What is motor vehicle insurance? 

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Insurance policies are contracts between you and an insurer.  Motor vehicle insurance offers coverage of your vehicle, other vehicles damaged in an accident, damage to land, property, or other persons.

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Types of motor vehicle insurance​

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There are different types of motor vehicle insurance which cover different things:

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• Compulsory third party (CTP)

  • This insurance is mandatory by law if you have a motor vehicle. 

  • You will usually pay for this insurance when you pay for vehicle registration.

  • It covers bodily damage to another person caused by your vehicle.

  • It does not cover any property damage your vehicle might cause or suffer.

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• Third-party property 

  • This insurance is encouraged to be your minimum level of cover if you drive a car.

  • It covers damage caused by your vehicle to another car, building, fences, and government property/items (like power poles and road lights).

  • If you do not have this insurance, and you cause damage to an expensive house or vehicle, you would likely find yourself with a very big debt that would take a very long time to pay off.

  • Some insurers may offer what is called an uninsured motorist extension to third-party property, and gives you some cover if you are hit by an uninsured motorist.  This can be difficult to claim as you would need to give your insurer the other motorist's contact information and vehicle registration which is not always available.  If that happens to you, we encourage you to seek legal advice. 

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• Third-party (fire and theft) 

  • This option offers the same coverage as the third-party property insurance, but it also covers your vehicle if it is damaged by fire, or if it is stolen.

  • Coverage is usually limited to the agreed value or market value of your car.

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• Comprehensive insurance 

  • A comprehensive policy will provide you with the same cover as the third-party (fire and theft) option, but it will also cover damage to your car. 

  • You can usually choose to cover your car for either market value (how much your car is worth at the time of an accident), and agreed value (between you and the insurer when your policy starts). 

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• A comprehensive policy will provide you with the same cover as the third-party (fire and theft) option, but it will also cover damage to your car.
  You can usually choose to cover your car for either market value (how much your car is worth at the time of an accident), and agreed value (between you and the insurer when your policy starts). 

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If you do not have insurance for your motor vehicle​

 

While insurance can sometimes be 'just another expense', it is actually quite risky to not have insurance.  If you cause an accident and you have no insurance, the other driver, or the insurer of the vehicle, property or person you caused damage to, could sue you for the damage caused.  This can often lead to a judgment debt, which you will need to pay.  If you do not have the money available, you might be forced to sell assets or have your wages/payments garnished in order to pay back the debt.

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Cancellation rights

 

You have the right to cancel your insurance with any insurer, although it is recommended you have another insurance policy lined up if you plan to cancel your insurance to ensure you are covered for motor vehicle insurance at all times.

There is usually a set time period, often about three or four weeks (i.e., the cooling off period), to review a new insurance policy and decide if you want to continue with the policy you have chosen.  If you choose to cancel your insurance after this time period, then your policy should detail your cancellation rights, and relevant processes to follow.

The insurance company also has the right to cancel your policy in certain circumstances.  For example, if you fail to make payments, or if the risks associated with your policy change, then the insurer may cancel the policy. 

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Excesses

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If you need to make a claim on your motor vehicle insurance, you will likely need to pay an excess. 

When you initially choose an insurance policy, you will often be required to select an excess amount to be paid when you want to make a claim.  Most motor vehicle insurance policies will require you to pay the excess, regardless of whether you are at fault or not.  

Of course, all insurance policies are different. You will need to learn the details of your chosen insurance policy to find out whether your insurer's excess requirements.

If you cannot afford to pay your excess, your insurer cannot reject your claim because of this.  You should contact your insurer if you cannot afford the excess and discuss your options.  

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How to submit a claim? 

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1. First, you will need to decide whether you want to make a claim on your insurance policy.  It is possible that it may not be the best action for you to take. You may want to consider your no claim bonus, or the number of claims you might have submitted with the insurer in the past years.
    

2. Gather your evidence - you will need to make sure your claim meets the terms and conditions of your policy.  If your accident involves another person or vehicle, you will need to gather the relevant details (i.e. their insurance company, the person's name, registration details, contact details, who is at fault, etc).
    

3. Make your claim.  Check the claims process on your insurer's website, or contact your insurer for more details on how to make a claim. 
    

4. Wait for a decision. After you make your claim, your insurer will need time to receive and review your claim documents and then make a decision.  Once a decision is made, you will be notified. 
   
   a) If your claim is accepted, you will be stepped through the payment process and anything further you need to do that is relevant to the type of claim you made.
   
   b) If your claim is denied, the insurer must notify you in writing and provide an explanation as to why your claim was denied.  Sometimes, the insurer needs more information about your claim before it can be accepted. Sometimes, and more often in cases where there is a 'hit and run', or if there is an unidentified person at-fault for the accident, the insurer will need to investigate the accident to try to identify the person or vehicle at-fault.

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What if I am unhappy with the decision made about my claim? 
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If you are not satisfied with the decision, or if you are unhappy with how your claim was managed, you can make a complaint directly to your insurer.  You will need to review your insurer's online process to submit a complaint.
 

You can also make a complaint with the Australian Financial Complaints Authority (AFCA):
 

1. On their website at  www.afca.org.au
    

2. By emailing them at info@afca.org.au
    

3. By calling them on 1800 931 67
    

To complain to AFCA, you will need to provide them with the following information:
 

• The issue you want to complain about
   

• The outcome you want to achieve
   

• Any documents that support your complaint
   

You can complain to AFCA yourself, or you can authorise someone you trust to complain on your behalf.

It is important to know that AFCA can only consider complaints made within 2 years of the internal complaint decision made by your insurer. If you receive an internal decision you are unhappy with, it is a good idea to complain to AFCA as soon as possible.

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The courts​

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You do have the option to skip the claims process entirely if a motor vehicle accident has occurred and go to the courts instead.  However, going to the courts or tribunals can have many risks.
 

Even if you win, the legal process takes a long time and can be costly and leave you out of pocket. Sometimes, you might not be able to recover your legal costs, even with a good legal team. 
 

If you lose your court case, this can be even more costly. You will likely be required to pay your own legal costs and be at risk for paying the other party(s)'s legal costs as well, in addition to damages in the accident itself. 
 

If you are considering legal action, we recommend you seek independent legal advice before commencing legal proceedings.