The Law Handbook 2024

968 Section 10: Accidents, insurance and compensation fault, can be identified and was uninsured, third- party property insurance will cover the cost of the repairs to the insured person’s vehicle, although only to a capped amount. Damages, claims and court Settling out of court Many claims for damages arising from vehicle accidents never get to court. Settling a claim before a complaint or summons is issued, or before a court hearing, reduces legal costs. Also, court hearings are unpredictable and a case can be won or lost for many reasons. For example, the outcome of a case can be due to the evidence of independent witnesses, or the credibility of each of the parties. If you are making a total loss claim and there is an insurance company on the other side, you may find that they offer to pay you less than you are claiming. However, they will sometimes pay more than stated in their first offer. You should be prepared to produce evidence of the condition and market value of your vehicle to support your claim (see ‘Damages’, below). What to do if you receive a letter of demand If a driver decides to sue another driver for damages after a vehicle accident, the driver or vehicle owner or their insurance company will send a letter of demand to the other driver. This letter states that unless certain costs are paid, a complaint or summons to appear in court will be issued. Such letters should not be ignored. If you receive a letter of demand, you can: • deny liability (perhaps indicating why a claim against you would fail); • threaten to counter-sue for your own damages; or • question (without accepting any responsibility) the amount of damages claimed; or • negotiate a settlement. If you believe that the accident was not entirely your fault, a settlement proposal can be made by estimating what a court’s decision would be, and calculating a settlement offer accordingly. You should seek legal assistance to do this (see Chapter 2.4: Legal services that can help). What to do if you cannot afford to pay If you receive a letter of demand from another driver or from an insurance company, and you cannot afford to immediately pay all the costs outlined in the letter, you can offer to pay in instalments. The other driver or insurance company is not obliged to accept payment in instalments. An offer to pay in instalments, indicating what you can afford to pay, should be in writing. The offer should be accompanied by documentary evidence of your financial position (e.g. a copy of your Centrelink statement) and a statement that if the offer is refused, a copy of the letter will be produced in court when the question of costs arises. Sometimes people (particularly insurance companies) accept less than the full amount – provided it is paid immediately in cash – rather than waiting for the full amount to be paid in instalments. If you are experiencing financial hardship and are having difficulty repaying an amount owed to an insurance company due to a vehicle accident, you may ask the insurance company to assess whether you are entitled to assistance. Under the General Insurance Code of Practice (see Chapter 10.4: Insurance), the insurance company must supply you with an application form for financial hardship assistance and contact details for the national financial counselling hotline (tel: 1800 007 007). The insurance company may request reasonable evidence of your financial hardship, such as: • Centrelink statements (if applicable); • evidence of a serious illness that prevents you from earning an income; • evidence of unemployment or disability, including mental illness. The insurer can only request information from you that is reasonably necessary to assess your application. If you request financial hardship assistance in relation to any amount sought fromyou, the insurance company is required to contact their debt collection agent and put on hold any recovery action in relation to the amount you owe, until it has assessed your request and notified you of its decision. If the insurance company decides that you are not entitled to financial hardship assistance, it must