Car accident debt

Many people run into financial difficulty following a car accident involving another vehicle (or property) where the insurer of the other vehicle (or property) demands payment for damage caused by the accident.

If you’ve had a car accident, are uninsured, and the other party’s insurer has paid out the repair bill, they will probably demand payment from you to recover its loss.

Your options when you can't pay

If you were not responsible for the accident, you should seek legal advice from a Community Legal Centre promptly.

Do not admit liability before seeking legal advice. If you accept liability for the accident and you are not insured, depending on your circumstances you can:

  • if you can access a lump sum, offer it as full and final payment of the debt, even if it is less than the insurance company is demanding;
  • ask the insurance company for an affordable payment plan; or
  • request a waiver of the debt.

Insurance companies that have signed the General Insurance Code of Practice (GICP), are obliged to act fairly and in a considerate manner towards you, and to consider flexible payment arrangements if you are experiencing financial difficulty because of illness, unemployment or other reasonable cause.

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Requesting a payment plan

If you are having difficulty paying your debt you can ask for a payment plan that allows you to pay the debt off in instalments, or for payments to be postponed for the present and paid at an agreed date in the future.

You can write to the insurance company and ask for a payment plan.

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Seeking a waiver of the debt

If your only income is a Centrelink benefit and you have no assets and insufficient money to pay the debt, you can write to the insurance company, explain your circumstances, and request that they waive the debt, or ask a financial counsellor to do this for you. The insurance company is under no legal obligation to waive the debt. However, as long as you remain on Centrelink with no assets, you cannot be required to pay. Be aware though that the debt remains and will increase.

Contact MoneyHelp for advice if you are in this position.

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In some circumstances it may be desirable to bankrupt on a car accident debt to give yourself a fresh start. Contact MoneyHelp or a financial counsellor for advice.

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