Sometimes you can get stuck in limbo where you have made the claim but have not had a decision on your claim. This fact sheet explains your rights to request information from the insurer or lodge a dispute if necessary.
This factsheet only applies to general insurance claims – this includes home and contents insurance, motor vehicle insurance, sickness and accident, travel, pet, and often consumer credit policies.
Darren has a comprehensive car insurance policy. He lodged a claim when his car was stolen. Darren has been calling BIG INSURANCE COMPANY every couple of days, but nothing has happened for weeks. They promise to get someone to ring him back but he doesn’t hear back. They keep asking him for information and documents and they haven’t made a decision.
More information about the complaints process and AFCA is available in our factsheet here: https://insurancelaw.org.au/factsheets/insurance-dispute-resolution-factsheet/
HOW LONG CAN THE INSURER TAKE?
The flow chart below gives an idea of the time-frames that apply to insurers under the General Insurance Code of Practice when they receive a claim:
IMPORTANT: The above information is a guide to the timeframes under the Code. The insurer has 45 days from the date you stated you had a complaint/dispute to respond or resolve it. After 45 days you can lodge in AFCA.
In addition to the above, the following deadlines apply to making a decision on a claim:
This does not mean that you have to wait four months (or twelve months) before lodging a complaint! It does mean that the insurer has breached the General Insurance Code of Practice if they fail to meet these deadlines and you can point this out in your complaint.
Exceptional circumstances include:
- extraordinary catastrophe or disaster;
- fraud or a reasonable suspicion of fraud;
- you don’t respond to the insurer’s reasonable inquiries or requests for documents or information;
- difficulties in communicating with you due to circumstances beyond the insurer’s control; or
- you request a delay in the claims process.
IMPORTANT: You can still raise a complaint before four months (or twelve months) if the insurer is not acting fairly or reasonably in moving your claim forward.
IF AN INSURER ENGAGES AN EXTERNAL EXPERT TO PROVIDE A REPORT TO ASSESS YOUR CLAIM:
The insurer will instruct the expert to provide a final report within 12 weeks. If no report is provided in this period, insurer will keep you informed of the progress of obtaining the expert report.
You have a right to request a copy of information and reports relied on in deciding your claim.
In special circumstances or where a claim is or has been investigated, insurer may decline to release information but should not do so unreasonably.
If your claim is denied and you request copies of external reports relied on by the insurer, they must send you the reports within 10 business days of your request.
WHAT TO DO WHEN YOU ARE IN INSURANCE CLAIM LIMBO
If the insurer is not making a decision and not informing you whether further information is required or why there is a delay, try lodging a dispute.
As a guide, if you think there has been unreasonable delay and you are not satisfied with the insurer’s reason for this, you should ring the insurer and lodge a dispute.
The dispute process is:
FIRST STEP: INTERNAL DISPUTE RESOLUTION (IDR)
This is the dispute handling department within the insurance company. You lodge a dispute by calling the insurer and saying that you have a dispute or complaint about the delay in making a decision on your claim. Insurers have to comply with time-frames in the General Insurance Code of Practice.
You can search for your insurer’s complaints department contact details here: https://afca.org.au/make-a-complaint/findafinancialfirm/
We also have a sample letter you can use: Sample letter: Raising a dispute
IDR has to respond within 45 days from the time you first raised a complaint to the insurer. Once a decision has been made, IDR should issue a written decision setting out their reasons for that decision and setting out your rights to take the matter further.
If your dispute is not resolved within 45 days you can lodge in the Australian Financial Complaints Authority (see below).
SECOND STEP: AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY (AFCA)
AFCA is a free and independent external dispute resolution scheme for consumers.
If you have internet access, the online complaints form at https://afca.org.au/make-a-complaint/ is generally the easiest way to lodge, and you will receive an email confirmation with your case reference number.
You can also lodge by phone by calling 1800 931 678 if you require any assistance.
AFCA is set up to be consumer friendly, so anyone can access the service without needing legal advice or representation (though you may want to consider this if you are unsure of your rights or need further assistance). AFCA cannot provide any legal advice as they must remain independent.
If you believe that your insurer has caused an unreasonable delay when they have all the information they need to make their decision, then you may be able to seek interest if you are ultimately successful with your claim. Ask for interest to be paid from the date the insurer reasonably should have made the decision.
AFCA’s process for awarding interest is explained here: https://www.afca.org.au/about-afca/rules-and-guidelines/application-of-interest/
AFCA can award up to $5000 in non-financial loss – for losses such as an excessive amount of inconvenience, stress or anxiety caused to you by the insurer. AFCA tends to be conservative with this type of loss, so medical certificates or clear chronologies and other evidence can be helpful.
AFCA’s process for awarding non-financial loss is explained here https://www.afca.org.au/public/download.jsp?id=7229
NEED SOME MORE HELP?
See Fact sheet: Getting help for a list of additional resources.
Last updated: November 2019