If you are involved in an event that involves an insurer it can be a challenging time.
This might be a claim on your own insurance for something like the weather events about your home or, perhaps you are dealing with an insurance company about a car accident.
The purpose of this column is to give you some suggestions about how to deal with a Letter of Demand from an insurance company as a result of some sorted of motor vehicle collision.
Quite often people will be involved in some sort of minor car accident where the Police are not called but details including insurance details are exchanged.
One or both parties then go back to their insurer, explain their version of events and usually, subject to the relevant insured person paying their insurance excess, the insurer will cover the cost of repair.
Insurance companies typically do not like wearing this kind of loss however so, they will often write to the other party to the collision or incident seeking to recover the cost they have spent repairing their insured person’s vehicle.
For example, a person is reversing out of a car parking spot at a shopping centre and collides with Person B.
There is some damage to each vehicle but nothing requiring anything like a tow truck or a Police report.
Person B reports the incident to their insurer, pays their excess and their insurer pays for the repairs to their vehicle.
The insurer then sends Person A a Letter of Demand to the effect of “we have been advised that on X date you were involved in a collision with Person B. We believe you are at fault and demand payment of the sum of $Y from you or we will sue you”.
These Letters of Demand take various forms, some insurers are more polite than others but ultimately you should not always accept face value that you are to blame and simply make payment.
This is because it is often difficult to determine who was actually at fault in these kinds of situations.
Further, the insurance company is usually just relying on the version of events given to them by their insured person to determine fault without any independent evidence like a third party eye witness or CCTV.
The amount of people who simply pay the sum of money that the insurance company demands without asking what evidence they have to prove their claim is mind boggling.
The reason this is important is because if you refuse to pay because you do not believe you are in the wrong the insurer will need to sue you to recover their alleged loss. To do this they will need to prove to an appropriate Court or Tribunal that you were at fault with respect to the relevant accident. So, if they only have what is often a vague version of events from their insured person and no third party witnesses or CCTV or any other evidence that actually proves you are fault, they are likely to fail in their case against you.
That is not to say that you should mislead an insurer or give evidence that is not correct, however the insurance company should be put to proof when they send Letters of Demand to everyday people which often result in people simply paying money that they may not actually be liable for because they are worried about the repercussions.
If you do not believe you are fault, ask the insurer to provide the evidence they will rely on to prove you are at fault. If they have no evidence, or their only evidence is a sketchy version of events from the person they have insured, you should consider trying to settle their claim for a lesser sum of money that recognises that the insurer will have difficulty recovering the sum from you if the matter goes to Court or getting some legal advice.
