident to my insurers making form in red at top ” accident report only”.
    All costs were settled by insurance, but when I received the renewal I found it was 4 times what it was before the accident.
    On questioning the insurance company ( at their counter) I was informed it was a knock for knock agreement, at which I demanded to see the manager and after a heated debate was able to get them to look in the accident report showing the endorsement . Still no luck but when I stated that their knock for knock arrangement was an inter insurance company arrangement and was not to involve the insured, they relented and reduced the premium to previous years amount.
    Then they asked if I was prepared to pay for renewable, I said no and walked over road to another company. So beware they are deviates

    1. Post
      Author
      Kalen

      There you go Barry, this is the sort of thing we are trying to clarify and bring to the fore. Now in your case you chose to go through your insurer (a good decision based on the circumstances!) and you found that at renewal your premium went up. In your case it was immediately evident that your premiums went up, in many it might be just a little increase, i wonder how many people don’t notice and just pay?

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