When an insurance, personal injury, or accident claim is made, they can sometimes be determined in terms of either a 50:50 or knock-for-knock claim. These are different ways that a claim can be settled.
50:50 and knock-for-knock claims are not the same. It is important to be able to distinguish between the two when a claim is made, and here is a guide to the difference between the two.
When an accident occurs between two entities, liability needs to be determined between the parties as part of the claim. If the accident was entirely the fault of one party, it is known as ‘single liability’, and the case can be settled quickly and easily.
It is, however, not always clear who is liable for an accident/incident – and it is often the case that it is not always 100% one party’s fault. This is where 50:50 split liability agreements come in.
What is a 50:50 Split Liability Agreement?
If an accident has occurred, whereby both parties are equally responsible, it can be determined as a 50:50 split liability. In this case, each party receives half of the money for their claim from the other party’s insurance company. This is a common outcome in road traffic accidents where it is one party’s word against the other and neither party is obviously at fault for the accident. This does not mean, however, that it can only occur with road traffic accidents, it can be applied to all kinds of injury claims.
Split liability agreements can also be made at ratios that are not 50:50. For example, if one party was 75% responsible for the accident, this would be classified as being 75:25 split liability and 75% of the overall value of the claim would be paid by the other insurance company. This ratio can be split in any way that is deemed to be appropriate, but this is still known as a “split liability agreement”.
The detail of the split liability of an accident would be given in favour of the claimant or the defendant. Therefore, for example, if an agreement was made 60:40 in favour of the claimant, the defendant’s insurance company would pay 60% of the claim. Similarly, if it was determined to be 60:40 in favour of the defendant, the claimant’s insurance company would pay 60%.
50:50 Split Liability Agreements – when they are used
As discussed above, the most common use for a 50:50 split liability agreement is when there has been a road traffic accident with no other witnesses and where there is a case of one word against another.
Especially when smaller claims are being paid, the cost of having to go to court to determine the payouts can be less than the payouts themselves. In this case, it is possibly not worth going to court, and sometimes an agreement is made beforehand.
50:50 Split Liability Agreement example
If, for example, you are reversing your car out of a parking space, did not see another car approaching, and they also did not see you and this ended up in a collision between the two cars then both parties could be deemed to be equally responsible. A 50:50 split liability agreement could be suggested.
If you are reversing your car out of a parking space and stop when you see another car approaching, but they did not see you and continued, hitting your car, this could be different. If there is proof that your car was stationary then liability would likely rest with the other party. If there is no proof then it is possible that a 50:50 split liability could be considered.
What is a knock-for-knock agreement?
A knock-for-knock agreement is, however, different. In a knock-for-knock agreement, the insurance company pays for their own policyholder’s claim, no matter who was responsible for the accident in the first place.
In a knock-for-knock agreement, liability does not need to be allocated to either party as the matter is settled by each party’s insurance company.
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Last reviewed on 11/07/23 by Joseph Norton who is an Associate Director and Head of Compensation