Start by asking the insurer for its decision and reasons in writing, along with the information and expert reports it relied on. Check those reasons against your policy wording. If you disagree, lodge a complaint through the insurer’s internal dispute resolution process, which ASIC requires to answer a standard complaint within 30 calendar days. If the answer is still no, you can take an insurance claim denied by a member firm to AFCA, which is free for consumers and eligible small businesses.
Get the decision and the evidence in writing
Knowing what to do if your insurance claim is denied starts with paperwork. Under the General Insurance Code of Practice, an insurer that subscribes to the Code and denies a claim, or does not pay it in full, must tell you in writing which parts of the claim it does not accept and why. It must also tell you that you can ask for the information about you it relied on, and for copies of any reports from assessors, investigators or other experts. If you ask, the Code gives the insurer 10 business days to hand them over, free of charge.
Ask for all of it. The assessor’s report is often where the real disagreement sits, for example a report that describes storm damage as wear and tear.
One limit on scope. The Code’s claims and complaints sections apply in full to retail policies, such as home and contents, motor and travel cover held by individuals or used by small businesses. Larger commercial policies sit outside most of those sections.
Test the reasons against the policy wording
A denial should point to something in the policy: an exclusion, a definition the loss falls outside, a condition you are said to have breached, or information the insurer says you did not disclose when the policy started. Find that clause in your product disclosure statement and schedule, and read it in full along with the definitions it relies on.
Then check two things. Does the clause actually say what the insurer says it says? Do the facts in the assessor’s report match what happened? An insurance claim denied on the strength of one sentence in a report can turn on a single wrong fact, such as the date the damage started or how the water got in.
Lodge an internal complaint first
The formal first step is a complaint to the insurer through its internal dispute resolution process. ASIC’s Regulatory Guide 271 sets the rules. You do not have to use the word complaint, or put it in writing, for it to count, but writing gives you a record and a date. Under RG 271, the insurer must respond to a standard complaint no later than 30 calendar days after receiving it, unless the complaint is particularly complex or held up by things outside its control and it sends you a delay notice before then that explains why and tells you about AFCA.
The Code says your complaint must be handled by someone other than the person whose decision you are complaining about, and that a complaint about a declined claim gets a written response. RG 271 adds that if the insurer rejects your complaint, the response must deal with the issues you raised, set out its findings on the material facts and refer to the information behind them, in enough detail for you to decide whether to go further.
Keep it short. Give the claim number, the clause the insurer relied on, why you say it does not apply, the evidence that supports you, and the outcome you want, whether that is payment, a fresh assessment or a review of a cash settlement.
Taking it to AFCA
The Australian Financial Complaints Authority resolves disputes between consumers or small businesses and its member firms, and its service is free to use. AFCA’s insurance guidance lists denial of a claim among the decisions it can consider. Under AFCA’s rules, a complaint that has not been through the insurer’s own process can be referred back to the insurer first.
Watch the time limits. AFCA says to come to it within two years of the insurer’s response to your internal complaint, or within six years of when you first became aware of the loss, whichever comes first. It may extend them in special circumstances.
AFCA usually tries negotiation or conciliation first. If it makes a determination and you accept it, the insurer must comply. If you do not accept it, you keep the right to go to court. In deciding, AFCA does what is fair in all the circumstances, taking into account the law, industry codes and good industry practice.
Business owners should check one exclusion early. AFCA treats a business with fewer than 100 employees as a small business, but its small business guidance says it cannot consider cover under contractors all risks, public liability, products liability, professional indemnity or industrial special risks in a small business insurance product. It can consider a complaint about how a broker followed instructions or arranged the policy. If your business insurance dispute falls in an excluded class, legal advice is usually the next step.
Documents to gather
- The policy schedule, the product disclosure statement and any supplementary statement that applied on the date of loss.
- The insurer’s written decision and the claim number.
- Every assessor, investigator, engineer or builder report the insurer relied on, requested under the Code.
- Photos and video of the damage with dates, plus quotes, invoices and receipts.
- Your own report from a tradesperson, builder or engineer where the cause is in dispute.
- A dated log of every call and email, with the name of each person you dealt with.
Lawyer, broker or neither?
AFCA does not require a lawyer, and policyholders run most complaints themselves. Legal advice makes more sense where AFCA cannot hear the dispute, where the amount at stake is above what AFCA can award, or where you have rejected an AFCA determination and are thinking about court.
What FRS does: as a general insurance broker, we lodge claims for our clients and read the wording against the insurer’s reasons when a claim is declined. We request the reports the Code entitles you to and prepare the internal complaint with the evidence in order. If it goes to AFCA, we help assemble the file. We cannot promise an outcome, and some disputes need a lawyer rather than a broker, but we will say so when yours does.
To report a loss or get help with a claim that has been declined, see our claims page.
Frequently asked questions
Can I appeal an insurance claim denied by my insurer?
Yes, in two steps. First lodge a complaint through the insurer’s internal dispute resolution process, which must answer a standard complaint within 30 calendar days under ASIC’s rules. If you are still unhappy, take it to AFCA. The service is free, and an AFCA determination binds the insurer if you accept it.
How long do I have to take a denied claim to AFCA?
Generally two years from the insurer’s response to your internal complaint, or six years from when you first became aware of the loss, whichever comes first. AFCA can extend these limits in special circumstances, but do not rely on that. Lodge the internal complaint soon after the denial, while the evidence is fresh.
Do I need a lawyer to dispute a denied insurance claim?
Usually not for AFCA, which consumers and small businesses can use directly at no cost. Legal advice is worth getting when AFCA cannot consider the dispute, such as a small business public liability claim, or when you have rejected an AFCA determination and are weighing up court action.
Can my insurer refuse to give me the assessor's report?
Only in limited cases. Under the General Insurance Code of Practice, a subscribing insurer must give you copies of assessor or expert reports it relied on within 10 business days of your request. It can refuse in some circumstances, such as where a law says it need not, and must then give you its reasons.
Questions about your own cover? Call 03 7046 3766 on weekdays between 9:30am and 6pm, or send us an enquiry.
