Uninsured drivers continue to risk debt, AA Insurance
Uninsured drivers continue to risk debt, AA
Insurance While debt grows for some, cover comes through
While debt grows for some, cover comes through for others
Auckland, 23 September 2013 – Uninsured drivers are continuing to risk a lifetime of debt after accidentally damaging another person’s property.
In the last 12 months to the end of August, AA Insurance handled over $6.4 million of claims involving 2,600 uninsured drivers considered to be at fault in accidents with customers. This is $600,000 more than the same period last year, and involved around 270 more uninsured drivers.
While the majority of New Zealanders are in agreement on the importance of having insurance, AA Insurance has identified a number of reasons why people may not take out insurance.
“These reasons range from not realising how important it is to believing they are more careful than average, but the most common reason comes down to cost,” said Suzanne Wolton, Head of Customer Relations, AA Insurance. “However, the question is, if you can’t afford insurance can you afford to have an accident?”
If you don’t have insurance, but damage someone else’s property and it’s your fault, then you’re liable to foot the bill, either as a lump sum or over a long period of time. This will happen whether or not the owner of the property has their own insurance.
“Insurance isn’t just about protecting your property; it’s also about protecting yourself from potential debt and financial disaster,” continued Suzanne. “By taking out insurance, you are covered by legal liability cover, which means if you’re at fault in an accident then your insurer will cover you – up to $20 million for motor insurance and $1 million for home and contents, if you are insured with us. For contents insurance the cover extends to those within your household, including pets.”
One AA Insurance customer took out third party insurance only two months before causing over $60,000 worth of damage to a late model Mercedes. The male driver became distracted and ran a red light, causing irreparable damage to the Mercedes that was turning right at a green light.
Without insurance another customer would have faced considerable long term debt of more than $38,000 after his foot slipped off the brake, hit the accelerator and caused his car to career through a roundabout, destroying plants and a power box.
Liability cover comes through
Many have narrowly avoided financial strife because the little known legal liability cover in their insurance has come into play. Even if you’re not directly involved in an accident, responsibility for the damage may still lie with you.
For example, one customer let his dog out at night, and it strayed into the road causing a car accident. Luckily this customer was covered by his contents insurance liability cover.
“Without insurance they would not have only faced financial strife, but also the possibility of a large debt affecting their credit rating,” added Suzanne. “If they’re a student, this could substantially curb their future earnings, as well as job prospects.
“A recent Massey University study found only 20% of flatting students had contents insurance. But students and renters need to remember that even if they have few belongings, they are still legally liable for any damage they cause to the property they rent.”
One customer, who was a tenant in a rental property, cleaned the oven range hood but didn’t replace it properly. This caused a fire in the kitchen worth thousands that was covered by the landlord’s home insurance, but the insurer then sought to recover the costs from the tenant. Fortunately they had contents insurance with legal liability cover for the cost of the repairs.
Another customer had been burning rubbish on their property but failed to extinguish it properly. The smouldering rubbish reignited and set fire to their sleepout which, at the time, was being used as storage space for a friend. If this accident hadn’t been covered by our customer’s contents insurance legal liability cover they would have had to pay around $19,000 to cover the total costs.
“No matter how careful you think you are, accidents can and do happen, and are often out of your control. Your belongings may not be worth much, so are easily replaced, but don’t forget it’s the damage you cause to another person’s property that could cost you a fortune,” said Suzanne.