At fault car accident without insurance: what should you do?

Being in a car crash can be a hugely stressful and confusing experience, whether or not you were the driver at fault. But it gets even more complicated in the aftermath if you don’t have car insurance and were the one who caused the accident. 

So you know exactly where you stand and what’s legally required of you, we’ve answered some of the major questions and concerns about at fault car accidents without insurance.

When a car accident occurs, it’s either caused by someone or as a result of unforeseeable circumstances on the road (like an animal jumping in front of your car). When you make an insurance claim, the latter is known as a ‘no fault accident’, since there are no drivers or other road users who can be held accountable (aka ‘liable’) for the incident.

But in other cases where you, another driver or someone else on the road does something which causes the accident – perhaps turning without indicating or speeding through a red light – it’s an ‘at fault accident’. So, if you’re involved in an at fault incident and an insurance company or other driver is referring to you as the person ‘at fault’, then you’ve been deemed liable for the incident.

Someone who is liable or at fault in a car accident is usually the one who has to pay for repairs to involved vehicles and other costs associated with the incident. Beyond mechanic bills, this might be costs for damaged property or injuries.

But just because you’re liable doesn’t mean the money comes directly from your pocket. If you have car insurance, this can cover the costs of repairing damaged property and cars (although you need to pay your set insurance excess before coverage kicks in). 

And if people were injured – or in the absolute worst case, killed – in the accident, there’s a form of personal liability insurance which can cover costs related to this. This is a kind of insurance which every car owner needs to drive in Australia (read more below).

Compulsory third party insurance (CTP) – which is often known as a greenslip – is the personal liability insurance you need to legally register your car and drive in Australia. 

The name, cost and details of CTP differ between the states and territories, but no matter where your car is registered, the cover is valid Australia-wide. Depending on where you live, this compulsory insurance can cover costs related to someone being injured, disabled or even killed as a result of a car accident you were responsible for.

Beyond CTP, you aren’t required to hold any other form of car insurance to legally drive in Australia. However, since CTP doesn’t cover you for any damages you might cause to other vehicles, property or your own car, you may want to consider an extra level of insurance which can protect you against some of these costs.

The two main levels of insurance for covering accident costs are third party car insurance and comprehensive car insurance.

Third party is the lower level of optional car insurance and can only be called upon when you’re looking to pay the repair bill on other vehicles involved in an accident where you were deemed at fault. Keep in mind that most third party policies have a cap on how much can be paid out when you make a claim. This means that not all costs may be covered.

Comprehensive car insurance provides broader cover as well as protection for your own wheels, meaning your own mechanic bills as well as others can be covered by insurance if you’re at fault in an accident. Many comprehensive policies also feature new-for-old replacement, where the insurance company will pay to replace your car with a comparable vehicle of a similar value if your car is written off in an accident.

So, you’ve been in a car accident and a few days later you receive a ‘letter of demand’ requesting you pay for repairs or replacement. You may or may not have been expecting this depending on how you left the scene of the accident. And depending on the circumstances, you may be required to pay the debt.

Hopefully, you will have done your due diligence to collect useful information and evidence when the incident occurred. This usually involves taking photos of the scene and damages, noting down the time and road conditions, and collecting important information about other drivers and witnesses such as ID, contact info, car rego and insurance details. 

If none of this is computing right now, read Mozo’s guide on what to do if you are involved in a car accident. If you come prepared with all of this information, it could make things easier for you down the line. 

Firstly…
Start by asking the person (or the insurance company that’s representing them, which is often the case) for evidence of the damage costs claimed against you, like repair quotes, towing costs, and car valuation. If you aren’t sure whether or not you were the at fault driver, or perhaps think more than one person shares the responsibility, you can request they provide proof showing you were at fault.

According to the Finance Rights Legal Centre, insurance companies don’t legally have to source more than one quote on repairs or share their evidence with you outside court proceedings, but some may if you ask.

Then… 
If you agree that you were at fault and think what they’re asking for is reasonable, you can pay the amount in full or organise a repayment plan if you can’t afford to cover it all at once (insurance companies are required to offer this as an option). If you face roadblocks in negotiating this, you can contact the company’s internal dispute resolution team. It can be wise to seek financial counselling or legal advice in these circumstances.

If you are ill or facing extreme financial hardship and can’t pay the debt at all, you can request to have the debt waived by the insurance company (although it may not always be granted). Again, seek out financial advice in this case – there are often free resources available with groups like Financial Rights Legal Centre and state-based legal aid organisations.

Otherwise… 
If you think the amount being requested is unreasonable, then you’ll have to go through the process of negotiating with the insurance provider or claimant on a price you think is fair. This can involve:

• Researching repair and replacement costs.
• Getting a quote from your own mechanic based on your own evidence of the damages (like photos of the accident). 
• Gathering formal witness statements about the crash.
• Again requesting the insurance company provide more evidence.

Put all of this information in writing and send it to the insurance company an official dispute letter. If you can’t negotiate an amount you’re comfortable to pay at this point, you may have to go to court over the debt. Just remember, if you lose you may have to cover their legal costs as well as whatever amount the court deems you owe.

If you aren’t insured but believe another driver caused the accident, you can make a claim against them for damages caused to your vehicle or property (this may be a counterclaim to their claim against you). In this situation it would be wise to seek legal advice or counselling.

If the other driver has insurance and you believe they were responsible for the damage caused to your car, you can make a complaint through Australian Financial Complaints Authority (AFCA). You can only file this complaint if:

• You can prove you are not at fault.
• The damage to your car is less than $15,000 (or you're okay with $15,000 as a maximum loss).
• The other driver has made a claim on their insurance for this incident.

If none of the drivers involved in a car accident have the appropriate insurance, then nobody will be able to make an insurance claim to cover damages, or seek compensation through the relevant insurance authorities. In this case, you can negotiate directly with the other driver to figure out who was at fault (or what proportion of blame each person carries), the costs for repairing vehicles and property, and how those debts will be managed.

As you might imagine this kind of negotiation could get hairy, so it may once again be worth seeking legal advice.

In terms of the steps you should take to sort out the matter, it’s fairly similar to if you were claiming through an insurance company. You’d need to gather evidence of damages, information about the incident and details of the other involved parties. Then, if you have agreed on who was at fault, it's a process of getting quotes for repairs and formalising an amount to be repaid to an agreed schedule by the relevant driver.

Dealing with the fallout of a car accident where you're at fault but have no insurance (beyond the legally required CTP) could be financially damaging. You may end up accruing significant debt if you don’t have the emergency savings to cover the claims made against you. 

And that’s exactly why car insurance exists – to soften the financial blow in situations like this. So, if you’re keen to avoid the risk, it could be wise to consider taking out some level of car insurance that can help cover costs associated with car accidents.

If you want the broadest coverage, start researching car insurance options by checking out the comprehensive policies below.