The Law Handbook 2024

966 Section 10: Accidents, insurance and compensation An example of how an insurance company’s ratings affect its premiums Rating Premium 1 $400 2 $480 3 $590 4 $740 5 $920 6 $980 Some insurance companies will still give you a no- claim discount even if you have made a claim – if the accident was not your fault and if your insurance company can recover the cost of repairing your vehicle from the other person involved in the accident. Also, some insurance companies, if they do receive money from the other driver, will refund part or all of your excess. You may also be able to pay a higher premium to protect your no-claim bonus in case you have an accident that is your fault. Can the other person pay? If the other driver has no insurance, consider whether they will be able to pay if you successfully sue them. It is pointless to pay legal costs only to discover that the other person does not have money to pay you. How much will legal costs be? Legal costs are relevant if you decide to sue the other driver for damages. The costs vary according to how much you are claiming the other driver owes you – the higher the claim, the higher the legal costs. Claims under $10000 are classified as small claims. They are dealt with by an informal process known as arbitration, where there is a limit on the legal costs the losing party can be ordered to pay. If you employ a lawyer and you win, you will be responsible for your legal costs that exceed the amount ordered to be paid by the other party. Also, be aware that if you lose, you will be responsible for paying your legal costs and the legal costs of the other party, and the cost of fixing the damaged vehicle. Before starting proceedings to sue another driver, seek free legal advice from a community legal centre (see Chapter 2.4: Legal services that can help). Whose fault was the accident? In some cases (e.g. if your vehicle was hit when parked), it is easy to show that you are entirely blameless. However, in many cases, both parties are to blame for an accident occurring. A court can decide to apportion blame (e.g. each party is 50 per cent to blame). In deciding whether to sue the other driver or whether to settle out of court, you should estimate how the court might apportion blame. Effect of sharing the blame For example, imagine that you and another driver collide; both vehicles need repairs costing $3000 each. You sue the other driver for $3000 and the other driver counter-sues you for the same amount. The case goes to court; your recoverable legal costs are $1200. If you win, and the court finds you are not to blame at all, you will be awarded $3000 damages and $1200 costs. Your solicitor charges you $1500, so you will receive $2700. If the magistrate finds that you are 20 per cent at fault and the other driver 80 per cent at fault, you will receive 80 per cent of your claim ($2400), plus legal costs ($1200) – so you will receive $3600. The other driver will receive 20 per cent of their claim ($600), plus legal costs ($1200) – so they will receive $1800. When the amount the other driver receives is set off against the amount that you receive, less your own lawyer’s costs, you are left with only $300, and you still have to pay for your vehicle to be repaired. How much will it cost to repair your vehicle? Before you decide whether or not to make a claim through your insurance company, you should compare the cost of repairing your vehicle to the amount of your excess, plus the higher premium that you are likely to pay the following year. Also, before you decide to sue the other driver (without making a claim through your insurer), you should compare the cost of repairing your vehicle to the cost of taking the other driver to court. How much will it cost to repair the other person’s vehicle? If the cost to repair the other driver’s vehicle is substantially more than the cost of repairing your vehicle, it is not cost effective to seek to recover your