What happens if you disagree with insurance payout?

Car insurance

Avoid surprises when you claim on your car insurance

3 minutes

You can claim on your car insurance when you've suffered any loss or damage that your policy covers.

When you have a car accident, contact your insurer as soon as possible. Some policies have time limits for claiming. Also ask them if you're entitled to any emergency benefits, for example, free car hire or accommodation.

1. Gather information about the accident

To make a claim, you have to meet the terms and conditions of your policy.

If your accident involved another car, your insurer may ask for details of the other driver, including:

• contact details (name, address, phone number)
• drivers licence and car registration
• insurance company
• car make, colour and model

Your insurer may also ask for:

• the location of the accident
• a description of what happened and any damage to cars or property (plus photos)
• a police report number (if the police attended or you reported your car stolen or damaged)
• details of the tow truck company (if one attended)
• contact details of any witnesses

2. Check what you can claim for

Check your policy to find out what you can claim for. For example, if you have third party insurance, you can only claim for damage to other cars.

Also check if there are any exclusions to your cover. You may not be covered if the person driving your car was under the influence of alcohol or drugs, or if your car was unregistered.

3. Check if you have to pay an excess

Generally, you have to pay an excess when you make a claim whether you're at fault or not. Some policies will waive the excess in limited circumstances.

Check your policy’s Product Disclosure Statement (PDS) for the excess amount and conditions where it might be waived.

4. Make a claim

There are different rules and processes for claiming. Check the claims process on your insurer’s website.

If you do decide to claim, you'll need to fill out a claim form. You may be able to do this with your insurer over the phone or online.

Ask your insurer if you can start a claim to find out how much the repairs will cost. Then you can decide if it's worth going ahead. For example, if the damage is minor, the repairs may cost less than your excess.

If the other party has admitted it was their fault, their insurer may pay for your costs.

The General Insurance Code of Practice sets out what insurers should do to handle claims. If they do not meet these standards you can complain to the insurer.

5. After you make a claim

After you've made your claim, the insurer must contact you within 10 business days. They may accept or reject your claim, or ask for more information.

If they reject your claim, they must do this in writing.

Your insurer may contact any other drivers, their insurers, and any witnesses who saw the accident.

They may also investigate to confirm the details of what happened and who was at fault.

If you're not happy with how your insurer has handled your claim, make a complaint to their Internal Dispute Resolution team. If you are still not happy, contact the Australian Financial Complaints Authority (AFCA).

Alisha was not at fault, but still has to pay her excess

Alisha's car was hit by a person driving a stolen car, who drove off after the accident.

Alisha contacts her insurer to make a claim. They tell her she will have to pay the excess, even though the damage wasn't her fault.

Alisha checks her policy. She finds a condition stating she has pay the excess if the 'at fault' party can't be found.

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.