Knock for knock
Knock for knock is an “old” agreement between car insurers when it comes to paying out claims for car accidents. A number of insurance companies have withdrawn from the agreement but some are still abiding by it. With the knock for knock agreement each car insurance company agree to pay their own clients’ cost instead of recovering from one another; irrespective of who the guilty party’s insurance company is. There are two provisions involved: all the parties must have accidental damage insurance and all the insurance companies must have signed as accepting the knock for knock agreement.
The main benefit of the agreement is that lengthy legal action is avoided, especially when there is a dispute as to who the guilty party is. It also reduces paperwork to a large extent and claim payouts will take place faster. The problem is with the innocent party.
If his insurance company is not going to claim back his excess from the guilty party’s insurance, he will not be refunded the excess amount. In some cases the insurance companies arrange that the “more guilty” party’s insurer will refund the excess to the innocent party. But, the innocent party may find that his insurance premium will be affected negatively at the renewal date as will his no claim bonus. It is mainly for this reason that some insurers have withdrawn from the knock for knock agreement.