Who is financially liable in this situation? HELP!!

LBangkokBreakfast on 11/03/2015 - 14:17
Last edited 11/03/2015 - 17:04

Background:
One day last year, my motorbike was in getting a service. My friend asked me if I wanted to use his motorbike for the day which I gladly agreed on. That afternoon I was hit by a car turning into a driveway in front of me. I had all appropriate protective clothing on, and was injured (not relevant here). The car driver admitted fault, and apologised. I called my friend from the roadside and he was understandable annoyed, but told me to make sure I got all of the car drivers details including a witness who confirmed that the car driver was at fault. The police did an investigation and officially found the car driver to be at fault, and he was charged with a dangerous driving offence. This is all documented in the police report.

Result:
The car driver advised he was NOT insured. My friend decided to go through his own insurance company instead, and let them go after the car driver for reimbursement. He was paying month-to-month premium. My friend was eventually paid out for his bike, however as he was in the 1st month of his monthly premium payments, he was required to pay out (or have deducted) the full premium amount for the year. $1200 yearly premium in this case ($100/month).

The problem:
My friend wants to be reimburst for the $1200 he is out of pocket. Which is is difference between what he was paid out, and what the motorbike insured for. He wants me to pay this amount, and under the impression that I "owe him" this money. Whilst I completely agree that he should not be out of pocket any money for something he had no involvement in, I also believe that I shouldn't be out any money for something that wasn't my fault. I have told him he needs to go after the guy who caused the accident to cover his costs, and however he wanted to do that I would I would help him out completely.

My Question Is:
In this situation, who is responsible for bearing the $1200 gap?

Poll Options

  • 20
    Car Driver at fault should pay
  • 6
    I should pay as I was riding the motorbike
  • 12
    My friend should absorb the costs
Automotive

Comments

  • Findo on 11/03/2015 - 14:45
    +2

    Is it possible for your friend to recover $1200 from the guy that hit you? If not, as a good friend you probably should cough up - you rode his bike, you should be responsible for looking after his things and it's a risk you bear when borrowing other people's things.

    • BangkokBreakfast on 11/03/2015 - 15:07

      It's possible, but I want to make sure he is entitled before we try.

  • dan76n on 11/03/2015 - 15:35
    +1

    its a tough one TBH.
    If the bike was repaired then he would just continue on but because it's written off his policy ceases.
    If it were my bike I'd only be expecting you to pay the premium if the bike replacement plus insurance was going to cost me more than the pay out.
    Was the bike insured for agreed or market? Usually agreed values are above the replacement value.

    Come to think of it the claim made isn't on his policy so why is he paying out the whole year?

    • BangkokBreakfast on 11/03/2015 - 16:58

      The claim was made on his policy, because the car driver didn't have insurance.

      • dan76n on 11/03/2015 - 17:10

        so would this mean he also paid an excess?

        • BangkokBreakfast on 11/03/2015 - 17:14

          Apparently he had to pay an excess to lodge the claim initially, and once they investigated and deemed the car driver at fault, they would refund the excess. I'm assuming that is what happened, as we haven't been very close the past year.

  • bobsburger on 11/03/2015 - 15:36

    nvm

  • PissLUR on 11/03/2015 - 15:41
    +6

    isn't that the annual premium that he has to pay anyway? to be covered for the next 11 months?

    • Annoying Source on 12/03/2015 - 11:07

      Yeah I was thinking this as well, If he had paid yearly instead of month to month then there would be no out of pocket because that is how much insurance cost him, I'm now sure if you can get this money back.

      But I was under the impression that (depending on insurance company) if I paid $1000 for a year of comp insurance and I got hit and totaled my car exactly 6 months into the year(and i'm not at fault). My insurance gets money for the value of the car + all other costs like my excess and what not from the other parties insurance. Then after all that is over I should get the value of the car, any excess that I paid and $500 from the original amount because I paid my insurance for a year of insurance and they would only be covering me for 6 months out of that year.

      If anyone could clear that up that would be great as I have been wondering this for a while

      Edit: After reading other comments, You should not have to pay it BUT he lent you his bike I doubt he had any idea that was going to happen, As a person I would say not pay it As a friend I would offer to pay half therefor you both lose and you both win.

      And buy him a beer, a simple lending of a bike turned out to be much more a shit storm (pardon my french) then either of you could have imagined

      • megamilinda on 09/04/2015 - 15:41

        My brother got into a accident (and wrote off his car) half way though his policy and had a portion of the policy refunded. It doesn't make sense that you pay for 12 months but only use 6 and not get the other 6 back.
        It's probably different with different insurance companies.

  • loulou1 on 11/03/2015 - 16:56

    i am going to be unpopular, so i am anticipating the neg votes, but you are not at fault and so shouldnt foot the bill.
    He chose to let you ride the bike, something happened which wasn't your fault. No different to the bike being parked on the street and it getting smashed up by someone else. He would still lose the remaining term on the policy. Yes it sucks for him, but not your fault. Life is not always fair.

    • qtvinsta on 24/03/2015 - 09:00
      +1

      its a $1200 lesson your friend has now learnt… on the topic of friendship, he should not persue you, just inform you (if really a good friend) and if you are a good friend would offer to pay…

  • inherentchoice on 11/03/2015 - 17:00

    Wait so the $1200 is paying for the full premium amount for the year?

    So does that mean your friend now has no more insurance premiums to pay for the rest of the year? If so, I think the solution is to pay him the $1200 as a loan and he can pay you back in $100 installments each month.

    He is paying for the insurance for his bike. He did not lend it to you on the condition that you would have to pay a whole years insurance if involved in an accident.

    • loulou1 on 11/03/2015 - 17:13
      +1

      unfortunately the insurance ends even though it is paid in full. insurance is paid to cover a particular vehicle. If that vehicle is written off, the policy ends and a replacement vehicle can not be substituted. If he gets a new bike than he will need to commence a new policy with a brand new premium.

      • inherentchoice on 11/03/2015 - 17:18

        Okay. I guess I was assuming that the bike was repaired and is now back on the road. OP didn't specify?

      • rodericb on 27/03/2015 - 17:56

        That's strange, I would have thought that the policy would remain in place. Provided it wasn't a total loss and a payout was given.

        I would offer the part 50% and for both of you to accept as a learning experience…

  • inherentchoice on 11/03/2015 - 18:00

    From the car driver's point of view, he may have no insurance but he may well reimburse the insurer for the full cost of the bike. The insurer could then choose to withhold $1200 for the premium.

    Hypothetically, If I was that driver I could pay the insurer and argue that I have fully paid for the bike. I don't have insurance by choice. The bike owner chose to purchase insurance and he chose to go through that insurer to chase me. He needs to pay for that insurance. He could have come to me directly and I would have paid him directly, and he could have then cancelled the insurance without having to pay the $1200. It's not my fault that he has agreed to the fine print which means he owes the insurer $1200.

    • dan76n on 11/03/2015 - 18:18

      I find it odd that the insurer can do this since there won't be a claim on the policy. They are essentially charging you to chase the uninsured driver on you're behalf.

  • Ughhh on 11/03/2015 - 18:19

    My friend was eventually paid out for his bike

    Im a bit confused with your poll options. I assume the insurance/car driver paid for the bike, so, what do you mean "Car Driver at fault should pay"? Why would the car driver be responsible for your friends insurance premiums? The car driver' is only responsible for the repair/cost of the bike, which your insurance is taking care of.

    • BangkokBreakfast on 11/03/2015 - 18:29

      Your right, the car drivers responsibility was to repair/cost of the bike. I put that as a poll option because in my opinion there are only 3 people involved in this situation. 1.Me, 2. My Friend, 3. The Driver. Now that my friend is $1200 short, I was wanting to know who should cover that shortfall. I listed the driver as an option in the poll because he is one of the 3 parties involved, and I wanted to see who thought he should be responsible.

      • [Deactivated] on 11/03/2015 - 22:17
        +7

        Now that my friend is $1200 short, I was wanting to know who should cover that shortfall.

        There is no shortfall.

        Your friend bought an insurance policy for $1,200 which ended after 12 months or if a 'write-off' payment was made.

        In the event of a write-off, there's no 'unused portion' for the remaining period as the payout fulfills the insurer's obligations and ends the policy, even if it's only one month into the period of cover.

        Whether he paid the total upfront or in monthly instalments, he agreed to pay the insurance company $1,200 and they agreed to cover his bike under the terms of the policy for the full period.

        The policy document (that he agreed to when he took the policy) will explain that in the event of a write-off he will have to pay the total unpaid balance of the premium.

        So he's not out-of-pocket for the premium as a result of the accident - he made that obligation before it happened.

        • BangkokBreakfast on 11/03/2015 - 22:31

          Quite an interesting point actually..

        • [Deactivated] on 11/03/2015 - 22:53
          +1

          @Hugetyla:
          It would be like if he had financed a $12,000 bike, paid a first installment of $500, and it was written-off in the first month.

          The insurance pays an agreed value, of which $11,500 goes to the finance company and pays out the loan.

          He's not out-of-pocket $11,500, and can't chase the driver (or his friend) for that amount.

          In your case he has a debt of $1,100 (presuming he paid the first $100 installment) owed to the insurance company.

          Under the terms of the policy for a write-off they have paid him an agreed value and ended the policy, and subtracted his outstanding debt from the payout (making sure they get their money).

        • [Deactivated] on 09/04/2015 - 10:28

          That is a good point. Because of this I believe that both parties should pay half of the 1,200. The best case, all seem to be equally responsible. You probably have no grounds on getting this from the driver though.

          Why is OP partly responsible? His actions and choices that day caused the policy to be consumed. Very unfortunate and unlucky, in my opinion you could have been the safest and most careful rider that day but something unlucky happened to you (that is what insurance is for no? to cover the unexpected).

          The friend made paid the premium to cover his riding and out of good will he chose to allow the OP to borrow it. So in my opinion, the accident lost the policy. The driver should be responsible, but there is no legal grounds for that (I might be wrong). Friend chose to buy the policy in the case of an unexpected accident (by him). In an ideal world, Friend should pay $400 (his decision to insure the bike and lend it to OP). OP should pay $400 (his decisions to borrow the bike and be at the location of accident and consume the policy), Driver should pay $400 (he caused the accident)

  • BangkokBreakfast on 11/03/2015 - 22:59

    That actually makes a lot of sense. I appreciate you explaining that to me, your right

  • mskeggs on 12/03/2015 - 18:06
    +5

    I understand the financial view, but I think you owe your friend a moral debt to recompense him in some way.
    He had a lot of hassles and is substantially out of pocket for no reason other than he did you a good deed.
    Presumably his future premiums also rose.
    What would like to happen if the position was reversed (i.e. not what you would be legally entitled to, but what you would want to happen).

    I understand it wasn't your fault, but it wasn't his fault either, and the driver is not able to be held responsible.
    I would offer him what you think is the right amount, but accept that if it is less than the amount he is out (which is going to be more than $1200 with premium rises and the hassles he went through) it is likely he will still feel aggrieved.

    Ultimately, if you do the right thing, you will be able to look in the mirror and say, I am a person who does the right thing, even when it is troublesome. There have been more occasions than I would like where I have failed that test, but I try and be that mirror-looking-guy.

  • Geewhizz on 25/03/2015 - 07:08

    Talk to legal aid about what steps you need to take to recover the amount from the at-fault driver.

    As I see it, it's his responsibility to pay it, but yours to do whatever you can to see that it's done. At the end of the day your friend did you a FAVOUR and it's your responsibility to see that he is not out of pocket for having done so.

    • Ughhh on 26/03/2015 - 18:31

      I think you have misread the entire thing. The at-fault driver isn't responsible for paying OPs friends insurance fees, the at-fault driver only needs to pay for the damages, which insurance company will chase them for- as they were paid to do.

      IF OPs friend DID NOT go through own insurance, then yes he can seek legal aid to recover the repair cost.

      • Geewhizz on 26/03/2015 - 18:43

        What you're failing to consider is that the friend is going to be out of pocket for a second set of insurance premiums,for his replacement bike, concurrent with the $1200 we're discussing. It's definitely an out-of-pocket expense that he would not have had, had this accident not occurred.

        • Ughhh on 26/03/2015 - 18:53

          as he was in the 1st month of his monthly premium payments, he was required to pay out (or have deducted) the full premium amount for the year. $1200 yearly premium in this case ($100/month)

          Would it make a difference if the accident occurred towards the end of the year rather than 1 month? The $1200 payment had to be paid either way, whether he was in an accident or not. If OPs friend was at 7 months, would it be reasonable for him to expect the at-fault drive to pay his past 7 months worth of insurance?

        • Geewhizz on 27/03/2015 - 07:17

          You're missing the point. Assuming that OP's friend has replaced the vehicle, he's now paying 2 lots of insurance. If the accident had occurred in the 7th month of the policy, there would have been 7 months in which he was only paying for one, and this entire discussion would be around 5 months worth of premiums, or around $500 instead of 11.

          If by chance he had actually paid the whole amount in advance he'd probably have been more likely to have simply sucked it up, but why should he? The at-fault driver should at least bear some responsibility for his actions. Not bothering to take out insurance doesn't excuse him from that.

          OP on re-reading your post though, has your friend even bothered asking the at fault driver about this? It doesn't sound as though he has.

        • Ughhh on 27/03/2015 - 10:56

          @Geewhizz:

          The at fault driver is only responsible for the damages to your vehicle, not what you pay your insurance fees. What if ops friend insurance was $1000 per month, is the at fault driver legally required to pay for

          1. Vehicle damages
            And
          2. $1000 x 12 = $12,000

          This $1200 fee that ops friend had to pay isn't the excess fee. You pay your insurance to cover you for 12month at $xx, the insurance did their job.

          I think you're getting what actually happens confused with what should happen in our own favour.

  • Handsoff on 27/03/2015 - 16:43

    Correct me if I'm wrong but him paying out the $1200 is the amount your friend would have had to pay for insurance in 12 months anyway, so essentially his insurance has been paid for the rest of the year. Although you were not responsible for the accident, you were riding his bike at the time and therefore responsible for what ever happens. You should pay for the $1200 upfront and your friend should pay you $100 each month (you don't end up out of pocket, your friend doesn't have to cop the bill for doing you a favour and you save a friendship). Your friend has done you a favour and has gone through the headache of being without a bike for a while and having to wait for a new one while dealing with insurance.

    Personally, I'd feel so guilty if I borrowed his bike and got into an accident then left him to deal with the financials.

  • keyman on 31/03/2015 - 10:32
    +4

    If I were in your situation, I would feel morally obliged to pay the $1200 in full. Although some arguments have been made that the $1200 would have been paid regardless throughout the year, the problem is that the policy is now ended, your friend is left without a bike and he will need to pay for another insurance premium earlier than anticipated all because he did you the gesture of lending you his bike.

    It's neither of you guys' fault and the $1200 insurance premium cannot be chased up with the at-fault driver however, the right thing to do in this situation is for you to pay the costs or at least negotiate to meet in the middle.

  • knoxy1001 on 31/03/2015 - 21:31
    +1

    If he hadn't lent you the bike, this wouldn't have happened. why should he be out of pocket? I get that he wouldn't have been paying monthly instalments if he'd just paid the 12 months up front, and if he'd crashed he'd have to bear the burden of his own decision to go month-to-month (as i see it you're not going month to month, you're just paying off 12 months insurance over 12 months), but, you were on it when you crashed. He shouldn't be out of pocket, I know you weren't at fault, but if you can't get it out of the driver, then you're up.

    if you like the guy and value friendship, give him $1200 and get him to buy the next round.
    if you don't particularly care, then just accept that you both made a terrible decision and he's going to have to deal with that- he'll never lend someone their items again.

    mind you, i'm bias, as someone crashed my car whilst i was on holidays, then didn't fix everything up and denied that was was broken, was them. from a moral standpoint, i think you take this as a $1200 lesson and pay your mate.

  • kronicmacstigator on 03/04/2015 - 14:54

    If I paid a year in advance for insurance and I was hit and not at fault. I would actually expect a refund from my insurance company for the rest of the year.

    I'd take it to the insurance ombudsman. Not at fault, your friend shouldn't be out of pocket one cent and neither should you. The at-fault driver should pay the insurance company.

    • [Deactivated] on 06/04/2015 - 03:15

      What do you expect the ombudsman to do?
      The insurance company didn't diddle the owner out of any money, they fulfilled their contract with the bike's owner exactly under the agreed terms of the policy.

      The owner could have gone after the at-fault driver himself, demanding they pay all costs to replace the bike with one in equivalent condition (with equivalent 11 months rego, CTP, and insurance) and all other reasonable costs resulting from the incident.

      Instead the owner claimed under his own insurance policy - a contract that stipulated (and limited) what his insurer would pay him.

      It doesn't sound like the owner asked his insurer to try and recover the uninsured loss (rental car/bike, insurance cost, etc) on his behalf when they were processing his claim.

      For $1,200, his insurance company paid him an agreed amount in return for a signed release from any further claims associated with the incident. The payout would have been exactly what he agreed when he took the policy.

      If he didn't want to use his $1,200 policy, or be out-of-pocket, he shouldn't have settled the claim with his insurance company, and instead sought damages from the at-fault driver.

  • illz on 09/04/2015 - 09:08
    +1

    Didn't read all the replies but if he paid $1200 for an entire year of insurance premiums and his car was written off then the remaining gets refunded, Pro-Rata.

    I know, this happened to me 2 months ago.

    Paid for the entire year, late last year. Accident in Jan, car paid out in full, cancelled insurance, amount owing on premium was refunded.

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