What’s the difference between a fault and a non-fault claim?

10 Feb, 2020

There is often confusion around the difference between a fault and a non-fault insurance claim, and what claims should be disclosed when taking out a policy.

Whether a claim is defined as fault or non-fault is not to do with whose fault any accident or damage is – it’s about how insurers categorise claims based on cost recovery outcomes.

NON-FAULT CLAIM:

In the case of a ‘non fault’ insurance claim, the insurance company has made a full recovery of any losses, from a third party. For example, if someone hits you, and your insurer recovers the repair costs via the insurer of the driver who ran into your car, that would be registered as a non-fault claim.

FAULT CLAIM:

A ‘fault’ claim is any claim in which the insurer has paid out to the policyholder or to a third party, but has not been able to recover the costs. It does not relate to whose fault any accident that led to the claim was – it’s purely based on whether the losses can be recovered.

WHAT KINDS OF CLAIMS MAY END UP BEING FAULT CLAIMS?

Typically, fire, vandalism and theft are almost always fault claims as it’s difficult to find the perpetrator and make a claim against them. Being hit by an uninsured driver will also usually result in a fault claim, but there are ways for costs to be claimed back (see below). 

CUSTOMER ACCIDENTS AND HOW THEY COULD AFFECT YOU

You could end up being liable for a claim on a vehicle you’ve sold if you haven’t kept the MID up to date. If you don’t remove the vehicle from the MID when selling it and the buyer gets into an accident and are being claimed against, the claimant’s insurers would approach whoever was the registered keeper of the vehicle. In order for the claim to be redirected, you would need to produce a sales receipt with information on when the vehicle was purchased. Without providing this information, you could be at fault and liable to pay any costs, as well as losing your no claims bonus.

DISCLOSING CLAIMS: WHY DOES IT MATTER?

It’s important to disclose any claim, whether on your own policy or where you are the named driver on someone else’s policy and have had to make a claim. If a claim is not disclosed when seeking and taking out a new policy or renewing your existing cover, this could later mean a future claim or even your policy becomes invalid when you need it.

Non-disclosed claims are almost always discovered, as insurers register all claims on the CUE database which can then be used to check for previous claims. It’s therefore better to disclose at the point of taking out a policy, than to leave it to be found at a later point.

Disclosing a claim doesn’t automatically mean your premium will increase. Many insurers will not add increases for non-fault claims, unless there are a few of them, and while fault claims may attract a premium increase this is not always the case. 

WHAT IF MY CLAIM WAS IN ANOTHER VEHICLE?

Any claim you have made on any motor insurance policy that you drive on, you need to disclose when applying for or renewing any motor insurance cover. We’ve had some customers ask us whether they need to disclose a claim they have made on their daily drive or another vehicle they own or drive, when taking out insurance for their car – the answer is a definite yes.

WHAT IF I’M HIT BY AN UNINSURED DRIVER?

A claim against an uninsured driver is likely to go down as a fault claim, but there is a Government scheme to help claim costs back where the uninsured driver is to blame for the damage. The Motor Insurer’s Bureau (MIB), which is funded by UK motor insurers, will pay back your insurer the cost of your claim against your own insurance. Once this is received, your insurer should reinstate any no claims bonus you may have lost due to the claim. The MIB can also pay compensation if you sustain a personal injury or damage to your property due to an accident involving uninsured vehicles. For more information on making a claim and how the claims process works, visit the MIB site here:

Claiming against an uninsured driver

If you have motor legal cover in place, your provider can pursue the claim from the MIB on your behalf, plus any legal costs of the claim would be covered.

CAN WE HELP?

If you have questions about your policy, a claim, or anything else to do with your motor trade insurance, we’re here to help – just message us below and one of our experienced team will be in touch.