$40,600 debt owed by uninsured driver will take a decade to repay

Friday, 26 February 2021

Many countries have laws requiring drivers to be insured. New Zealand does not, despite policymakers having looked closely at doing so several times.

AA Insurance dealt with about 8000 claims involving at-fault uninsured drivers with damage caused adding up to $26 million.

The uninsured drivers were liable for the costs, and in a handful of higher-cost cases, face a decade of debt repayments to the insurer.

The insurer said it still had 16 people making repayments on debts they incurred in 2008 after causing crashes while driving uninsured.

In one case from last year, a young, uninsured driver will be paying off a debt from a crash of over $40,000 at $100 a week for the next eight years.

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While that was at the higher end of debts, there were hundreds of crashes of AA Insurance policyholders with uninsured drivers who ended up being pursued by the insurer for the costs of repairing, or replacing damaged vehicles.

AA Insurance, like other insurers, charges uninsured drivers for damage caused to its policyholders’ cars.

Amelia Macandrew, customer relations manager for AA Insurance, said that last year it handled 320 claims involving uninsured drivers who caused damage in car accidents that cost more to fix than the average fees and costs for a year of tertiary study.

“In 2020, the average fees and costs for a year’s study came to $11,484,” Macandrew, said.

“During the same year, the average cost of damage that these uninsured drivers were financially liable for was $19,114 or $6.1 million collectively,” she said.

Some individuals ended up owing huge sums.

One young uninsured driver, who lost control of his vehicle in a mall car park, hit an AA Insurance customer’s car, shunting it into a wall, she said.

The car was a write-off, but it was worth $40,600, and the uninsured driver was now paying that debt off at the rate of $100 a week, and would, at that rate, be making repayments for the next eight years.

One woman in her 30s, who caused a crash by crossing the centre line, was repaying a debt of $23,300 at $50 a week for the next nine years.

Uninsured drivers were legally liable for the damage they caused to the cars of other drivers, McAndrew said, and the costs could be “a life changer”.

“Not having at least third party car cover is a risk that could severely affect you financially if you cause an accident,” says Money Hub founder Christopher Walsh.

Insurers’ had staff dedicated to collecting the money, and, if people could not pay, long-term repay plans would be offered to them, she said.

Uninsured drivers had no say in how, or where, cars they damaged were repaired by insurers.

Macandrew said insurers’ focus was on safe repairs done through trusted repairers.

Uninsured drivers who wanted to challenge the amount they were charged would have to seek legal advice.

Macandrew said AA Insurance market research indicated most drivers had experienced an accident at some point in their driving careers.

In all 63 per cent of drivers had had an accident, and 65 per cent of those had at least one accident before the age of 30.

AA Insurance’s research indicated about a third of young drivers didn’t consider their car worth insuring, but Macandrew urged them to at least get third party insurance, which covers damage to other people’s cars and property.

Macandrew urged all students with cars to at least take out third party cover.

Online money research website Moneyhub said third party car insurance cost about $150 a year.

Founder Christopher Walsh said that “unlike other countries, it is perfectly legal to drive a car in New Zealand without insurance. But if you cause an accident and damage another vehicle or property, you are personally liable.”

”With third party insurance available at around $150 per year, it is a sensible choice to protect yourself and the general public.”

New Zealand MPs have considered making car insurance compulsory, but decided against it.