Car Insurance and Paying for that Ding
Compulsory Third Party (CTP)
CTP, is a must as you will not be able to register your vehicle until you have a receipt confirming payment of that insurance. You can chose whichever insurance company you like to provide this insurance to you – but you must have CTP insurance to register a vehicle in NSW. In NSW, we call this type of insurance “Green Slip” insurance.
What it covers: CTP protects you against claims for compensation if you hurt or kill someone in a motor vehicle accident. The insurance covers any person driving the vehicle. So if you are driving with a passenger in your vehicle, and hit another vehicle, and the person driving that vehicle and your passenger are injured, they may be able to claim against your CTP insurer for their injuries.
What it doesn’t cover: CTP does not insure against the cost of repairs to any vehicles or property. CTP is strictly to cover injuries to people only.
It is the cheapest form of cover. However, having only CTP insurance leaves you at significant financial risk. That is because if you damage a vehicle or other property belonging to someone else, CTP cover will not insure you against that damage.
Third Party Property
This is the most basic form of optional insurance cover. It is optional – meaning that you do not need to have this type of insurance to drive on the road or register your vehicle. You can choose who to insure through, and you should investigate the scope of the cover and the cost of the cover when thinking about which insurer to choose. Third party property insurance will ensure that you will not become bankrupt or have to pay off debt if you cause an accident and run into someone’s prized car, boat or caravan.
What it covers: Third Party Property covers damage caused by your car to other people’s property – their car, boat, caravan, trailer etc. It will also cover your legal costs.
What it doesn’t cover: Third party property doesn’t cover the cost of any repairs or replacement of your own car, except under some very limited situations and only through some insurers. You should read the product disclosure statement from your insurer to check the scope of your insurance.
Third Party Property, Fire and Theft
If you can’t afford to pay too much for your insurance, but do want some level of protection for your own car, Third Party Property, Fire and Theft insurance is the next option. Again, this type of cover is optional – meaning that you do not need to have this type of insurance to drive on the road or register your vehicle. You can choose to insure with any insurer that you wish – but remember to check the terms and cost of insurance.
What it covers: In addition to covering damage to the property of others, Third Party Property, Fire and Theft insurance also provides some limited cover for your own car in the event that it’s damaged or lost due to fire or theft. You should read the product disclosure statement from your insurer to check the scope of your insurance.
What it doesn’t cover: This insurance doesn’t cover the cost of repairs to your vehicle if it is involved in a traffic accident.
What are the chances of your car being stolen?
According to the National Motor Vehicle Theft Reduction Council, a vehicle is stolen every ten minutes in Australia.
Comprehensive Car Insurance
This is the ‘top-level insurance cover option’ and will give you the greatest peace of mind and insurance cover – but it’s also the most expensive insurance available.
What it covers: It covers everything mentioned in the previous insurance options above and also covers accidental damage to your own vehicle, no matter who is at fault – even if you caused the accident. Usually insurance companies offer a range of optional extras, including replacement vehicles and no-excess windscreen replacement.
What it doesn’t cover: Even comprehensive insurance has limitations. This type of cover generally will not cover damage caused by someone else driving your car, unless they are authorised by you to do so. It also will not cover damage caused if the driver was over the legal alcohol limit or affected by drugs. Additionally your car must be roadworthy and the driver must hold a valid driver’s license at the time of the accident, otherwise your insurance will not cover you for the damage.
I've had an accident- what do I do?
At the scene of the accident:
Get the other driver’s details. All drivers must provide their name, contact details, and licence and car registration numbers to the other driver. If you get the registration number, you can find out the details of the car owner through the NSW Road and Maritime Service.
Get details from any witnesses. Ask witnesses for their names, addresses and phone numbers, and also a brief description of what they saw. If you can, write it down and get the witness to sign the note.
Take notes about what happened before, during and after the accident and any damage to property.
Take a photograph on your camera or mobile phone (eg. of skidmarks or debris on the road, damage to vehicles, road and weather conditions, road markings or signs) and draw a diagram of the accident scene.
Take a note of the time of the accident, place, street lighting, traffic conditions, weather and anything else you think may have had some influence on the cause of the accident.
If police attend they should speak to each driver and witnesses. They might issue an infringement notice. Ask the Police officers for their name and contact details and the event number of the incident. Usually, Police carry cards that record these details which they will give to you. Later, if you need to, you can get a copy of the police report. You can get a copy of the police report by filling in a form available from Police, and paying a fee.
All serious accidents should be reported to the police immediately – usually a serious accident is one where a person is injured, or where there is serious damage to vehicles. For a minor accident call the Police Assistance Line within 24 hours on 131 444.
You should be given an event number by Police that will assist you in obtaining a Police Report or speaking to your insurer.
Start collecting evidence:
If you did not get information at the scene of the accident, you should collect all information as soon after the accident as is possible.
Get the event number for the accident from Police.
Ask witnesses to write a statement about what they saw and if possible have that Statement witnessed by a Justice of the Peace.
Draw a diagram of the accident and take photographs of the damage to your car.
You will also need to get quotes for damage to your vehicle. If you are insured, you should contact your insurer, who will usually direct you to their authorised repairer to start the process of arranging for quotations for the repair of your vehicle.
Paying for damage
If you are insured, you should contact your insurer immediately. Before you call, you should know the registration number of your vehicle, and it is useful (but not necessary) to have your Insurance Policy Number (see your insurance certificate). Most insurers provide a claims processing service over the phone. Some other insurers require you to fill in and sign a claim form for processing of the claim. You should ask the insurer for your claim number.
If you are not insured, and not at fault, you should write a letter of demand to the other driver.
You might also receive a letter of demand from the driver or insurer of the other vehicle. If you receive this, you should respond to it, and if you are insured appropriately (have third party property, fire and theft or comprehensive insurance) you should immediately send the letter of demand on to the insurer of your vehicle.
You have 6 years from the date of the accident to claim for damage to your property, or for someone to claim for damage to their property against you in a court. You should try to resolve the problem by negotiation before taking court action, but you must take action in a court to recover your damage within that time period, otherwise you might lose forever your right to claim for the loss that you have suffered. Most property damage usually falls within the jurisdiction of the Local Court, and some may be able to be dealt with as a small claim.
Other things to know about your insurance
It is up to you whether you lodge a claim on your insurance policy. You can decide to pay the damage yourself without lodging a claim on your insurance if you wish. If you make a claim, you might have to pay an excess if you were the driver or owner of the vehicle at fault in the accident, and you also you might lose your no-claim bonus (which usually affects the cost of your insurance for a period of time).
If you wish to claim against your insurance, you must discuss the accident with your insurer before you admit liability or try to negotiate with the other party. If you fail to do so, you might find that your insurer will not insure you for the damage.
That is because it is a usual term of your insurance that you must not admit any responsibility for the accident or the damage caused.
Financial Ombudsman Service (FOS)
If your insurance claim is rejected by your insurer, or the insurer delays in making a decision about your claim, you can lodge a dispute with the Financial Ombudsman Service (FOS).
If the insurer says something like: ‘you can’t make a claim under this policy’, this is actually a rejection of your claim. If that happens, ask the insurer to put their position in writing and also think about lodging a dispute with FOS.
You have two years from the final rejection letter of the insurer, or six years from the date you first became aware of your loss (whichever is the earlier) to lodge a dispute with FOS.
If you unsure about anything that your insurer is saying or doing, it is best to lodge your dispute with FOS.
What are the types of car insurance?
In Summary: What's Covered?
Disclaimer: This information is a general guide to the law. It should not be relied on as legal advice. If you have a specific legal problem you should consult a lawyer.
It applies to people who live in, or are affected by, the law as it applies in NSW, Australia. The information contained in this publication is current at 1 January 2014.