What happens when you have a car accident without insurance?

ALASDAIR DUNCAN
Car accidents can result in damage to your vehicle and to both other people and their vehicles, and if you happen to be at fault and do not have insurance, you may be wondering what happens next.

If you have had a car accident and damaged another person’s vehicle or property in the process, there are a number of potential factors to consider and questions you may have. In this article, we’ll answer:

Can I drive without insurance in Australia?

When you register your car, it is a requirement that you take out Compulsory Third Party (CTP) insurance. In most states, CTP is included in the cost of vehicle registration. In NSW, the process is slightly different. There, CTP is known as Green Slip insurance, and you are required to purchase it before registering your vehicle.

What does CTP insurance cover you for?

CTP protects drivers against compensation claims if they injure or kill someone in a road traffic accident. This is necessary, because the legal liability for deaths or injuries can be significant, and can stretch into millions of dollars.

CTP insurance does not cover drivers against damage caused to other people’s vehicles or property. For that, you will need to take out an additional form of insurance, such as third party property, third party fire and theft or comprehensive car insurance.

While these additional forms of insurance are not compulsory, they can protect you against claims if you damage someone else’s car in an accident. If you want to know more, Canstar has a summary of the types of car insurance and what they cover you for.

What happens if you are not insured and have an accident?

In general terms, the person who is responsible for a car accident is typically the one required to pick up the bill. If you are at fault in an accident and have no insurance other than CTP, then it is likely you may have to pay for any damages out of pocket.

The kinds of costs you may have to pay to the other driver could include the cost of repairing their vehicle, towing fees, the cost of a rental car while theirs is being replaced and the costs of replacing any damaged personal property.

What happens if the other driver makes a claim against you after a car accident?

If the other driver believes you are responsible for an accident and they have  third party property, third party fire and theft or comprehensive insurance, they may choose to make a claim against you for damage to their car or property.

If this happens, you may receive a letter of demand from their insurance provider asking you to pay for the damage. If you do receive such a letter, it could be worth seeking legal advice about whether you are fully or partially at fault, or not at fault at all.

According to Legal Aid Queensland, in the event you receive a letter of demand, you have the right to ask for evidence in the form of quotes or valuations of the amount of damage being claimed against you (called quantum).

According to Legal Aid Queensland, you may need legal advice following a car accident if:

  1. There is a dispute about who is at fault (liability) or the amount of damage (quantum).
  2. You are about to negotiate with the other driver or their insurance company.
  3. Both vehicles are damaged and you think the other driver may be partially at fault.
  4. You are going to court because an agreement cannot be met.
  5. There is a disagreement with a car insurer over your vehicle property damage claim.

Once you have all the information, Legal Aid Queensland recommends negotiating with the other driver or their insurance company and getting legal advice.

What happens if you and the other driver cannot reach an agreement?

If an agreement can’t be reached between you and the other driver, you and the other driver may have to go to court or a local tribunal. It’s also worth noting you may be able to make a counter claim against the other driver if there is damage to your car and the other driver is partially or fully responsible.

Once again, it may be worth pursuing legal advice if you may have a counter claim to make against the other driver.

What if you believe another party was at fault for the accident?

If you are not insured and are involved in an accident for which you believe another party was responsible, Legal Aid Queensland says that you can make a claim against them for damage to your vehicle or property. If you are in this situation, it may be worth pursuing legal advice to find out if you have a claim against the other driver.

If you are not insured but have been in an accident with a driver who was insured, and you believe that they caused damage to your vehicle or property, you can also make a complaint to the Australian Financial Complaints Authority (AFCA). You will be able to do this if:

  1. you are not at fault for the accident
  2. the damage is less than $15,000
  3. the other driver has made a claim on their insurance

What happens if neither party in a car accident has insurance?

If you have an accident and neither party involved has insurance that covers damage to their vehicle, then neither party will be able to make an insurance claim. You may be able to negotiate with the other driver to settle the necessary repair costs directly with them.  If you are in this situation, though, it may once again be worth pursuing legal advice to find out if you have a claim against the other driver.

Legal Aid NSW has a list of tips for drivers who have been involved in car crashes, and they recommend that directly after an accident you:

  • note down the contact details, licence and car registration details of all drivers involved
  • gather details from any witnesses
  • take notes about the circumstances of the accident
  • take photographs of any damage to vehicles and property
  • note details such as the time and place of the accident and traffic conditions in which it occurred
  • ask police for their name and contact details (if police attend the scene)

Legal Aid NSW also advises that if you believe the other driver was at fault for the accident, you may wish to negotiate with them about who was at fault, how much damage was done to your vehicle and property, and the amount to be paid, as well as the timeframe.

You may also want to send the other driver a letter of demand, stating how much money you would like them to pay for repairs and losses, as well as setting out a time frame for the payment.

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Where can you get free legal advice?

Legal Aid commissions offer free legal assistance services in criminal, family and civil law matters for eligible Australians. Each state and territory has its own Legal Aid body, and legal professionals can provide free information and referral services, as well as assistance over the telephone. The Australian Pro Bono Centre maintains a list of the Legal Aid services available in each state and territory. Community legal centres, which are independent and not-for-profit, also provide free legal support services to Australians across various areas, including credit and debt, and consumer law.

How do you get car insurance?

If you want to take out car insurance in order to be covered for damage to your vehicle and property and other people’s too, you can start by comparing insurance with Canstar. Each year, Canstar’s Star Ratings and Awards recognise the products that offer potential savings for consumers, with our latest results revealing you could potentially save hundreds by switching to an Award-winning car insurer.

Original story by Ellie McLachlan, with additional reporting by Alasdair Duncan.

Cover image source: Monkey Business Images/Shutterstock.com.

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