Comprehensive Car Insurance
If a vehicle is covered by a comprehensive insurance policy, it is generally best to let the insurer handle the claim. The person can decide not to claim on their insurance, and instead handle their own claim (see below). Either way, they should be aware of the following factors.
Advantages of Claiming
A major benefit gained by immediately making a claim on an insurance policy, is that the vehicle involved will be repaired with a minimum of delay. Furthermore, some insurers still permit an insured to keep their no-claim discount (even if they have made a claim) if the accident was not their fault and the insurance company, after processing their claim, was able to recover the damages from the party responsible. In these circumstances, the insurance company will normally try to get back all or part of the insured’s excess from the other driver. If the person does make a claim on their insurance policy, their insurance company can commence an action against the other driver in their name. This is known as ‘subrogation’. In such a case, the insurance company will pay all the costs of the action. If the insurance company recovers more in damages than it paid to the insured person, it will generally give them the balance (after deducting its legal costs).
Excess on a Policy
The ‘excess’ is an amount stated in an insurance policy as payable by the person themselves when they claim on the policy. The excess varies with insurance companies, the age of the driver, and the insured’s driving history. The standard excess is around $500. So, if a claim is for $600, your will pay $500 and your insurer will pay $100. All insurers insist on a special excess for drivers under 25 and for them it may be an additional $500. If a person has had a previous claim, the excess may be increased. The insured should find out their excess before making a claim. It is possible to pay an extra premium to remove all or part of the excess.
In calculating the amount of premium a person will pay each year on their comprehensive policy, insurers have adopted a principle of rewarding owners who have not made claims on their policy. If an insured makes no claim during each year of the insurance, the insurance company will normally, at the time of the renewal, adjust the rate of premium so that they are paying less than the previous year (though general increases in rates may off-set this). Conversely, if they have made a claim during the previous year, they will have to pay more. It is therefore advisable, before making a claim on an insurance company, to find out from them the effect it will have on the no-claim discount. The no-claim discount is generally worked out as a percentage of the standard (or basic) premium. You should consult your insurance company about their no-claim discounts.
Third Party Property
Where a person has third party property insurance, the main thing to remember is that their policy covers them for damage to the other party’s property, so there is nothing to stop them suing for their own damages and, if the other party counter-claims, having that claim defended by their insurance company. They must of course, notify their insurance company of the accident and of any claim made against them. However if a person sues for their own damages, they must consider very carefully the amount of their damages compared with legal costs and other factors.