Damages, claims and 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).
-
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;
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 2.3: Legal services that can help).
-
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; or
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 from you, 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 advise you of the reasons for its decision and provide information about its complaints process.
If the insurance company decides that you are entitled to financial hardship assistance, it must work with you to set-up an arrangement that could include:
extending the due date for repayment;
paying in instalments;
paying a reduced lump-sum amount;
postponing one or more instalment payments for an agreed period; or
a combination of the above options.
You may also ask for a release, discharge or waiver of the debt or obligation; however, you are not automatically entitled to this.
If you are unable to reach an agreement, the insurance company is required to provide details of its complaints process.
If the insurance company decides that you are not entitled to financial hardship assistance and your circumstances change, you can make another request for assistance. While assessing your second request, it is at the insurance company’s discretion whether it again puts any debt recovery action on hold.
If you disagree with an insurer’s decision in relation to financial hardship, you may request a review through the insurer’s internal dispute resolution process. If you are still dissatisfied with the outcome you can lodge a complaint against the insurer with the Australian Financial Complaints Authority (AFCA) (https://www.afca.org.au/make-a-complaint).
-
A release is a document signed by parties that ends legal action. The party who began the legal action agrees to withdraw their claim, usually in exchange for a payment by the other party. In a release, a party accepts an amount of money as full settlement of a matter and agrees that they cannot take any further legal action about the matter. When claims are settled out of court, it is normal for the insurance company or person who is paying the settlement to require the other party to sign a release.
You should be careful when signing a release for a claim for property damage. Make sure that the release does not prevent you from making a claim for personal injuries suffered in the accident. It is wise to only sign a release after any reference to a claim for personal injuries is deleted. To delete such text, cross it out and write your initials next to the crossed-out text.
-
‘Liability’ means legal responsibility. ‘Negligence’ is an act that breaches a duty to take reasonable care and results in loss or damage to another person.
In deciding which person’s negligence caused an accident, evidence can be given by the drivers involved in the accident, and by their passengers who saw or heard anything relevant. However, the best evidence is that of independent witnesses, who were not involved in the accident. For example, people in other vehicles or pedestrians may have seen the accident or something relevant to it. Remember, if you are making a claim, you must prove that the other person was negligent.
It is necessary to distinguish between a ‘complaint or summons claiming damages’ and a ‘summons to answer a charge of committing an offence’. For example, if the police charge a person with failing to give way, and that person is found guilty, it does not necessarily mean that the accident occurred solely because of that driver’s negligence. If you wish to sue that person for damages, it is possible that the court may still find you to be partly at fault (e.g. by travelling too fast, or not keeping a proper lookout).
In the same way, the fact that a person complied with all traffic regulations does not mean they are not in any way to blame for an accident, since it is often necessary to take more care than just obeying the road rules.
-
You must keep your loss as small as possible, and you must prove that the damages claimed were caused by the accident. First, obtain a detailed quote for the cost of repairing your vehicle. It is best to get at least two quotes. If you only get one quote, you must show that the single quote is reasonable, and the repairs cannot be done more cheaply elsewhere.
If your vehicle is so badly damaged that it will cost more to repair than the vehicle was worth before the accident, the vehicle is a ‘write-off’. In this situation, evidence must be obtained of what the vehicle’s market value was at the time of the accident. You cannot claim the replacement value of the vehicle, which may be higher. Your claim will be for the pre-accident market value less the value of the wreck (often called the ‘salvage’ amount).
-
Some vehicles (e.g. a taxi) may be essential for their owners to earn an income. If the owner cannot work while the vehicle is being repaired, they can claim lost wages. In some cases, another vehicle may be hired and the hire cost claimed. However, you must show that hiring another vehicle was essential, and that there was not a cheaper method (e.g. using public transport). It can be difficult to recover the cost of hiring another vehicle, so keep hire charges moderate.
If you are selling your vehicle at the time of the accident, make sure you obtain quotes for repairing the damage before selling the vehicle. If the vehicle is a total loss, obtain a loss assessor’s report before selling the vehicle; remember to deduct any salvage value from the market value of the vehicle.
In either case, it is advisable to have the vehicle assessed by a loss assessor so that, if necessary, you can prove the amount your vehicle depreciated as a result of the accident.
Damages, claims and court
Chapter: 10.5: Motor vehicle accidents and insurance
Contributor: Adrian Snodgrass, Principal Lawyer, ASA Law
Current as of: 1 September 2024
Law Handbook Page: 871
Next Section: What to do after a motor vehicle accident
