Motor insurance claims

You must inform your insurer or broker as soon as you become aware of any loss or damage to your motor vehicle.

Motor Insurance Claim

Making an insurance claim

Source: You and Your Rights>

You must inform your insurer or broker as soon as you become aware of any loss or damage to your motor vehicle.

Many policies warn vehicle-owners to report an accident even if no claim is anticipated against the insurer. Indeed, insurers insist on being provided with all the necessary information that may assist them to investigate or settle claims arising from an accident.

Most drivers involved in an accident submit two types of claim:

  • For indemnity against claims they expect to be made against them;
  • For compensation for loss that they have suffered.

Both types of claim can be made if the driver holds a comprehensive policy, regardless of who was to blame for causing the accident.

Filling in the claim form

Take great care when you fill in your claim form. Although insurers will refuse to pay out on a fraudulent or dishonest claim, allowance is made for honest claims that may over-estimate or exaggerate the extent of damage.

Answer all questions about the vehicles involved, even if your policy does not allow you to claim for damage to your own car. An insurance assessor may want to inspect all the vehicles to see whether policy conditions or legal requirements have been complied with. This may help in contesting a claim made by someone else.

Give the date, time and place of the accident, as well as a full description of the events that led up to it. If possible, include a copy of a sketch map and add a list of the names and addresses of other drivers, passengers and witnesses.

State whether the police inspected the scene of the accident. The names and addresses of others involved can be obtained from the police station that sent a patrol van to the accident.

If there is not enough room on the insurer’s claim form, write the additional information on a separate piece of paper.

Quick Tip – Dividing the share of responsibility

If you were 70 per cent negligent in a motor accident and the other driver 30 per cent – and if both parties agree to this proportion of contributory negligence – the damages you pay can be significantly altered. For example, if your damages amount to R1000 and the other party’s damages amount to R700, you would be responsible for 70 per cent of the other party’s damages and he or she would be responsible for 30 per cent of your damages. Consequently you would have to pay the other driver R190 (70/100 x R700 = R490; 30/100 x R1000 = R300; R490 – R300 = R190).

Repairing the car

A comprehensive policy entitles you to claim for damage to your own car. The terms of your policy require you to submit two detailed, written estimates of the cost of repairs. You can approach a garage or panel-beating works to prepare them for you. Most of them will provide you with this service free of charge. On the other hand, many insurers have repair contracts with a number of garages, which will submit estimates for repairing the vehicle after inspecting the damage.

Assessors employed by the insurer will also inspect the damage caused by the accident and calculate the cost of repairs.

If you want the repairs to be done by a garage that has not been asked to submit an estimate or that is not approved by the insurer, you may have to pay the difference between the actual costs of repairs and the amount of the estimate accepted by the insurer. This amount would be in addition to the ‘excess’ agreed on in terms of your insurance policy.

Work on your vehicle usually begins as soon as an estimate for repairs has been accepted by your insurer. If, however, there is an unreasonable delay in starting or continuing the work, inform your insurer, who will bring pressure to bear on the repairer.

Depending on your policy, you may be able to claim for the cost of hiring a replacement motorcar while your own vehicle is unserviceable. Remember, however, that whether you intend claiming from your own insurer or from the insurer of some other motorist, you must get your own insurer’s written consent before you incur any major expense, such as for car hire or repairs. Permission may not be required if the terms of your policy specifically allow you to authorise expenditure up to a certain sum of money.

After repairs have been completed, ensure that you are completely satisfied with the work. If you feel you are not qualified to judge the standard of repairs, have the vehicle examined by a competent authority, such as the Automobile Association.

Don’t sign any document stating that you are satisfied (or that ‘this is in full and final settlement’) if you are not satisfied. Instead, refuse to take possession of the car, report your reasons for dissatisfaction to the insurer and demand that faulty work be corrected.

When a car is written off

If an assessor reports that the estimated cost of repairing your motor vehicle exceeds its insured or market value, it will probably be written off. Under the conditions of a comprehensive policy, the insurer will generally be entitled to offer you a lump-sum payment instead of paying for repairs.

In most cases, you would be offered the market value of your vehicle ‘immediately before’ the accident. There are two exceptions to this rule:

  • When you receive the sum for which the vehicle is insured, if this is less than the market value;
  • When, in the case of an ‘agreed-value’ policy, you receive the agreed value on which premiums were based when the policy was last renewed.

If your insurer decides that your car should be written off, it will send you a written offer of payment. If you accept this offer, you must send the vehicle’s registration papers to the insurer. The receipt of these papers entitles the insurer to take possession of what remains of the car, sell it as scrap and to cancel the registration.

Because legal liability for cancellation of a motor vehicle’s registration lies with the licensed owner, you should ensure that the registration has been cancelled by advising the local vehicle licensing depot. This will avert the possible issue of a summons against you for failure to renew the licence.

DISPUTES OVER VALUATION A car’s market value is usually based on the figures published in the monthly price-guide for motor traders. This is usually available to the public, but an insurer’s assessment can also be checked by reference to the prices asked for similar models in newspaper advertisements and local garages. If you disagree with the insurer on the market value, you may have the matter referred to arbitration in terms of a clause in most insurance contracts.

The market value of an old vehicle is likely to be low and even relatively minor damage may make it a write-off. If you decide to keep the car, ask the insurer to pay you the market value, less the amount the car would have realised as scrap.

SETTLING A LEASE OR CREDIT AGREEMENT Your consent may not be required to write off a car that is the subject of a lease or credit sale agreement (hire purchase). Nor will you receive the full amount of the lump-sum paid out in settlement. Payment usually to the extent of the financial interest involved is first made to the lessor or finance company. Therefore, if R3000 is owed on a car written off at a book value of R5000, the ‘outstanding’ amount is paid to the finance company, with the balance of R2000 paid to you.

If a new or nearly new car on lease or credit is written off, you may suffer financially. If the car is written off during the first 12 months, the sum paid by the insurer may only just cover the amount you still owe under the contract of lease or sale.

END OF THE POLICY When a car is written off, the insurance policy generally comes to an end. If this happens shortly after the policy has been taken out or renewed, you may have paid the premium for a full year’s insurance, but will have had the benefit of that policy’s cover for only the period leading up to the accident.

Settling a claim privately

After an accident, you may not always want your insurer to be actively involved in any claims made by or against you. If the insurer has to act on your behalf, you could risk losing your no-claim bonus or having it reduced even if you were not responsible in any way for the accident.

If the bonus, or the portion of it which you would lose, is worth more than your own claim and the claim against you, it is advisable to handle the claim privately. Moreover, there are two situations in which you may have to handle a claim privately if it is to be pursued at all:

  • All drivers have an ‘accidental damage excess’ written into their comprehensive insurance policies. This means that they undertake to pay the first part or excess of any claim for accidental damage.

If the cost of repairing your own car is less than the excess you have agreed to pay, a claim on the insurer is pointless.

  • Some drivers may have only the ‘compulsory’ insurance and rely exclusively on the MMF ‘third party’ that is available. This, however, does not cover damage to vehicles or property.

Even when you intend to make or deal with a claim yourself, always report the accident to your insurer. Failure to do so may invalidate your policy.

Give the insurer full details of the accident, informing it that you do not intend claiming against your own policy at present. This allows you to claim later if the damage is more costly than you anticipated or if you fail to negotiate a satisfactory settlement with the other driver involved in the accident.

It is a fundamental principle of indemnity insurance, such as motor insurance, that no one may be paid twice for the same loss. Therefore, you may not accept payment from another motorist and from your insurer for the same damage.

If you have a choice, deal with a claim yourself only if the amount involved is comparatively small and responsibility for the accident is clear cut and indisputable. Motor law is extremely complex, and an inexperienced person can often encounter great problems by trying to deal personally with anything other than a simple claim for repairs.

Warning – Answering claims and summonses

In terms of your insurance policy, you must keep your insurer informed of any developments arising from an accident.

Do not answer claims or demands that are sent to you by other drivers or their insurers. Refer them to your insurer, reporting also any oral claims or allegations they may make. Don’t delay in advising your insurer about any developments – it may need to act immediately to defend a court summons.

Many comprehensive policies entitle policyholders to have their defence arranged and paid for by the insurer. You do not, however, have to accept this defence. You may engage an attorney or counsel of your own choice provided you settle these fees yourself.

Making your own claim

Your first step in trying to recover the cost of repairing your damaged vehicle from another driver should be to secure an undertaking that he or she will meet the costs. Next, ask two or three garages to give written estimates of the cost of repairs. Thereafter, write to the other driver, with a copy to his or her insurer, with a copy of the estimates and details of other claims to be made, for example, the cost of hiring a replacement car.

Make it clear that you hold the other driver responsible for the accident and ask for confirmation that the claim will be met. Keep a copy of all correspondence. If negotiations fail later, these will be useful to your own insurer.

The other driver or his or her insurer may offer to settle your claim immediately by paying the estimated cost of repairs. If the garage chosen to do the job has given a ‘firm’ price, it will be safe to accept the offer. This may prevent you from claiming for incidental expenses while the repairs are being done. However, these expenses are unlikely to be substantial if the claim is small.

Paying first and claiming later

If the garage refuses to commit itself to a firm quotation or the insurer demands a final account of repairs before it settles, you may have to instruct the garage to do the repairs before your claim will be considered by the other driver’s insurer and without any assurance that the account will be settled.

Unless credit has been granted, the garage can keep your car until it has been paid for the work done. If the estimated repairs are costly, the garage may refuse to start work on the car until the insurer confirms that a settlement will be made.

In these circumstances, put your claim in the hands of your own insurer, or seek the help of an attorney or the legal department of your motoring organisation.

Sometimes an assessor from the other driver’s insurer will be sent to inspect the damage. If it is felt that your estimates are too high, you may be asked to obtain more competitive quotes from other garages.

Before you agree to settle, ensure that the garage chosen to do the work does not supply low quotations because of its reputation for inferior workmanship.

WHAT CAN BE CLAIMED If the other driver’s insurer accepts an estimate for repairing your car, write to that insurer setting out the final details of your claim. Only an attorney can tell what you may claim. The claim may include some, but not necessarily all, of the following:

  • The cost of repairing your car;
  • The cost of towing it to a garage;
  • The cost of hiring alternative transport;
  • The cost of fares on public transport while the car is being repaired.

In submitting your claim, you must prove that you need a car. However, if you get a replacement car, you cannot claim for any petrol or oil purchased. The insurer will probably reduce claims for fares by the amount that would have been spent on petrol and oil while driving the car that is being repaired.

DEALING WITH DELAY Although most insurers will settle this type of small claim promptly, sometimes delays may occur, especially if they have to complete their own investigations into the accident or are waiting for information from their own policyholder.

Your first letter, making the claim, should be sent immediately after the accident. Do not wait longer than 10 days for a reply or more than two weeks for a reply to your letter setting out your detailed claim, unless you are aware that there is good reason for such delays.

If there is an unreasonable delay, send the insurer a brief reminder, threatening to take legal action. If this does not produce a satisfactory reply within 10 days, hand the claim over to your own insurer or seek legal advice.

If the offer is too small

Many insurers will respond to your initial letter by offering less than the amount claimed. Nothing stops you from rejecting such an offer and insisting on receiving the full amount claimed. If the insurer does not increase its original offer without delay, seek legal advice.

When an acceptable offer is made, confirm your acceptance in writing. If you are to be paid a reduced amount because the insurer claims that you were partly responsible for the accident, your letter should emphasise that, although you accept the offer, you do not admit liability.

In terms of the standard insurance policy you may not make any admission without the written consent of your insurer. To do so without consent may invalidate your policy.

When an insurer settles a claim, the claimant is usually asked to sign a discharge form which releases the insurer and its policyholder from any further liability. If you are sure that all you are entitled to claim is included in the settlement, sign the discharge.

Remember – once you have signed it, the insurer can refuse to make any further payments on your claim. This applies even if you did not claim all the compensation to which you were entitled or did not know of a particular loss at the time you signed the discharge.

Settling a claim

Before you decide to deal personally with a claim against you by another driver, make sure that you are not committing yourself to a greater financial liability than seems likely at first.

If repairing the damage to your vehicle is clearly going to be less expensive than the loss or reduction of a no-claim bonus, it will probably be safe for you to deal with the claim personally. You must, however, advise your insurer of the accident even if you do not intend to claim at this stage.

Ask the other driver for the estimated cost of repairing his or her car. If this is far more than was expected or will not represent a saving on your no-claim bonus, pass the claim on to your insurer.

If the price quoted seems reasonable for the amount of damage done, try to settle the claim immediately. Make it clear that any payment is in ‘full and final settlement’, and is made without admission of liability.

IF THE ESTIMATE IS TOO HIGH If the estimate seems excessive in proportion to the damage, or appears to include damage that was not caused in the accident, pursue the matter with the other driver. If the driver is not prepared to reduce the amount, get independent assessments from an experienced motor mechanic, a panel-beater or the technical department of a motoring organisation, such as the AA. It is worth going to these lengths only if the amount involved is fairly large, because you may have to pay an inspection fee.

If the driver making a claim refuses to co-operate by, for example, not allowing the car to be inspected, make a firm offer in writing of a fair amount. Record in the letter the specific instances of the driver’s refusal to co-operate. If your offer is rejected, refer the claim to your insurer or seek legal advice.

If the other driver prefers to have the repairs done before accepting the settlement, ask for the final account as well as the estimate.

If a claim is made for the costs of hiring alternative transport, such costs should not be out of line with the cost of running the vehicle. Documentary proof of all expenses incurred should be submitted. Check that the period of hire does not exceed the time in which the car is repaired.

DECIDING WHETHER TO PAY IN FULL On receipt of the final details of the other driver’s claim, you will have to decide whether or not to pay the full amount. If the other driver was partly to blame for the accident, you will have a valid reason for reducing the claim. It is not worth arguing at length about liability, because the essence of settling a claim without involving insurers is to do so quickly and with minimal expense to the parties concerned.

Pitfalls of ‘on-the-spot’ settlement

A driver who collides with your car may offer you a small sum ‘on the spot’ to settle the matter. This offer may be tempting if the damage seems limited – if there appears to be only a small dent, for instance. However, it is advisable to refuse the offer until a garage has given a proper estimate of the cost of repair.

You should also refuse an offer by the driver responsible that repairs to your car be carried out by his or her garage at his or her expense unless you are satisfied with the standard of workmanship of that particular garage and can be assured that the job will be completed within a reasonable period of time.

Any agreement to settle a claim without involving insurers should be made on the basis that the settlement must be made within a specified time and for the full amount of the damage caused. However, whatever the outcome of the negotiations, your insurer must be informed of the accident as soon as possible.

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