Compulsory third party insurance

Contributed by DavidBayly and MelissaLetizia and current to 27 July 2018

In Western Australia, the MV Act provides that the Insurance Commission of Western Australia (“ICWA”) is the compulsory third party insurer to Western Australian drivers and registered vehicles.

Who is insured?

Personal injury insurance through ICWA is compulsory with vehicle registration. Section 4 of the MV Act provides that all motor vehicles that are on a road are required to be registered each year with the motor registration division. Payment of the registration fee creates a contract of insurance (Compulsory Third Party Insurance or “CTP”) entered into by the owner of the motor vehicle for any liability (such as causing bodily injury or death) which may be incurred by the owner of the motor vehicle or any person who drives the motor vehicle in circumstances where the bodily injury or death was “directly caused by, or by the driving of, that motor vehicle” in any part of Australia.

Who is not insured?

A number of provisions of the MV Act apply to make owners and drivers personally liable for damage in certain circumstances.

For example, where a motor vehicle accident occurs on private property and the motor vehicle is unregistered, section 4 and section 8 of the MV Act may operate to exclude a claim against ICWA.

Further, there are several circumstances in which ICWA will be required to pay compensation in the first instance and will then seek a recovery from the owner or driver of the uninsured motor vehicle, such as the following:

• where a vehicle being driven on a road is unregistered (uninsured); and
• where the driver or owner of a vehicle has breached one of the “warranties” of the insurance policy (contained in the Schedule to the MV Act).

The most common circumstances in which an owner or driver are in breach of a warranty are as follows:

• where the vehicle is unroadworthy, unsafe or damaged;
• where the driver is unlicensed to drive; or
• where the driver is under the influence of intoxicating liquor.

Who can claim?

When a person (including drivers, passengers, motorcyclists, cyclists and pedestrians) is injured in a motor vehicle accident and the fault is either totally or partially caused by another driver or the owner of another motor vehicle, they can make a claim. The process for determining fault is set out in more detail below.

What if I cannot identify the driver or vehicle? (Hits & Runs)

Where the driver of a motor vehicle at fault has caused bodily injury or death and the driver/vehicle cannot be identified, a claim is to be made directly against ICWA and legal advice should be sought immediately.

The injured person is required to make enquiries as to the identity of the driver/vehicle and provide ICWA with notice in writing of the claim under section 7(3) of the MV Act.

What if the other vehicle is not registered in Western Australia?

Where a person is injured in a motor vehicle accident as a result of the negligence of a driver of a motor vehicle registered in another State or Territory, any personal injury claim may be covered under the relevant motor injury insurer in that State or Territory and legal advice should be sought immediately.

What if the other vehicle had no driver?

The CTP insurance policy covers claims for bodily injury and death caused “by” a motor vehicle and caused “by the driving of” a motor vehicle.

In Section 3(7) of the MV Act, bodily injury caused ‘by’ a motor vehicle is defined to mean “by the driving of that vehicle or of the vehicle running out of control”.

This means that you may still be able to make a claim if you are struck by a motor vehicle which has no driver. You should seek legal advice if this occurs.

Determining fault

Being injured in a motor vehicle accident does not mean that a person will be able to claim damages for personal injuries or death. Under the CTP scheme, the injured person must be able to prove that the accident was either totally or partially caused by the fault of the driver or owner of the motor vehicle involved in the accident.

In law, determining ‘fault’ translates to proving that the driver or owner of the motor vehicle has been ‘negligent’ and caused injury or death. In order to prove negligence, an injured person needs to prove that:

1. the defendant owed the injured person a duty of care;
2. the defendant breached that duty of care; and
3. the defendant’s breach of duty caused the injured person to suffer loss and damage.

Breach of a Duty of Care

Under the common law, all drivers owe a duty of care to all road users including passengers, motorcyclists, cyclists and pedestrians. Common breaches of the duty to exercise reasonable care include:

• speeding;
• failing to keep a proper lookout for other traffic and road users;
• driving with insufficient control – for example, driving under the influence of alcohol or drugs;
• failing to give way;
• failing to keep sufficient distance to the vehicle in front; and
• entering an intersection or roundabout without regard for other traffic that may also be entering that intersection.

Committing a breach of the Road Traffic Act 1974 (WA), the Road Traffic Code 2000 (WA) or committing a criminal offence does not automatically mean that a driver has been negligent, because all of the circumstances of the accident are considered.

Certain provisions of the CLA apply to motor vehicle accidents which codify and/or modify the common law. The duty of care provisions under section 5B of the CLA apply to motor vehicle accidents but do not substantially affect the common law.

Causation

Damages can only be claimed where loss and damage is suffered as a result of the motor vehicle accident.

Where a pre-existing injury or condition has been aggravated by a motor vehicle accident and loss is suffered as a result, there may be an entitlement to compensation.

Various causation issues arise and there is a large body of common law dealing with these issues. Section 5C of the CLA is also applicable to the question of whether loss and damage is caused by an accident. Legal advice should be sought as soon as possible if such an issue arises.

Defences to a claim

A number of defences may be raised to a claim under the CTP scheme which may result in a claim being refused in full or in part. It is critical to seek legal advice if you are advised that your claim is being refused or reduced on certain grounds. Some common defences are set out below.

No Fault

If an injured person is unable to prove fault of another driver or owner of a motor vehicle then their claim may be refused.

Contributory Negligence

Drivers, passengers, motorcyclists, cyclists and pedestrians who fail to take reasonable precautions to protect themselves from harm may be guilty of contributory negligence. Their claim can be reduced if contributory negligence is successfully argued, to the extent (percentage) they are found to be responsible for the damage suffered.

Examples of actions by an injured person which may result in a claim being reduced for contributory negligence may include:

• failure to wear a seatbelt;
• accepting a lift with an intoxicated driver;
• speeding;
• failing to keep a proper lookout for other traffic and road users.

Other defences

The CLA also applies to motor vehicle accidents and sets out a number of defences, including notably where a motor vehicle accident occurs in the course of a ‘recreational activity’. Where a person is injured as a result of a recreational activity, liability may be limited and persons should seek legal advice for further assistance.

What can be claimed?

An injured person can claim compensation for the loss and damage they have suffered as a result of their injuries. The compensation which can be claimed usually fits into a number of defined categories which are explained in some detail below.

Economic loss

An injured person is compensated for their loss of earning capacity if their loss of earning capacity has been or is likely to be productive of financial loss. This includes both past loss of earnings and future loss of earning capacity. For example, if an injured person is unable to work as a result of their injuries then they may be entitled to compensation as a result.

Claims for economic loss are restricted by the MV Act to a maximum of three times the full-time adult average weekly earnings in Western Australia.

Past and Future Medical Expenses

This includes:

• ambulance transport services;
• hospitalisation expenses;
• consultations with general practitioners, specialists, pathology tests, pharmaceuticals;
• the cost of undergoing X-rays, CT scans, MRI and ultrasounds;
• therapy services such as physiotherapy, massage, chiropractic, podiatry, optometry, osteopathy and psychology;
• nursing services including home nursing services; and
• dental services.

Care & Assistance (both paid and voluntary)

This includes:

• personal care such as assistance with toileting and showering;
• domestic assistance with tasks such as cleaning and cooking;
• gardening, home maintenance and handyman expenses;
• community access and transport; and
• respite care.

Travel Expenses

This covers journeys to and from medical and treatment appointments and expenses such as parking associated with those appointments.

Additional Expenses

This includes:

• equipment , aids and appliances such as crutches;
• medical aids such as glasses, hearing aids, mobility aids or dentures;
• rehabilitation services such as working with a physiotherapist on a return to work program;
• home and transport modifications; and
• prostheses.

General Damages

Section 3C of the MV Act provides that persons injured in a motor vehicle accident may be entitled to compensation for “non-pecuniary loss”, commonly referred to as general damages. This means compensation for:

• pain and suffering;
• loss of amenities of life;
• loss of enjoyment of life;
• curtailment of life expectation; and
• bodily or mental harm.

Restrictions apply to accessing general damages.

Under section 3C(2) of the MV Act, the amount of general damages to be awarded is a proportion, determined according to the severity of the injury, termed “a percentage of a most extreme case”. The maximum amount payable for general damages is currently $418,000, which is the amount of general damages payable for “a most extreme case”, such as someone who has suffered quadriplegia.

As of 1 July 2018, the general damages award is subject to a threshold/deductible sum of $21,500. For the 2018-2019 financial year the general damages threshold provides that:

• where the amount of general damages is assessed at $21,500 or less, no damages are payable (MV Act, section 3C(4));
• where the amount of general damages is assessed to be more than $21,500 but less than $63,500, the threshold amount of $21,500 is deducted from the amount assessed for general damages (MV Act, section 3C(5));
• where the amount of general damages is assessed between $63,500 and $85,000, a deductible continues to apply but the amount deducted gradually reduces to zero (MV Act, Section 3C(6)); and
• no deduction applies to general damages that are assessed above $85,000 and the full amount is payable.

You should seek legal advice to determine to what extent the threshold/deductible might apply to your claim.