Financial
Defense.
Protocols for defending against insurer-initiated debt recovery and managing financial hardship.
02.0 // Debt Defense
Major insurers process thousands of recovery actions annually against uninsured drivers. These claims are often automated, relying on intimidation.
The "Strict Proof" Defense Strategy
The most effective defense is to disrupt automation by demanding strict proof. The cost of manual file review often exceeds the recovery value.
- Liability: Never concede. Request "Version of Events" and dashcam. Argue Contributory Negligence.
- Quantum: Scrutinize the assessor's report for "rectification of pre-existing damage" and "betterment."
- Credit Hire: Challenge "loss of use" costs. The recoverable rate is the "market spot rate," not the inflated "credit hire rate" (Anthanasopoulos v Moseley).
Strict Proof Letter Elements
"Please provide a signed version of events from your insured and any independent witness statements or footage relied upon."
"Please provide the itemized assessor's report and tax invoice for repairs. Quotes are not accepted as proof of loss."
"Confirm your client's ITC entitlement. We will not be liable for the GST component."
03.0 // Financial Hardship
The General Insurance Code of Practice (Part 10) extends hardship provisions to "Third Party Beneficiaries" and individuals from whom the insurer is seeking recovery.
Strategic Levers
The "Judgment Proof" Debtor: If a debtor has no assets and income is Centrelink-based, they are judgment proof. Insurers cannot garnish Centrelink payments.
The "Nuisance Offer": Offer a "full and final release" for a nominal sum (e.g., $500 on a $20,000 debt). Insurers often accept to close the file.
Debt Freeze: Lodging a hardship application pauses all recovery action (calls, legal steps) for 21 days.
04.0 // Credit Reporting
Insurers and debt collectors may threaten to list a default on your credit file. This is highly regulated.
- Notice Requirements: They must give separate notices (Section 6Q and 21D of the Privacy Act).
- Dispute Freeze: If the debt is disputed, they cannot list a default until the dispute is resolved.
- Statute Barred Debt: In NSW, debt older than 6 years (without acknowledgement) is statute barred and cannot be pursued or listed.