How to respond to an insurance company’s letter of demand

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One of the most regular inquiries we get is from people who have received letters from insurance companies seeking payment of a sum of money from them in relation to some form of accident or incident that occurred. Usually this is a motor vehicle accident.

The letter is usually standard in form and says something like:

“We are the insurance provider for person X.

We understand that our insured and you were involved in a motor vehicle accident on Y.

Based on the version of events our insured person has provided us, we have formed the view that you are at fault with respect to the incident.

We intend to recover our insured’s loss and damage from you in the amount of $Z.

Please pay the sum to us within time period A to avoid further recovery action.”

The particular wording of the letter will change from insurer to insurer, however the sentiment is the same.

That is, where an insurer has had to pay a claim to someone they have insured they will try to recover the relevant sum of money from the other party if they can make an argument that the other party is at fault.

The problem is, insurers often base their claims against third parties on very little actual evidence.

Usually the evidence on which they rely is a version of events provided to them by their insured person. Sometimes they will ask for a handwritten diagram.

The insurer will usually not have statements from independent third party witnesses or CCTV or anything that actually substantiates what their insured person has recounted to them.

The other reason that this is a problematic approach is because quite often it is not straightforward who is at fault in a car accident.

Whether the accident occurs on a road, or in a car park, or whatever the case may be in the absence of footage and/or third party witnesses it is difficult to tell who had right of way, or breached a certain road rule, or what precise circumstances led to the collision or accident.

If you have received a letter like this and you do not consider that you are at fault you should ask the insurer to provide what actual evidence they have supporting their claim.

Their insured’s version of events may not be enough to convince a Court (if the matter was litigated) that you are liable.

You should see if the insurer has any third party witnesses or video footage of the incident. Quite often the insurer will ask you to put to them in writing your version of events. You are not required to do this.

If the insurer is seeking to make a claim against you it is their job to prove their claim.

There may be some circumstances where you have a piece of vital evidence that will prove unequivocally that you are not at fault.

You should however be aware that you are not compelled to provide anything to the insurer unless formal litigation commences and you are issued with a Subpoena or some other Court Order requiring you to make such a disclosure.

Quite often if two parties to a collision have different versions of events and there is no way to determine unequivocally which version is correct the insurer who is pursuing you will realise they are unlikely to succeed in an action against you in Court and the claim will go away.

To be clear, we are not suggesting that any person should manufacture or make up a version of events to avoid a legitimate claim, however, if you do not think you are at fault then you do not have to simply pay the insurer because they have sent you a letter of demand without knowing their case against you in the form of whatever evidence they have that they intend to rely upon with respect to the claim.

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