Steps to dispute a car insurance claim

If you feel you were unfairly denied a car insurance claim, there are several avenues you can explore to rectify the situation. This includes everything from the insurer’s internal dispute resolution process (IDR), to external dispute resolution services (EDR) such as the Australian Financial Complaints Authority (AFCA).

We’ll take you through the car insurance claim dispute process and what steps you can take if you want to challenge your insurance provider’s decisions.

Step one: Receiving the outcome of your claim

If you’ve ever found yourself in a situation where you’ve made a claim that was denied by your insurance company, you’ll be provided with correspondence from your insurer explaining why your claim was rejected and why you’re not receiving any payment.

Step two: Double-check your policy

Once you have all the information your insurer used to arrive at their conclusion, double-check everything to ensure that no errors or misrepresentations have been made. Collect all the information you can, such as:

• pictures taken at the scene,
• insurance and assessment reports, and
• police reports.

Reading through your Product Disclosure Statement (PDS) can help you see what you are and aren’t covered for on your insurance policy, and it’s important to understand this when making a claim. The PDS should be available on the insurer’s website. If you have trouble finding it, contact your insurer and ask where it may be, or if they can send it to you in the mail or by email.

If you’re satisfied with the insurer’s decision after reading their explanation and going over your PDS, then no further action is required. However, if you still wish to dispute a car insurance claim, you can escalate the process.

Your insurance provider’s obligations to you

Before moving onto the next step in disputing a car insurance claim, it’s essential to understand what your insurance provider is obligated to do if they are a subscriber to the Insurance Council’s General Insurance Code of Practice. All car insurance companies are required to:

• give you reasons for their decision in writing;
• inform you of your rights to ask for the information that they relied on to assess your claim, and supply the information within ten business days if you request it;
• inform you of your rights to ask for copies of any Service Suppliers’ or External Expert’s reports that they relied on in assessing your claim, and supply the reports within ten business days if you request them; and
• provide details of their complaints process if you wish to dispute the outcome.

Source: General Insurance Code of Practice. Australian Financial Complaints Authority, Insurance Council of Australia. 2014.

Step three: Complain to your insurer

If you’re still sure that something’s amiss from your insurer, you should complain in writing to your insurer’s Internal Dispute Resolution (IDR) team. The IDR department’s function within an insurer is to undertake a separate and independent review of your complaint, this often also involves a review of your claim.

They should keep you updated on their process and notify you about their final decision.

At this point, you should have a good idea as to why your claim was denied. If you’re still convinced your claim has been dismissed unfairly, you now have all the information you need to escalate your dispute even further.

Step four: Contact the Australian Financial Complaints Authority

Seek external advice from the AFCA and make a formal dispute with them. They will then communicate between you and the insurance company. The AFCA is an independent organisation who offers a free service, and all decisions they make are binding.

By this stage in the car insurance claim dispute process, hopefully, you’ll have reached a resolution with your insurance company.

How does AFCA assess car insurance claim disputes?

Once AFCA receives a complaint, this complaint will be formally registered and referred to a case manager, who will be in charge of assessing your dispute and reaching a resolution. Note that you must make a complaint within two years of receiving a response from the IDR.

If you haven’t gone through the insurance provider’s IDR, you can still make a complaint to the AFCA, though this must be within six years of the claim being rejected.¹

Should you be unhappy with AFCA and the insurer’s IDR outcomes, there’s a further step you can take.

Step five: Litigation

You can take your insurance provider to court to try and settle the matter. Small claims tribunals differ from state to state, so contact your state legal body or seek legal advice about the validity of your dispute from a legal professional if you wish to take legal action.

If you pursue legal action, you should ensure you have first attempted all other steps beforehand. Also, keep in mind that legal action will cost you money.

Switching car insurance

If you’re not satisfied with your insurance provider or are just looking to switch policies, you can read our guide on how to switch car insurance.