The Law Handbook 2024

Chapter 10.5: Motor vehicle accidents and insurance 965 • had an illegal blood-alcohol content ( BAC ); • was driving under the influence of intoxicating drugs; or • refused to undergo a breath test. Your insurance claim may also be unsuccessful if the damage was sustained while the vehicle: • was being used for racing; • was overloaded or in an unsafe or unroadworthy condition; • was being driven by an unlicensed driver; or • had been modified in any material way from the manufacturer’s specifications. Also, if you have not told the insurer: • the correct purchase price of the vehicle; • your full driving history; or • that any drivers of the vehicle are aged under 25, then your claim may be reduced or denied, or an extra cost may be charged. For more information about illegal BAC, driving under the influence of drugs, breath tests and unlicensed drivers, see Chapter 6.8: Driving offences. What to do when your motor vehicle is damaged Introduction If your property (e.g. your vehicle) is damaged in a motor vehicle accident, you must decide whether to: 1 make a claim through your insurer; 2 sue the other person involved in the accident for damages; or 3 pay your own costs. In order to decide which course of action will cost the least amount of money, it is necessary to consider all the alternatives. There are different considerations depending on whether you have comprehensive insurance, third-party insurance, or if you are uninsured. What to do when you have comprehensive insurance In deciding what to do about damage to your vehicle if you have comprehensive insurance, consider the following factors (explored in more detail below): • How much is your excess? • How much is your no-claim discount? • Can the other person pay? • How much will legal costs be? • Whose fault was the accident? • How much will it cost to repair your vehicle? • How much will it cost to repair the other person’s vehicle? How much is your excess? In an insurance policy, the ‘excess’ is the amount you (the insured) must pay when you make a claim and before an insurer will pay for any expenses. The insurer pays the difference between the excess and the amount of the expenses (e.g. if your excess is $500 and it will cost $750 to repair your vehicle, your insurance company will pay $250). Figures vary between insurers, but a normal excess is between $400 and $2000. It is possible to reduce the excess, or to remove it altogether, by paying a higher insurance premium. For example, you could pay a premium of $1100 and have no excess, or pay a premium of $800 and have an excess of $600. If you are under 25, your insurance policy will probably also include an additional ‘age excess’. Often, making a claim can result in your excess or premium increasing when your policy is due for renewal – make sure you ask your insurance company about this before making a claim. NOTE Before making a claim with your insurance company, compare the amount of your excess with the amount of the expenses relating to the accident (e.g. the repairs). It may be cheaper to not make a claim with your insurer. How much is your no-claim discount? When you first take out comprehensive insurance, you pay a basic rate premium. If you don’t make a claim for a year, then in the following year you receive a discount, in that you move to a lower rating and therefore pay less for the same insurance. If you have made a claim, then in the following year you move to a higher rating and pay more for the same insurance. The no-claim discount is often called a ‘no-claim bonus’. Insurance companies have different premiums and different ratings systems. The following table gives an example of how ratings affect premiums.