What happens if you don’t have car insurance and get into an accident?

Carrying just the bare minimum Compulsory Third Party (CTP) car insurance? Buckle up, because if you're in an accident without proper additional coverage, things could get bumpy. This guide takes you through different scenarios to show what financial and legal potholes you might hit - whether you caused the crash or not.

Let's take a closer look.

Finding yourself in an accident when you’re at fault can be stressful enough, but without any insurance beyond the mandatory CTP, it becomes even more challenging. Here’s what you need to consider about the legal and financial fallout that could follow.

Paying for others’ damages 

If you don't have insurance to cover damages you caused to someone else’s property or vehicle, you’ll need to pay these costs yourself. If the bills climb high and you can't cover them, the other person might take legal action against you. This could mean your wages get garnished or a lien is placed on your property—essentially, the court could order that part of your income or assets go directly to settling your debt.

Dealing with your own damages 

As for your own car, without insurance, any repairs or replacement costs are entirely on you. This can be a hefty hit to your wallet. If fixing the car is too expensive, you might end up stuck with a damaged vehicle, affecting your daily life and adding ongoing maintenance costs.

When an accident occurs where the other driver is entirely at fault and they have anything higher than CTP insurance, you can breathe a sigh of relief. Here’s what typically happens:

Claiming damages for your vehicle 

Since the other driver is fully responsible for the accident, their insurance is meant to cover the damages to your vehicle, property and even finances (for instance if you have to hire a rental car while yours is in the shop). 

You’ll need to contact their insurer to file a claim. This process typically involves providing evidence such as accident reports and photographs of the damage. The insurance company should compensate you for repairs or the equivalent value if your car is totaled.

Handling potential complications 

While the other party's insurance should cover your damages, sometimes you might encounter issues such as delays in processing your claim or disagreements over the amount of compensation. If the insurance settlement offered does not adequately cover the damages, or if there are delays, you might need to follow up more persistently or consider legal advice to ensure you receive fair compensation.

When the other driver is completely at fault and neither party has insurance beyond CTP, it gets a little trickier. Here’s what to keep in mind:

Recovering damages for your vehicle 

Without insurance, you’ll need to negotiate directly with the other driver to cover the cost of repairs or replacement for your vehicle, as well as any other damages to your property and related out-of-pocket expenses. This involves providing evidence of the accident, obtaining repair estimates, and sharing invoices for any out-of-pocket costs.

If the other driver agrees to pay, ensure you get this agreement in writing to avoid future disputes.

Handling non-payment 

If the other driver refuses to pay or cannot afford to, your next step may be to take legal action. Depending on the severity of the damage, it may be worth consulting a lawyer to assist with this process. 

Short of that, you could consider filing a claim in small claims court. This involves presenting your case and evidence to a judge, who can order the at-fault driver to pay for your damages. However, this can be time-consuming and there is no guarantee of payment if the driver lacks the funds.

Dying in a car accident, or sustaining major injuries, can be much more devastating financially to you and/or your next of kin, versus totalling even the most expensive car. Due to the magnitude of such possibilities, the government requires every single driver to take out the minimum level of cover known as compulsory third-party car insurance. In other words, it’s illegal to drive without it.

So when you ask the question, ‘what happens if I don’t have insurance and get into an accident’, you’re really asking  ‘what happens if I get into an accident and CTP insurance is the only insurance I have?’

If you cause an accident and someone is injured or dies, your CTP policy will cover their medical expenses and/or compensation for their death. And vice versa.

Without CTP, you can’t even register your car. So if you cause an accident in an unregistered car without CTP, you could land in all sorts of hot water. So don’t do it!

The two main levels of insurance for covering accident costs are third party car insurance and comprehensive car insurance.

Third party is the lower level of optional car insurance and can only be called upon when you’re looking to pay the repair bill on other vehicles involved in an accident where you were deemed at fault. Keep in mind that most third party policies have a cap on how much can be paid out when you make a claim. This means that not all costs may be covered.

Comprehensive car insurance provides broader cover as well as protection for your own wheels, meaning your own mechanic bills as well as others can be covered by insurance if you’re at fault in an accident. Many comprehensive policies also feature new-for-old replacement, where the insurance company will pay to replace your car with a comparable vehicle of a similar value if your car is written off in an accident.

Let's say you were in a car accident and don't have insurance. A few days later, you get that dreaded "letter of demand" from the other driver (or more likely, their insurance company) telling you to pay for repairs or a replacement vehicle. Don't panic just yet.

Gather Your Evidence

Hopefully, you were prepared and gathered some useful evidence at the scene of the accident. This includes things like:

• Photos of the damage
• Contact details for witnesses
• Notes about road conditions, time of day, etc.

If you didn't get this evidence, make sure to read up on what to do after an accident so you're prepared next time.

Request Documentation

According to the Finance Rights Legal Centre, insurance companies don’t legally have to source more than one quote on repairs or share their evidence with you outside court proceedings, but some may if you ask.

Therefore, it doesn’t hurt to ask them to show their work and justify the amount they say you owe. Request copies of:

• Repair estimates
• Towing charges
• Vehicle valuations
• Anything they used to calculate the total amount

If you disagree that you were fully at fault for the accident, also request proof that you caused the accident.

If You Agree with the Amount

After reviewing their documentation, if you agree with the amount they say you owe and that you were at fault, you have a couple options. You can pay the full amount at once, or if money is tight, you can set up a payment plan. 

If your financial situation is truly dire, you can ask if they'll reduce or waive some of the debt - but you'll need to provide documentation like pay stubs, bills, etc. It's also a good idea to talk to a financial counsellor.

Negotiate a Lower Amount

However, if the amount still seems outrageous or unreasonable after seeing their documentation, it's time to negotiate. Here's what you can do:

• Get your own repair estimates based on the accident evidence
• Collect written statements from any witnesses supporting your version of events
• Send the company a formal letter disputing the charges with all your proof

The Court Route

If you've negotiated in good faith but still can't agree on an amount, your last option may be going to court over the debt claim. The downside is that this could mean covering their legal fees if you lose the case. This isn’t ideal, but sometimes necessary to fight an unreasonable claim.

If you aren’t insured but believe another driver caused the accident, you can make a claim against them for damages caused to your vehicle or property (this may be a counterclaim to their claim against you). In this situation it would be wise to seek legal advice or counselling.

If the other driver has insurance and you believe they were responsible for the damage caused to your car, you can make a complaint through Australian Financial Complaints Authority (AFCA). You can only file this complaint if:

• You can prove you are not at fault.
• The damage to your car is less than $15,000 (or you're okay with $15,000 as a maximum loss).
• The other driver has made a claim on their insurance for this incident.

Dealing with the fallout of a car accident where you're at fault but have no insurance (beyond the legally required CTP) could be financially damaging. You may end up accruing significant debt if you don’t have the emergency savings to cover the claims made against you. 

And that’s exactly why car insurance exists – to soften the financial blow in situations like this. So, if you’re keen to avoid the risk, it could be wise to consider taking out some level of car insurance that can help cover costs associated with car accidents.

If you want the broadest coverage, start researching car insurance options by checking out the comprehensive policies below.