The General Insurance Code of Practice requires insurers to be honest, fair and open with their customers and to maintain high standards when dealing with claims or customer complaints. What happens however, if the insurance company won’t pay your claim or only gives you a partial payment? What can you do if you are not happy?
First of all, you need to find out why they won’t pay your claim, then if you are still unhappy you can request an internal review of your claim. If that doesn’t work, you can opt for an external review by the Financial Ombudsman or you can commence legal action yourself against the insurers. In extreme cases and if you believe that the insurer’s actions are likely to affect other customers, you can report them to the Australian Securities and Investments Commission (ASIC).
Let’s look at how internal and external reviews operate, in the event that an insurer disputes your claim and you want to take the matter further.
Internal reviews and dispute resolution
Insurers have a variety of reasons to refuse to pay a claim in full or in part. These include the problem that the item in question wasn’t included in your policy or that it falls within their exclusions category. As an example, some of the common exclusions for home insurance claims are that the property was left vacant for long periods of time, it had pre-existing damage or you were renovating at the time and that caused the damage (in the latter case, check your builder’s insurance cover).
Other common causes include not paying your premiums or cancelling your policy (yes, people do make claims under these circumstances) or in the case of house insurance, not maintaining your property.
If you disagree with their reasons for not supporting your claim, the insurer must tell you how to request an internal review of your claim. Someone within the company who has the power to make a decision on your claim will review your complaint and if they have all the information they need to make a decision, they must get back to you within 15 days.
External reviews and dispute resolution
If you are still unhappy with this final decision concerning your claim, you can make a complaint to the Ombudsman, however you must have tried to reach a decision with the insurer and have given them 45 days to respond to your complaint.
The Ombudsman is completely independent to the insurance companies and will look at all of the evidence from both parties, giving an impartial decision. Mediation by the Ombudsman is usually attempted first, to see if a resolution can be reached between you and the insurer. If this doesn’t end well, then the Ombudsman will make a determination in your case. The insurers are bound to this decision, but you are not and if you are still not happy, you can take the insurer to court or report them to ASIC. One of the big benefits to the consumer of submitting your complaint to the Ombudsman is that it is free, whilst going to court can be very costly.
At Insurance Advisernet (IA), your adviser is there to act as an advocate in the event of a claim and to help guide clients through the claims process. From lodgement of the claim, monitoring progress and negotiating with our insurer partners to ensure the best possible outcome for our clients. Therefore, if you have any doubts, talk to your adviser to find out more about the claims process, otherwise find your local adviser today.
General Advice Warning
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.