Accidents & Insurance What does my insurance cover? What do I do if I’m in a car accident? Should I admit a car accident was my fault? What happens if I don’t stop after a car accident? Is car insurance compulsory in New Zealand? What does market value and agreed value mean in insurance? How much will my insurance pay? What is an insurance excess? Are there any conditions for insurance? What happens if I get into a car accident and I’m not insured? I can’t afford to pay for the car accident damage, what can I do? Are my parents responsible for an accident I’m in? What should I do if I have problems with my insurance company?
Anyone can get into a car accident. If you do, it’s important to know what you have to do next. It helps to know about car insurance so that you don’t end up having to pay so much if you’re in an accident. In New Zealand, it’s not required that you insure your car, but it’s a good idea to have at least the basic insurance. If you don’t, you could end up having to pay lots of money to fix someone else’s car as well as your own.
There are different types of vehicle insurance in NZ. The most basic policies (often called ‘third party’ insurance) will cover damages to someone else’s property in a driving accident. If you don’t have third party insurance and you accidentally write-off a $200,000 car, you could be paying off the debt for a very long time or you might have to consider bankruptcy! More expensive policies can cover any kind of damage to your own vehicle as well. It’s important that you read and understand the insurance policy before you agree to it. Make sure you’re happy with it and that it covers all the situations you want it to.
If you’re in an accident, you have to stop. You need to stop even if you’re riding a bike, skateboard or roller skates. You need to help anyone who’s hurt as much as you can and call 111 if someone is injured. Then you need to report the accident to the police. You should stay until the police arrive. Running away after an accident can make the consequences worse for you.
You should also:
It may not always be a good idea to immediately admit fault. If you’re with an insurance company, it is best to let your insurance company decide whether you’re at fault, if they think you weren’t at fault, they may be unwilling to pay for the accident. Check your insurance policy. Also if you admit fault, the police might charge you with a driving offence. Before you admit any fault, you should call YouthLaw or your local Community Law Centre.
Sometimes the other driver might be aggressive and threatening. You might feel like you need to admit it was your fault to protect yourself. If this happens, you should tell the police you only admitted it was your fault because you were threatened.
If you’re in an accident, you must stop, find out if anyone has been hurt, and give all the help you can to anyone who has been hurt. If you don’t stop and check, it’s a crime with a maximum penalty of up to 3 months in prison, up to $4,500 fine, and the loss of your licence for at least 6 months.
If someone is injured and you don’t stop, it’s an even more serious offence. You could be imprisoned for up to 5 years, fined up to $20,000, and lose your licence for at least a year.
No, but it’s still a very good idea to have insurance, in case of accidental loss or damage to your own vehicle, or another’s vehicle or property. If you don’t have insurance, you’ll have to pay for the repair costs of your car and the other person’s car if you had caused the accident.
There are two methods that insurance companies use in insuring your vehicle. Market Value means that the insurance company will evaluate how much your vehicle was worth just before the loss or damage, and only pay you up to that amount. Agreed Value is when you and your insurer agree as to the value of your vehicle (usually when you start or renew the insurance policy). This avoids arguments later on about how much the vehicle was worth.
What you’ll get paid back will depend on your insurance policy. If you have an extensive insurance policy, then the insurance policy should compensate you for any damages you or the other person has suffered up to the maximum limit minus your excess.
If the amount claimed is less than the maximum limit and your vehicle is completely written off, then the value will depend on whether the policy was insured at market or agreed value.
An excess is an amount that you’ll have to contribute before the insurance company will cover the rest of the claim. For example, if the damage costs $5,000 and your excess is $500, you’ll have to pay the first $500, and your insurance company will then pay the $4,500 left. Your policy will also probably have a limit, which means that the insurance company will only cover up to that amount. For example, if your limit is $200,000 and you write off a car worth $250,000, you will still have to cover the extra $50,000 yourself, and also pay for the excess.
Your insurance policy should tell you what your excess and limit is.
Your insurance contract will also usually require you to follow the law and take reasonable care to avoid accidents and theft. If you don’t, the insurance company can refuse to cover you. For example, some insurance policies may not pay out if you’ve been drink driving. Each insurance policy is different so remember to check your insurance policy before purchasing and agreeing to it.
If you don’t have insurance, then you will personally have to pay for any damage that you cause. First, you should get some legal advice about whether the accident was your fault or not.
Before you agree to pay, you should make sure that you and the other driver agree about how much damage was caused and take photos where possible. If you don’t agree to the amount that the other driver claims will cost to fix the damage, you can ask for some evidence. It’s fair to ask for a couple of different quotes on how much it will cost to fix the damage also.
If you really can’t afford to pay for any damage, tell the other driver or their insurance company about your financial situation. Sometimes they might decide it’s not worth trying to get money from you or they may ask you for weekly payments.
If you’re not able to make a reasonable offer to pay for the damage, or you don’t stick to the agreement, most insurance companies will take you to the Disputes Tribunal or District Court or try to get the debt through a debt collecting agency. In the most dire situation, you may have to file for a no asset procedure or bankruptcy.
Your parents aren’t generally responsible for any damage that you’ve cause, no matter how old you are. You will be responsible. The exception is if they could have foreseen that the situation might happen, and could have stopped you. For example, they might be held responsible if you’re too young to have a licence but they let you drive their car anyway. If you get into an accident, then it could be argued that they should have seen it coming and should not have let you drive.
If you have problem with your insurance company the Insurance and Savings Ombudsman (ISO) may help you to resolve a dispute with them. You need to try to go through the insurance company’s internal complaints processes first, but if that doesn’t solve the problem satisfactorily, and you’ve reached a deadlock, then the ISO can get involved.