Motor vehicle accidents and your insurance

Yeah… I crashed into them, but they were insured so it’s fine!

Not necessarily!

The nature of motor vehicle insurance is something that is often misconceived by those who have been unfortunate enough to be involved in an accident where they were primarily at fault – and did not have comprehensive or third party insurance coverage.

In such a situation, you must remember that although a third party who has suffered damage may have comprehensive insurance coverage, this will not release you from liability. The general principles of negligence still apply.

The nature of motor vehicle insurance contracts

The two common forms of motor vehicle insurance are ‘Comprehensive’ and ‘Third Party’. Let’s take a look at what those terms mean. 

Comprehensive cover will generally cover the loss or damage suffered to your insured vehicle, in addition to the liability to third parties for property damage arising out of the prescribed use of the vehicle insured.

You should also note that the above policies do not cover personal injury. This is instead covered by your Compulsory Third Party insurance which you pay upon registration of your vehicle.

Well, if they have been covered by their insurer, why are they still suing me?

A confusing aspect of insurance contracts is the right of subrogation that is commonly included into most policies. 

Subrogation basically means that the insurer will become entitled to exercise the rights of the insured in relation to the subject matter of the insurance contract. 

That’s why claims in relation to damage arising out of a motor vehicle accident, where the party whom suffered loss was insured, will be commenced in the insured’s name, even though it is the insurance company that is actually commencing the action to recover the loss suffered.

What happens first, and how should I approach an insurance dispute?

Generally, these matters commence with a demand made by the insurer in relation to the damage caused as a result of the accident. As above, given these matters ultimately concern negligence, whether you are liable will be dependent on an objective assessment of all circumstances. 

For example, even though you may primarily be at fault, contributing factors may have the effect of minimising the loss recoverable. If there is a sound argument for contributory negligence on behalf of the plaintiff, it may be the case that the costs of litigating the matter would likely outweigh the damages recoverable.

For this reason, the majority of claims are settled between the parties outside of court.

Need advice with a motor vehicle accident where you’re at fault?

If you need assistance or advice with respect to a motor vehicle accident causing property damage, call the experienced Litigation Law team at McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form here.

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