How do car insurance claims work?

If you are unfortunate enough to be involved in a car accident, then you may well be wondering – how do car insurance claims work, and what are you covered for?

What is a car insurance claim?

A car insurance claim is a claim that you make to your car insurance provider when you have suffered damage or loss that you believe is covered by your insurance policy. After receiving your claim, your insurance provider will assess it, and depending on the kind of policy you have and the outcome of their decision, you may receive a financial payout.

How do you claim on your car insurance?

When making a car insurance claim, there are a number of steps you may wish to follow to make the process run efficiently. The main things to keep in mind are:

1. Gather information about the accident

If you are involved in an accident with another car, then it is important to gather as much information as you can from the other driver, including their contact details (name, phone number, address), drivers licence (take a photo of both sides of the licence) and insurance information, and the make, model and colour of their car.

It is also important to note details such as the location and time of day of the accident, a description of what happened, a police report number (if you have one), details of any tow truck company that may have attended, and contact details of anyone who may have witnessed the accident.

2. Check your policy details to find out what you can claim for

Once you have recorded the details of the accident, it is important to check the details of your car insurance policy to find out what you’re covered for. There are several different types of car insurance in Australia, with different levels of cover.

Some policies only cover for third party property damage, which means you are only covered for damage to another person’s car, while some comprehensive car insurance policies can cover damage to your car as well as the other person’s.

It is important to check your policy details and product disclosure statement (PDS), to find out what you can claim for, and if there are any exclusions to your cover.

3. Check and see if you are required to pay an excess

Generally speaking, before claiming on your car insurance, you will be required to pay an excess, which is an amount that you pay yourself before your coverage kicks in. This is the case with car insurance claims, whether or not you are at fault for the accident.

In some situations, your insurance provider may waive the excess, but this is at their discretion, and if you want to know more, it is best to contact them directly.

4. Lodge your car insurance claim

Depending on your car insurance provider, there are a number of possible ways you could lodge your claim, ranging from their app to an online portal to over the phone or in person. Once this is done, your insurer will begin the process of assessing the claim, and determining who the at-fault driver is.

If you are thinking about making a claim on your car insurance, then it is ideal to contact your insurance provider as quickly as possible. There are two important reasons for this – one, because some insurance policies may have a time limit to claim, and two, because you may have benefits to help you out in the immediate aftermath of an accident, like access to a hire car or emergency accommodation.

How are car insurance claims assessed?

Once you have made a claim on your car insurance, your insurance provider will have 10 business days to respond to it, per the rules set out in the General Insurance Code of Practice. Once your claim is submitted, there are two general possibilities:

• If no further investigation or information is required, your insurance provider must decide to accept or deny your claim within this 10 business day period.
• If further information or investigation is required, then your insurance provider must contact you to notify you of what further information they need, and whether they will appoint a loss assessor or adjustor to investigate your claim. They must also provide an estimate of the time frame required to make their decision.

If your claim is in the process of being assessed and you request an update, your insurance provider is required to respond to your request within 10 business days. Your insurance provider is required to update you on the status of your claim every 20 business days, until a decision is made.

What happens once your claim is accepted?

Depending on your insurance provider and the level of cover you have, a number of things could potentially happen after claiming on your car insurance. It could be that your car is a write-off, in which case you may receive a financial payout or a replacement vehicle, depending on the terms of your policy, as long as you have an appropriate level of insurance.

If your vehicle is repairable, then generally, depending on your insurer, you may be connected with an authorised repairer, who will then conduct the necessary repairs, with your insurance provider paying the cost.

What can you do if your car insurance claim is rejected?

If you feel that your car insurance provider has rejected your claim unfairly, you may be able to settle the matter by making a complaint to the car insurance ombudsman. The Australian Financial Complaints Authority (AFCA) handles complaints by individuals against car insurers, and if you have attempted and failed to negotiate a resolution with your car insurance provider, you may be able to raise a complaint with this body.

Decisions by the ombudsman are binding, and if your complaint is successful, the AFCA can compel your insurance provider to pay your claim, amongst other powers. If your insurance provider does not comply with this decision, then they will be reported to the Australian Securities and Investment Commission (ASIC).

What can you do if you are in a car accident without insurance?

If you have had a car accident and damaged another person’s car or injured them in the process, there are a number of factors to consider. In all states and territories of Australia, it is a requirement that you take out compulsory third party (CTP) insurance when registering your car, to cover for compensation claims if you injure or kill someone when driving, but it may be that this is your only insurance.

Canstar has a guide to some of your options if you have a car accident without insurance, but in basic terms, the person responsible for a car accident is typically the one required to pay, so you may need to come to an arrangement to pay the other driver out of pocket if you are at fault for an accident. Legal Aid Queensland has more information about some of your options in this situation.

Cover image source: ViDI Studio/Shutterstock.com