Insurance companies and brokers often refer to fault and non-fault claims when you are arranging your car insurance, but what does it actually mean as the literal interpretation of these expressions can lead to some misunderstanding?
You could reasonably, and understandably, assume that the fault suggests whether you are to blame for an incident or claim under a policy. In the insurance world this is not the correct understanding of these terms.
What is a non-fault claim?
A non-fault claim is one where a recovery is made against another party in respect of an incident. For instance, if you are involved in a motor accident with another car or vehicle and upon investigation the responsibility for the incident is placed with the driver of the other vehicle or vehicles, the insurance company or you can take action against the other persons to recover your losses as a result of the accident. Whilst this is a concept that is well understood, it is worth pointing out the legal mechanism for this which is in fact suing the third party in respect of the their legal liability for injury or damage. Whilst in practice, many third party claims are handled without the need for action it is important to understand the the legal process as to why claims are recoverable against other policies.
Providing the insurance company, or you, are successful in recouping your losses against a third party, then the claim will be treated as non-fault for insurance purposes.
What is an at fault claim?
Essentially an at fault claim is any claim under a policy that is not accepted as a non-fault claim, but it is very important to investigate this a little further as this is where the misuderstanding occurs with many policyholders and motorists.
It cannot simply be interpreted as a claim involving another car or vehicle where you are found to be responsible and your insurance company pays out in respect of their losses. Yes, these circumstances would lead to a fault claim under a policy, but it iss by no means the full meaning of a fault claim.
As stated earlier, the expression “at fault” suggests your are to blame for the claim, lets look at some other circumstances that will show you that this is not the correct interpretation.
You are involved in a road traffic accident that is clearly the fault of another person, but they leave the scene and you are unable to identify the vehicle or driver or the registration number and driver details are incorrect or fraudulent. In this case your insurance company will not be able to recover against the driver. This claim is not “your fault” but it is recorded as an “at fault” claim.
Your vehicle is stationary and unattended, in the street, at home or in a car park and is struck by another vehicle, again the vehicle concerned cannot be identified. You weren’t at fault, you weren’t even in the vehicle at the time but this is recorded as an at fault claim.
Your vehicle is stolen or vandalised by persons unknown, clearly not your fault yet once again the insurer cannot make a recovery so it is an at fault claim.
Do I need to declare a non-fault claim to an insurance company?
This would depend upon the question you were asked. It is vital that you answer any questions put to you in relation to the arrangement of any insurance as accurately as possible. If you are asked “Have you been involved in any claims in the last 5 years?” and you have only one non-fault claim you must declare it.
If you are in any doubt as to whether you should declare certain information to an insurance company, you should always seek professional advice. In terms of personal insurance, it should be noted that it is the responsibility of the insurance company to ask you the right questions and not rely on broad questions that rely on your understanding of what information they many require. Whilst this shifts the burden of disclosure of the policyholder, it does mean that insurers will tend to frame their questions more directly and you should always answer these correctly.