Understanding Car Insurance Claims in Australia

Car in a glass jar

The Australian car insurance market is a competitive landscape with over 63 companies competing for car insurance claims. Of these 63 companies, the market is dominated by Allianz, IAG, Suncorp & QBE, who as of 2020 had a combined market share of 56.3%.

Our aim with this car insurance claim guide is to help you better understand the different types of car insurance, what exactly a car insurance claim is, when you should make a claim, the time constraints associated with making car insurance claims, what is involved with the entire car insurance claim process from start to finish, how making a claim affects you and how to best navigate and manage the process. 

By the end of this guide, you’ll be a car insurance claim expert! If you have any specific questions, you can skip to that section, by clicking one of the jump links below:

  1. Types of Car Insurance
  2. What is a Car Insurance Claim?
  3. How to Claim Car Insurance
  4. How Long Does a Car Insurance Claim Take
  5. Financial Aspects of Car Insurance Claims
  6. Navigating Complex Claim Situations
  7. Conclusion

Deciding when to make a car insurance claim depends on the specifics of an accident and the potential implications.

If you’re at fault in a significant accident, filing a claim is generally wise. However, for minor damages, weigh the costs against deductible amounts and potential premium hikes. You might be better off paying out of your own money and not making an insurance claim for small accidents, especially if another party isn’t involved.

We recommend seeking legal advice for any incident, even minor ones like damaging a wall or power line. Legal counsel can clarify your liabilities and guide your decision on whether to make a claim or not.

However, if you believe you’re not at fault, you have a legal right to be restored to your pre-accident state at no cost to you and do not need to make an insurance claim. 

Check your eligibility here to see if Right2Drive can help provide you with a like-for-like accident replacement vehicle for the entire duration of the repair or until you receive the settlement payment in the case of a total loss.

Types of Car Insurance

It’s important to understand the different types of car insurance and what level of coverage each of them provide.

The four types of car insurance are:

  • CTP insurance.
  • Third-party property insurance.
  • Third-party fire and theft insurance.
  • Comprehensive insurance.
car insurance form

Below is a quick visual aid to help you get a quick overview of what is covered by each type of car insurance. Please note that this table is not comprehensive and there are other features and benefits associated with each level of car insurance coverage specific to the policy you choose – please refer to each insurer’s Product Disclosure Statement for a comprehensive list of details.

Type of InsuranceCoverageWhat It Doesn’t Cover
CTP Insurance (Compulsory Third Party)– Covers injuries to other people caused by an accident you’re responsible for.– Damage to your car or other people’s property.  – Injuries to you.
Third-Party Property Insurance– Damage to other people’s cars or property.  – Legal costs for damage caused by your car.– Damage to your own car.  – Theft of your car. – Fire damage to your car.
Third-Party Fire and Theft Insurance– Damage to other people’s cars or property.  – Your car if it’s stolen or damaged by fire.– Injuries to you or others. – Damage to your car from an at-fault accident.
Comprehensive Insurance– Damage to your car and other people’s property. – Theft and fire. – Natural disasters.  – Vandalism.– Some policies might not cover damage caused by wear and tear, or if you were driving under the influence.

What is Comprehensive Car Insurance?

Comprehensive car insurance provides the greatest level of coverage across the widest range of events. It covers your car and those of the other parties involved, regardless of who is the responsible party.

This level of coverage generally has the highest premiums but protects you significantly from out-of-pocket expenses in the event of an accident.

What is Third Party Fire and Theft Insurance?

Third Party Fire and Theft insurance protects against damages you inflict on others’ property and vehicles while on the road. Generally, with most providers, there is an option to extend the coverage so it shields your car from theft, vandalism, intentional harm, and fire damage.

Depending on your chosen policy andcar insurance provider, you may also receive coverage for a rental car in the event of theft and damages caused by an uninsured motorist.

What is Third Party Property Damage insurance?

Third Party Property Damage car insurance provides coverage for damages you inflict on other vehicles and properties, excluding your car.

What is Compulsory Third Party insurance?

As the name suggests, Compulsory Third Party Insurance is a legal obligation for all cars in Australia. In all states except New South Wales where it is purchased separately, it is a part of your registration.

In certain states like Queensland, New South Wales, the ACT, and South Australia, drivers can select their CTP insurer during the registration process. However, in places like the Northern Territory, only a single option is available. It’s important to understand that CTP doesn’t provide coverage for personal injuries you sustain.

InformationDetails
CompulsoryAll states
Included in RegistrationAll states except NSW
Choice of CTP ProviderAll states except NT where only one option

What is a Car Insurance Claim?

A car insurance claim is a request formally made by the policyholder to their car insurance company to claim compensation from them as per their car insurance policy and coverage level.

Once the claim has been made, the insurance provider will assess it and provide an outcome dependent on the agreed policy and the evidence provided during the claim process.

In the event of more complicated claims, an Insurance Assessor may be required to provide additional expertise to assess the validity of a claim, the extent of loss and the resulting level of compensation.

Car on table

Is There a Time Limit on Car Insurance Claims?

Most insurers do not have a strict time limit for lodging property damage claims under Comprehensive car insurance policies. However, time limits can apply for lodging claims under Compulsory Third Party (CTP) insurance – these limits vary depending on the state.Please refer to each insurer’s Product Disclosure Statement for a comprehensive list of details.

State/RegionClaim DurationSpecial ConditionsCTP ProvidersAdditional Tools/Info
NSW3 monthsBack pay entitlement if claimed within 28 daysAAMI, Allianz, GIO, NRMA, QBE, YouiCTP Connect tool by SIRA
Vic12 monthsExceptions up to 3 years with TAC approvalTAC (No-fault scheme)N/A
Qld9 months1 month if managed by a solicitorAllianz, QBE, RACQ, SuncorpMAIC’s online tool
SA6 monthsClaim ASAP if vehicle unidentified/unregisteredAAMI, Allianz, QBE, SGICEzyReg tool
WA3 yearsClaim ASAP after crashInsurance Commission of Western AustraliaN/A
Tas12 monthsComplete ‘Application for Benefits’ (Form B)MAIBN/A
NT6 monthsClaim ASAP after accidentMACC & TIO (No-fault scheme)N/A
ACT13 weeksClear explanation if delayedAAMI, Apia, GIO, NRMAAccess Canberra & Service NSW websites

Consequences of missing the deadline

If for one reason or another, you miss a car insurance claim deadline you will likely face short-term and long-term consequences.

The most likely and immediate is a claim denial. Almost all policies specify the period in which a valid claim can be lodged and claims made outside the fixed time window could be denied. 

In the unlikely event that your claim is accepted, a potential long-term consequence could be increased premiums due to the perceived increased risk,

If a claim is denied you could become liable for out-of-pocket expenses relating to the incident. Depending on the set of circumstances, this could be of significant monetary value.

Further to this point, if you are found to be the at fault party, the not at fault party may decide to legally enforce compensation, resulting in legal fees which can significantly increase the out-of-pocket expense.

There are of course other potential ramifications from missing the claim deadlines but there are too many to cover in this article. 

How to Claim Car Insurance

The process of making a car insurance claim can be lengthy and complicated. You must understand exactly what will be required of you and what you can expect from the process.

Initial steps:

  • Gathering Evidence: This is the most critical step in almost all claims. Collecting photographic or video evidence of the damage to your vehicle, any other vehicles involved, and the scene of the accident is paramount to a successful and fair claim outcome. 

You should also collect the personal information of the other drivers involved including their insurance information, driver’s licence, licence plate number and contact info.

We have a detailed blog explaining in thorough detail exactly what information needs to be collected after a car accident.

  • Reporting the Incident: Once you have collected the initial evidence you need to report the incident to your insurance provider as soon as possible. This usually involves calling a dedicated claims number provided by the insurer.
  • Include Police Reports and Witness Statements if necessary: If the police attended the scene of the accident then there was likely a police report made. This report can be a crucial piece of evidence, as it provides an objective and impartial report of the incident.
  • Getting to Grips with Your Policy’s Terms and Conditions: Before submitting a claim, it’s essential to get a thorough understanding of your insurance policy. This will prepare you for the claim process and set expectations for what costs might be covered.

Once you have contacted the insurance provider:

  • Assigning a Claims Adjuster: Once the claim is filed, the insurance company usually assigns a claims adjuster, also known as a claims assessor, to investigate the incident. The adjuster will review the evidence, assess the level of damage, and determine the appropriate claim amount based on the policy’s terms.
  • Estimation and Repairs: It is likely you will be asked to get a dollar estimate for the total amount of damage relating to your vehicle. Depending on your policy, you may have a free choice of repair shops or be limited to one of the insurer’s preferred repair shop partners.
  • Settlement: Once the claims adjuster has completed their evaluation, they’ll offer a settlement, the type of settlement depends on whether the insurance policy is market value based or agreed value based.
  • Market Value Policies: The adjuster calculates your car’s current market value. If you disagree with this estimate, be ready to negotiate with supporting evidence.
  • Agreed Value Policies: The settlement is a pre-determined amount agreed upon when you took out the policy. Ensure the offer matches this value.
  • Payment: If you are happy with the offer you can accept their proposal and ask them to begin processing the payments.

How Long Does a Car Insurance Claim Take

Below is a quick visual aid to help you get a quick overview of what is covered by each type of car insurance. Please note that this table is not comprehensive and there are other features and benefits associated with each level of car insurance coverage specific to the policy you choose – please refer to each insurer’s Product Disclosure Statement for a comprehensive list of details.

Car Insurance Clock

All insurers must abide by the General Insurance Code of Practice and inform the policyholder within 10 business days of their decision to accept or deny the claim once the insurer has received all of the required information, documents and supporting evidence.

However, the entire process from crash to conclusion varies greatly depending on the different factors:

  • Accident Severity: Minor accidents generally take less time to find a resolution than major collisions.
  • Multiple Participants: Generally speaking, the more parties involved in a car insurance claim the longer it takes. This is especially true for third-party issues where a pedestrian was involved or property damage occurred.
  • Repair Times: The availability of parts, level of damage and how quickly the repair shop can begin work impacts repair times. 
  • Documentation: The longer it takes to provide all of the required evidence and documentation, the longer the car insurance claim process.

In conclusion, while the claims process might seem daunting, understanding each stage and maintaining open communication with the insurer can make the journey smoother. Being informed and proactive is key to ensuring a favourable outcome.

Financial Aspects of Car Insurance Claims

Excess is a word you hear a lot when it comes to car insurance claims. Well, what is car insurance excess

This is the out-of-pocket amount a policyholder must pay before the insurer starts to contribute towards settlement. For example, with a $500 excess on $2,000 in damage, the policyholder bears the initial $500, and the insurer handles the remainder. Generally speaking, the higher the excess amount, the lower the insurance premium. This is because there is less financial risk to the insurers.

Another key financial aspect is determining if a vehicle is written off or repairable. If the costs of repairs are greater than the car’s market value, it will be considered written off. If that is not the case, then repairable damages are settled after taking into account the excess amount in the policy.

If you are found at fault, it is likely that your insurance premiums will rise. 

However, If you believe you are not at fault, then please check your eligibility here to see if Right2Drive can help you.

Navigating Complex Claim Situations

Insurance claims can often turn into a complex situation due to a variety of reasons. This section will help guide you in these types of situations. Let’s start with some reasons why an insurer might deny a claim:

  • Fraud Suspicions: Insurance fraud is unfortunately surprisingly common and a significant concern for car insurance companies. If the insurer suspects fraudulent activity they could deny your claim.
  • Policy Violations: Claims can be denied if the policyholder breaks any of the stipulations in their insurance policy.
  • Incomplete Documentation: A claim could be denied due to incomplete or inaccurate documentation.
  • Coverage Limitations: Every policy has its limitations. If the damage or liability exceeds the policy’s cover limit, the outstanding amount won’t be compensated.

Steps to Take if Your Claim is Denied:

  1. Review the Denial Letter: Always start by thoroughly reviewing the insurer’s denial letter. This document should provide reasons for the claim rejection.
  2. Double Check Your Policy: Go through your insurance policy to ensure that the denial reason aligns with the policy’s terms and conditions.
  3. Gather Evidence: If you believe the denial is unfair, reorganise and add any evidence or documentation that supports your claim.
  4. Use Open Communication: Contact your insurer to discuss the denial. Sometimes, misunderstandings can be clarified through dialogue, leading to a resolution.
  5. Seek Legal Advice: Consider consulting with a legal professional who can provide guidance on the best steps forward.

Dispute Resolution:

If you remain unsatisfied with your insurer’s decision, it’s important to know your rights for further redress:

  • Internal Dispute Resolution (IDR): Begin with the insurer’s IDR team. They are there to handle disputes and can sometimes overturn initial decisions if presented with compelling evidence or arguments.
  • External Entities: If the internal route doesn’t work, consider the Australian Financial Complaints Authority (AFCA). They serve as an independent dispute resolution scheme, handling complaints against insurers. They offer a fair, free, and accessible service, ensuring that both parties receive a just assessment.

Conclusion

Car insurance in Australia has many layers, with lots of companies offering different policies. Hopefully, this guide has broken down the main points to help you understand how it all works and left you with a better understanding of the landscape. From the types of insurance available, to how to make a claim, it’s crucial to be informed. 

If problems arise, there are steps to follow to get things sorted. With the knowledge from this guide, you’ll be better equipped to handle car insurance situations. Remember, always stay informed and if you believe you are not at fault, then check your eligibility.

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Not At Fault? Avoid Lengthy Car Insurance Claims.

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