Investigations by insurers can be very upsetting and intimidating. This fact sheet gives you information about your rights and responsibilities during an investigation on a general insurance claim (e.g. comprehensive car or home building/contents insurance).
Also see our General Insurance Interview Checklist
Greg’s car was stolen at night. He had parked his car outside a racecourse when he went to see the races with some friends. Afterwards, he went to find his car and it had disappeared. After searching the area, Greg contacted the police to report the car stolen. Greg claimed on his insurance with BIG INSURANCE COMPANY.
BIG INSURANCE COMPANY is now asking Greg for a lot of personal information including phone records, TAB records and loan statements. They have also asked for permission to speak with Greg’s family and friends. The investigator wants to meet with Greg at his home and the meeting could take 3 hours or more. Greg does not want an investigator in his home.
Insurers are always on the lookout for fraud. The insurer will usually not tell you they suspect you of fraud. Instead you will often be told that your claim is being investigated. If you are being investigated, read this factsheet and consider whether you need to get legal advice.
DUTY OF UTMOST GOOD FAITH: CO-OPERATING WITH THE INVESTIGATION
An insurer is entitled to investigate your claim.
As part of your duty of utmost good faith under your contract with your insurer, you have a duty to cooperate with your insurer’s investigation, provided that investigation is relevant and reasonable.
In addition, the onus is on you to prove that you have suffered loss and damage which is covered by the terms and conditions of your policy. This includes establishing that the loss and damage occurred in circumstances consistent with the other known and confirmed evidence, and that your version of events is credible. Given that, provided your claim is genuine, it is in your interests to provide as much information as you can to your insurer to support your version of events.
If your claim is not genuine, you should withdraw it immediately. Claiming on insurance in circumstances where the claim is fabricated and you are seeking to obtain a financial benefit from the insurer can lead to serious consequences as you are committing fraud.
WHAT DOES THE INSURER HAVE TO PROVE IN A FRAUD INVESTIGATION?
Fraud occurs when a person seeks to obtain a benefit under an insurance policy by deception. It may involve deliberately damaging insured property and then making a claim; the deliberate insertion of false information in a claim form; and/or knowingly making false statements to the insurer to mislead the insurer. A fraudulent claim may be made in a variety of ways, so this is not an exhaustive list.
Fraud is a serious allegation and the onus of proof is on the insurer to prove the allegation. To establish fraud the insurer needs to prove that it is more likely than not that you intended to deceive the insurer or acted with reckless indifference as to whether or not the insurer was deceived.
If fraud is established by the insurer then it can reject your insurance claim and void your policy. This means you no longer have insurance cover. In serious cases, the matter may be referred to the police to investigate and you may be charged with a criminal offence.
Both parties to an insurance contract have the obligation to act with utmost good faith towards each other. Where the insurer does not have sufficient evidence to prove fraud but they believe that you have provided inconsistent information they may try and reject your claim on the basis of a breach of the duty of utmost good faith. Alternatively, the insurer may try and reject your claim on the basis that you have not proved that you suffered loss and damage covered by the terms and conditions of your policy.
According to section 56 of the Insurance Contracts Act 1984 (ICA), the insurer cannot rely on fraud if the fraud was minor and it would be unfair for the insurer to reject the entire claim. The insurer can reject any part of the claim that is made fraudulently.
Similarly, section 54 of the ICA says that the insurer cannot rely on an act or failure to act, or statement or misstatement on your part, if your words or conduct did not contribute to the loss or prejudice the insurer’s interests.
REQUESTS FOR PERSONAL INFORMATION
Most general insurers have subscribed to the General Insurance Code of Practice.
Under section 7.3 of General Insurance Code of Practice, insurers have agreed that they will only take into account “relevant information” when deciding on your claim.In the context of fraud, “relevant information” can be interpreted very widely. When investigating fraud, it is normal for the insurer to request personal information such as:
- financial records including bank statements, credit card statements, loan statements, lines of credit and mortgage documents;
- information relating to the insured assets, such as proof of registration and service records in a motor vehicle claim;
- telephone records; and
- criminal history or driving history where you were required to disclose this information when you purchased the policy .
If, for some reason, you are unable to provide information that the insurer has requested you should write to the insurer setting out why you are unable to provide the information and what attempts you have made to obtain it.
You should complain in writing or verbally to the insurer’s internal dispute resolution section if you think the information requested is excessive or irrelevant. If the internal dispute resolution section does not resolve your dispute within 45 days you can lodge a dispute with the Australian Financial Complaints Authority (AFCA). See our Insurance dispute resolution fact sheet. AFCA is a free dispute resolution service.
IMPORTANT: If the insurer requests information and you refuse to provide it there is a risk that the insurer will reject your claim on the basis that you have not complied with the duty of utmost good faith.
INFORMATION FROM THIRD PARTIES
Insurers may sometimes request that third parties, such as friends or family members, who aren’t insured for the purposes of the claim, agree to be interviewed or otherwise participate in the investigation. Insurers cannot force third parties to agree to be interviewed. Insurers cannot rely solely on the refusal of a third party to be interviewed as a basis to reject your claim.
You do not have an obligation to:
- obtain information held in another person’s name; or
- compel your friends and relatives to answer questions from an investigator.
However, you do have a duty to cooperate with your insurer. This would usually extend to providing the names and contact details of people who may be able to provide information relevant to your claim. This may be particularly important where the evidence of another person is relevant to proving that loss and damage covered by the terms and conditions of your policy has occurred, and establishing that your version of events is credible. As you want your claim paid, it is generally in your interests for third parties to make themselves available to corroborate your version of events. If there is a third party who may be able to corroborate (back up) your version of events (for example, in the case study above, the friends with Greg at the races when his car was stolen), but you refuse to provide their contact details, your insurer may infer that the third party would not corroborate your version. They may further infer that your version of events cannot be relied on.
WHAT IF THE INVESTIGATION IS TAKING TOO LONG?
The General Insurance Code of Practice sets out time limits that the insurer should comply with for resolving claims.
Section 7.16 through 7.18 General Insurance Code of Practice states:
7.16 Once we have all relevant information and have completed all enquiries, we will decide whether to accept or deny your claim and notify you of our decision within ten business days.
7.17 Our decision will be made within four months of receiving your claim, unless Exceptional Circumstances apply. If we do not make a decision within four months, we will provide details of our Complaints process.
7.18 Where exceptional circumstances apply, our decision will be made within 12 months of receiving your claim. If we do not make a decision within 12 months, we will provide details of our Complaints process.
Exceptional circumstances are defined to include where there is fraud or where fraud is reasonably suspected. As a consequence the insurer may deem that the four month time limit is not applicable.
If you think an investigation is taking too long (e.g. longer than a month), you should complain to the insurer’s internal dispute resolution section. You should say something like:
“I wish to raise a dispute about the delay in my claim. I want your internal dispute resolution department to review my claim and respond in writing”
It is generally of value to set out a short chronology (a timeline) setting out dates of when you were contacted by the insurer or investigator. Make sure you have provided all the information requested of you! To establish the insurer has delayed you need to make sure you have been timely with your responses for requests for information.
If the internal dispute resolution section does not resolve your dispute within 45 days you can lodge a dispute with AFCA. See our Insurance dispute resolution fact sheet. AFCA is a free dispute resolution service.
If you think the delay is unreasonable you can request that the insurer pay interest under section 57 of the ICA from the date on which it became unreasonable for the insurer to withhold payment of the claim. AFCA will decide whether or not the delay was unreasonable : for further information see AFCA’s Approach to motor vehicle insurance claim delays.
Where an insurer is investigating a claim they may request that you take part in an interview.
If you are being interviewed by an investigator, some tips include:
- You can request that the interview be held in a neutral location i.e. somewhere private but not at your home. This makes it easier to leave if you need to. If you are happy to have the interview at home, you can. For some claims, the insurer may have a legitimate interest in viewing the home, for example, for a theft claim at the property.
- Set a maximum time for the interview in advance (e.g. 1-2 hours). Once this time is up, consider leaving.
- Do not guess an answer:
- If you don’t know the answer at all, you can say “I don’t know” or “I don’t remember” (whichever applies). Be aware that insurers may be sceptical if you cannot remember anything about an event or claim, so you should try and talk it through with the investigator and answer questions as best you can.
- If you are unsure of your answer to a question make the investigator aware of this.
- Make it clear to the investigator if you are estimating times or other details.
- Try to remain calm.
- Take your time to think through questions before answering them.
- If English is your second language, or you feel more comfortable communicating in a language other than English, you can request an interpreter.
- You can bring a support person, provided they do not speak on your behalf, and are not themselves a person the insurer might reasonably want to interview as part of its investigation, for example, a witness.
- Ask for a break if you need one.
- If your interview with the investigator is being recorded, ask for a digital copy or transcript of the interview. You can also record the interview yourself (e.g. on your phone).
- Do NOT sign anything you are unsure of.
- Consider seeking legal advice before and after the interview if you have any questions or concerns.
WHAT IF MY JOINT CO-INSURED MADE A FRAUDULENT CLAIM ON OUR POLICY BUT I WAS NOT AWARE OF THE FRAUD?
According to the common law the interests of joint co-insured are treated as one and the same. This means that the claim will be taken to have been made fraudulently even if you were not aware of the fraud. You should get legal advice and see what you can do.
WHAT CAN I DO IF THE INSURER REJECTS MY CLAIM ON THE BASIS OF FRAUD (OR BREACH OF DUTY OF UTMOST GOOD FAITH)?
If the insurer rejects your claim on the basis of fraud, you should request their reasons in writing under section 7.19 of the General Insurance Code of Practice
You should also request a copy of all evidence the insurer is relying on including expert reports, transcripts, and audio recordings. See our Sample Letter to Your Insurer Requesting Documents. If the insurer refuses to provide the evidence, you can rely on sections 7.19 and 14.2 of the General Insurance Code of Practice, and also on the duty of utmost good faith, to argue that they should provide it.
Under section 14.4 of the General Insurance Code of Practice, where a claim has been or is being investigated, an insurer may decline to release information and/or reports, but must not do so unreasonably. If you believe that an insurer is declining the release of information unreasonably, then you should request written reasons from the insurer and request a review of the decision.
If you wish to have the insurer’s decision concerning your claim reviewed, you should make a written complaint to the insurer’s internal dispute resolution section. In your complaint you should try to address all of the concerns and inconsistencies that the insurer has set out in their letter rejecting the claim and point out any statements of yours that have been taken out of context by the investigator.
If your complaint to your insurer’s internal dispute resolution section has been rejected (or is not resolved within 45 days), you can then proceed with raising a dispute with AFCA because:
- It is free.
- It is independent.
- It can make a determination that is binding on the insurer. This means if AFCA decides the insurer has to pay then it has no choice.
- You don’t have to accept the determination if you don’t want to. If the decision goes against you then you can still go to court to pursue your case.
IMPORTANT: YOUR TIME LIMIT TO LODGE A COMPLAINT IN AFCA WILL EXPIRE ON THE EARLIER OF:
- 2 years from the date of the final response from the insurer’s internal dispute resolution section; or
- 6 years from when you first became aware or should reasonably have become aware of your loss (e.g. within 6 years from the date of the motor vehicle accident, theft or flood).
In AFCA, a Referee decides all disputes where fraud has been alleged. The Referee may request additional information from you or the insurer and, where appropriate, interview you or other willing witnesses in person.
I HAVE LIED TO MY INSURANCE COMPANY
If you have not been truthful in providing information to your insurer, your ability to successfully claim on your insurance policy may be affected and your insurance policy may be cancelled. You may need to disclose this cancellation to other insurers, and this may mean no insurer will be willing to insure you. Depending on the extent of the deception, it may also have further implications, including criminal charges. The insurer can’t initiate criminal proceedings against you but may refer the matter to the police to take criminal action against you. You want to seek legal advice to determine whether you can:
- correct the information and rely on section 54 of the ICA; or
- withdraw your claim.
NEED SOME MORE HELP?
Need some more help? Call the Insurance Law Service on 1300 663 464 for free and independent legal advice or see our Getting Help factsheet.
If you found this helpful and have further questions, why not try our Motor Vehicle Accident Problem Solver
Last updated: October 2018.