What to do if your insurance claim is denied

A compliant denial letter contains four things, and ASIC's Moneysmart sets them out plainly: which part of the claim was not accepted, the reasons for that decision, your right to ask for copies of any reports the insurer relied on, and how to complain about the decision. Read the letter looking for those four items specifically. If any of them is missing — and a surprising number of letters omit the third — that omission is itself a Code point you raise in the complaint, because it has denied you the material you need to respond.

Find the clause. Not the general description of what happened, but the actual words of the policy the insurer says apply. A letter that says 'the damage is not covered under your policy' has not identified a clause; a letter that says 'clause 4.2, gradual deterioration' has. Write back and ask for the clause reference and the exact wording if it is not quoted. You cannot test a decision against a policy term you have not seen, and the insurer has to be able to point at one.

Then classify the ground. The Financial Rights Legal Centre, the community legal centre that runs the national Insurance Law Service, sets out four common reasons a claim is refused: misrepresentation when you took out or renewed the policy, a policy condition or exclusion clause, a policy that was cancelled before the loss, and fraud. Denials often dress one of these up in narrative language. 'Pre-existing damage' is usually an exclusion argument, sometimes a misrepresentation argument. 'Lack of maintenance' is an exclusion argument about causation.

Note who bears the burden on each. Financial Rights is explicit that it is the insurer that must prove, on the balance of probabilities, that an exclusion applies; the insurer that must prove the elements of misrepresentation, including that it was disadvantaged; and the insurer that must prove fraud with clear and cogent evidence of intent or reckless indifference. A denial letter that asserts a ground without evidence behind it has discharged nothing.

Check the dates against the Code timeframes. Moneysmart states that an insurer responds to a claim within ten business days, tells you within five business days of appointing a loss assessor, updates you at least every twenty business days, and decides the claim within four months except in limited circumstances. A denial delivered outside those markers, or after a silence, is a second complaint you run alongside the first — and the letter you send back should be a request for documents, not an argument.

Ask for four categories of document in one written request. First, the product disclosure statement and your certificate or schedule of insurance — the schedule matters because, as Financial Rights explains, it records the questions the insurer asked and the answers you gave, and you are meant to receive it within fourteen days of applying so you can correct anything wrong. Second, every report relied on: the loss assessor's or adjuster's report, and any hydrologist, engineer, builder, mechanic or medical report. Third, the internal claim file notes. Fourth, any call recordings.

The reports come under the Code. Moneysmart states that if you ask for copies of reports used to assess your claim, the insurer must send them within ten business days, and the Life Insurance Code of Practice carries the same ten-business-day obligation for documents relied on in a claim or a complaint. Financial Rights adds that there are very limited grounds for an insurer to withhold information, and that if one is claimed you should require the refusal in writing and get legal advice on it.

Call recordings and application records are the ones people forget. If you bought the policy over the phone, the call was almost certainly recorded, and Financial Rights advises asking for a copy — because the question the insurer says it asked and the question you actually heard are often not the same question. If you applied online, ask for a copy of the exact questions displayed and the answers submitted. In a non-disclosure dispute this is frequently the whole case.

Where the insurer says it would have refused cover or charged more had it known, ask for the written evidence. Insurers maintain underwriting guidelines governing who they will insure and on what terms. Financial Rights notes that an insurer will often produce a statutory declaration from an underwriter, or the relevant extract of those guidelines, and that you can also telephone the insurer anonymously and ask whether it would insure a hypothetical person in your position. That check has ended more than one non-disclosure denial.

If the insurer resists, use the Privacy Act. The Office of the Australian Information Commissioner states that Australian privacy law gives you a general right to access your personal information held by an organisation, that the request should say what you want and how you want to receive it, and that the OAIC considers thirty days a reasonable response period. Refusals must be in writing with reasons and with information about how to complain. A claim file is thick with your personal information, and this request is separate from — and additional to — the Code obligation.

Keep the request boring and specific: number the items, give a date by which you expect them, and do not bundle it with argument. Financial Rights recommends keeping written copies of everything and notes of every phone call, including the date, time and the name of the person you spoke to. That record becomes the chronology you eventually hand AFCA.

Misrepresentation. For consumer policies taken out or renewed since 5 October 2021, the Insurance Contracts Act 1984 imposes a duty to take reasonable care not to make a misrepresentation — Division 1A of Part IV, headed exactly that. Financial Rights sets out what the insurer must prove: that it told you of the duty and the consequences, that it asked a specific question, that you misrepresented in answer to it, that you failed to take reasonable care, and that it was disadvantaged. Failing any one limb defeats the denial.

The relevant factors are generous to consumers. Financial Rights lists what is taken into account: the type of insurance and its target market, whether the questions were clear and specific, how clearly the consequences were explained, anything the insurer knew or should have known about you including limited English or literacy difficulties, the documents you were given, whether a broker acted for you, and whether it was a new policy or a renewal. You also do not have to disclose something that reduces the insurer's risk, is common knowledge, or which the insurer knows or ought to know.

Innocent and fraudulent misrepresentation are treated very differently. Financial Rights explains that with an innocent misrepresentation the insurer can only reduce your cover to what it would have offered had it known the truth — so if it would still have insured you at a higher premium, it must pay the claim and may charge the difference. Only a fraudulent misrepresentation, which requires proof that you acted intentionally or recklessly, allows the insurer to treat the policy as if it never existed. Get legal advice immediately if fraud is alleged.

Conditions and exclusions. This is where section 54 of the Insurance Contracts Act does most of the work. The section is headed 'Insurer may not refuse to pay claims in certain circumstances', and Financial Rights explains its practical effect: the insurer cannot refuse to pay because of an act or omission on your part where the insurer's interests were not actually prejudiced by it. Their worked example is exact — if your policy required keyed window locks and the burglar came through the front door, the missing locks made no difference and section 54 answers the denial.

Wear, tear and maintenance denials are causation disputes. Financial Rights is direct that insurance is not a substitute for maintaining your home, and that a storm claim can fairly fail where cracked or missing tiles let in far more water than a sound roof would have. But it also says that where the wear was minor and had little or no impact on the extent of the damage, you should be covered. So the question for your own expert is not 'was there wear' but 'how much of this loss is attributable to it'.

Cancelled policies and fraud. Financial Rights notes that insurers sometimes cancel mid-term for missed instalments, often because a direct debit silently failed, and that you can complain to AFCA if the cancellation was wrong or you were not properly told. On fraud, the insurer must prove intent to deceive or reckless indifference to the balance of probabilities, and section 56 of the Act limits it: where the fraud was minor and it would be unfair to reject the whole claim, the insurer cannot rely on it. Fraud findings also follow you into future insurance applications.

AFCA publishes its reasoning on most of these. Its approach documents include separate published papers on section 54, on non-disclosure and misrepresentation in general insurance, on the duty to take reasonable care not to make a misrepresentation, on proximate cause of damage, on pre-existing medical conditions, on motor vehicle total loss and on motor vehicle claim delays. Reading the approach that matches your denial ground tells you, in advance, roughly how the decision maker will frame the question.

Financial Rights puts it bluntly in its AFCA factsheet: AFCA relies heavily on expert reports, and if you disagree with the insurer's expert about how repairs should be done or how the damage occurred, you should consider getting your own expert evidence — evidence that both supports your position and points out the flaws in theirs. That second half is the part people skip. 'In my opinion this was storm damage' is worth far less than 'the insurer attributes this to gradual deterioration but does not account for the impact fracture at the ridge, which is consistent with hail'.

Match the expert to the ground. Water ingress and flood-versus-storm disputes call for a hydrologist or a building consultant; structural and roofing disputes for an engineer or a licensed builder; motor claims for an independent mechanic or a crash-repair assessor; total loss valuation disputes for a valuer with comparable sales. Life, income protection and TPD denials turn on the treating doctor and on occupational evidence — Moneysmart lists the material insurers ask for, including medical reports and test results, details of your work duties and hours, payslips and tax returns.

Give your expert the insurer's report. Do not brief them cold. The value of your report is not that it exists but that it engages with the specific findings the insurer relied on, and an expert who has not read the other side's document cannot do that. Ask them explicitly to comment on any signs of wear and tear and whether those had any material impact on the extent of the damage — Financial Rights recommends exactly this framing for maintenance-based denials.

Where your evidence is your own account, put it in a statutory declaration. Financial Rights recommends this for complaints that rest on memory or word of mouth, with as much detail as possible and set out in time order, and suggests obtaining declarations from any witnesses as well. A dated, signed, structured statement is treated very differently from a paragraph in an email, and it fixes your account before the passage of time makes it vaguer.

For motor disputes about fault and excess, Financial Rights suggests supplying diagrams of how the collision happened, plus copies of the relevant road rules, police reports and any CCTV or dash cam footage. Moneysmart's car claim page lists the material the insurer will usually want in the first place — location, description, photographs, police report number, tow truck details and witness contacts — and if you gathered those at the scene, they are already the backbone of your rebuttal.

Organise it before you send it. Financial Rights recommends lists or spreadsheets where there is a long schedule of items — one row per item, what you want done, what evidence you have supplied, where it stands — and a dated chronology of every contact for delay complaints. The file that is easy to follow is the one that gets followed.

Use the word complaint. Moneysmart's guidance on complaining about a financial product is specific: put it in writing, put the word 'complaint' in the heading or subject line, include your name, contact details and the date, give a clear explanation of the problem and the outcome you want, and attach copies of the relevant documents while keeping the originals. Sending the insurer's claims team another email about your claim is not the same act and does not reliably start anything.

Address it to internal dispute resolution, not the claims handler. This is a separate function under ASIC's Regulatory Guide 271, the regulator's enforceable guide on internal dispute resolution which applies to Australian financial services licensees, credit licensees and superannuation trustees. The Life Insurance Code of Practice makes the separation explicit for life insurers: the person assigned to your complaint will not be the person whose decision or conduct is the subject of it. If you argue with the assessor who declined the claim, you are arguing with the author of the decision.

Know the deadline you have just triggered. Financial Rights states that the insurer usually has thirty days to respond to your complaint, or forty-five days for superannuation trustee complaints. The Life Insurance Code of Practice puts the same numbers in clause form: a final written response within thirty calendar days, and forty-five calendar days where a superannuation fund trustee owns the policy. If it cannot meet the thirty days it must tell you why before the time is up, and tell you about your right to go to external dispute resolution.

Structure the complaint around the ground, not the grievance. Open with one sentence stating the claim number, the date of the denial and the ground given. Then take the elements the insurer has to establish and address them one at a time — the question it says it asked and what the recording shows; the clause it relies on and why the facts fall outside it; the causation finding and what your expert says. Then state the outcome. 'Accept the claim and proceed with the scope of works dated X' is actionable; 'reconsider your decision' is not.

If money is urgent, say so in the same letter. Moneysmart notes that where you are experiencing financial hardship the insurer could make an advance payment on the claim or defer the excess, and Financial Rights adds that a claim can be fast-tracked where you demonstrate urgent financial need after an event such as fire or flood, with an advance payment possible within five business days. It also warns to be careful how an advance is spent if part of the benefit is still in doubt.

When the response arrives, or the deadline passes without one, stop there. Financial Rights is clear that if the insurer does not fix the problem within thirty days the next step is usually AFCA, and that no response in time is itself a basis to escalate. Further rounds of internal correspondence rarely improve the offer, and they consume the two-year window that runs from the internal response.

AFCA covers the products people are usually denied on. Its insurance page lists domestic insurance such as home, contents and car; travel and ticket; pet; sickness and accident; strata title; medical indemnity; life insurance including income protection, funeral, trauma, total and permanent disability, accidental death and endowment; and small business and farm insurance. It also covers extended warranties issued — not merely administered — by member firms. It does not consider private health insurance or workers compensation.

The issues it will look at map directly onto a denied claim. AFCA lists denial of a claim, the value of an assessed loss and delays in deciding; information not disclosed or misleading; disputes about liability for a car accident or an excess; denial of a travel claim because of a pre-existing condition; and denial of a landlord claim on the basis that damage was not malicious.

The test is broader than a court's. AFCA states that for non-superannuation complaints the decision maker must do what is fair in all the circumstances, having regard to legal principles, applicable industry codes or guidance, good industry practice, and previous relevant determinations. It says explicitly that this is not limited to what is legally permissible, and that where it departs from legal principles it will explain why. It also says it will not necessarily be bound by the minimum standard in an industry code and may require a higher standard.

Denied claims can skip the queue. AFCA says it may refer a complaint straight to determination where the matter needs to be finalised urgently — including where the complainant is in financial hardship, has suffered a natural disaster such as flood or bushfire, or has a serious medical condition on a low-value claim. Say so on the form if any of that is true, rather than assuming it will be noticed.

The remedies include the one you want. AFCA's published list of outcomes expressly includes 'the meeting of a claim under an insurance policy by, for example, repairing, reinstating or replacing items of property', along with payment of a sum of money, variation or setting aside of a contract, waiver or variation of fees, and an apology. It can also award interest, and it publishes a separate approach document on awarding interest in insurance.

Know what it cannot do. AFCA states it cannot impose punitive, exemplary or aggravated damages, and that compensation for indirect financial loss and for non-financial loss is capped per claim — the cap for complaints lodged on or after 1 January 2024 is $6,300 for each, a figure AFCA publishes and indexes, so confirm the current amount before relying on it. Monetary jurisdictional limits also apply to the amount in dispute, and Financial Rights advises getting legal advice where the amount is large.

Lodge early. AFCA's stated general time limits are within six years of when you first became aware, or should reasonably have become aware, of the loss, or within two years of the insurer's internal dispute resolution response — whichever comes first. It may extend limits in special circumstances. AFCA has also published a notice that it is experiencing delays allocating complaints, particularly in insurance because of floods, so a complaint lodged promptly is a complaint that starts queueing sooner.

Car. Moneysmart notes that the cover you hold determines what you can claim — with third party property damage, only damage to other cars — and that exclusions commonly bite where the driver was under the influence or the car unregistered. Financial Rights adds the fuller list: unlicensed driver, driver under 25 where excluded, unroadworthy vehicle, undisclosed modifications, mechanical failure, wear and tear, wilful damage, undisclosed rideshare use, drag racing and misfuelling. Most are section 54 territory, because most can be shown to have made no difference to the loss.

Two car-specific points are worth knowing. Financial Rights notes that AFCA can consider complaints where you have no comprehensive cover and are pursuing the at-fault driver's insurer for damage to your car below a published threshold, provided that driver made a valid claim or has died or cannot be found. And note the boundary: a denied claim about a written-off vehicle or an excess is an AFCA matter, but personal injury from a road crash runs through the compulsory third party or motor injury scheme in your state or territory instead, which sits outside AFCA entirely.

Home and contents. This is where the Code timeframes matter most, and where the scope of works becomes the battleground. Moneysmart explains that an approved claim involving rebuilding or repairs produces a written scope or statement of works setting out what will and will not be repaired and the materials to be used, and that if you cannot reach agreement on it you can send the claim to the insurer's internal complaints team. A partial denial buried in a scope of works is still a denial and is complained about the same way.

Cash settlements deserve separate care. Moneysmart states that where a cash settlement is offered and it is not the only option, the insurer will give you a Cash Settlement Fact Sheet setting out alternative settlement methods, the sum insured, the total offered, a breakdown of each component, a statement about getting independent advice, and information about your right to request a review. It warns that the insurer's estimate may reflect what repairs cost the insurer with its preferred suppliers rather than what they will cost you, and that you can supply your own quotes.

Travel. Moneysmart lists the exclusions that generate most denials: pre-existing medical conditions, high-risk activities, pregnancy-related costs, unattended luggage, travel to areas under an official warning, financial failure of an airline or operator, and pandemics. It also notes that even where an event is covered, an insurer may decline if at the time you were drunk, affected by drugs or doing something illegal. AFCA specifically lists denial of a travel claim because of a pre-existing condition among the complaints it considers.

Life, income protection and TPD. Moneysmart states that insurers will decide income-related claims within two months of notification or two months after the waiting period expires, and other claims within six months on the same basis — and the Life Insurance Code of Practice sets those same two-month and six-month outer limits by clause, with a further fifteen business days to communicate the decision in writing once all information is in. TPD denials usually turn on the definition: own occupation, any occupation, or activities of daily living, each with a different threshold.

Where the cover sits inside superannuation, the pathway forks. Moneysmart notes that if you bought cover through a super fund you contact the fund, and the Life Code's forty-five-calendar-day trustee response timeframe applies. AFCA's superannuation jurisdiction has different decision rules — the decision maker asks whether the trustee's or insurer's decision was fair and reasonable in the circumstances and must affirm it if it was, cannot change a definition of disablement or an eligibility condition in a policy, and its determinations bind both parties and take effect immediately.

A catastrophe declaration is not a change to your policy. The Insurance Council of Australia states that a catastrophe declaration made by the Council means additional resources are made available to speed up claims processing, that a disaster declaration made by government may release recovery funds, and that neither has any effect on your insurance, your excess or what is covered. People frequently believe the opposite and are then blindsided when the excess is deducted.

It does change the decision deadline. Financial Rights explains that the Code's four-month limit for deciding a claim extends to twelve months in exceptional circumstances, and that those circumstances include an extraordinary catastrophe or disaster with a large number of simultaneous claims, a reasonable suspicion of fraud, your failure to provide information reasonably requested, communication difficulties beyond the insurer's control, and your own request to delay. It stresses that this does not licence the insurer to sit on the claim, and that you can complain about unreasonable delay at any time without waiting for the deadline.

The most valuable right after a disaster is the review window. Moneysmart states that if your claim arose from a natural disaster and was finalised within one month of the event, you have twelve months from the date of finalisation to ask for a review if you think the assessment of your loss was not complete or accurate — and that you can do this even if you agreed to the settlement, including a cash settlement. Financial Rights confirms the same right applies even where you have already signed a settlement or release.

Protect the evidence in the first days. Moneysmart advises taking extensive photographs and videos of the original damaged state before moving anything, and talking to the insurer before spending money on temporary repairs. The Insurance Council adds a specific warning about well-meaning volunteers removing property that was not damaged or could have been repaired, and recommends photographing and keeping a sample of anything that has to be discarded as a health hazard. Those photographs are the record that survives when the argument arrives months later.

Finally, know who else can help. The General Insurance Code Governance Committee is the independent body that monitors and enforces insurers' compliance with the Code, and anyone can report an alleged breach to it — that is separate from your claim and will not resolve it, but Code breaches raised in an AFCA complaint carry weight, since AFCA takes applicable industry codes into account. The Financial Rights Legal Centre's Insurance Law Service gives free legal advice on insurance disputes nationally.