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. They may not tell you they suspect you of fraud. Instead you will often be told that your claim is being investigated.
CO-OPERATING WITH THE INVESTIGATION
An insurer is entitled to investigate your claim, to make sure your claim is genuine and falls within the scope of the policy.
You have a duty to cooperate with your insurer’s investigation, provided that the investigation is relevant and reasonable.
You also need to prove that you have suffered loss covered by your policy. This includes establishing that the loss occurred in circumstances consistent with the other known and confirmed evidence, and that your version of events is credible.
If your claim is not genuine, you should withdraw it immediately. Insurance fraud is a criminal offence and can lead to serious consequences.
WHAT DOES FRAUD MEAN?
Fraud is where a person obtains, or tries to obtain, a benefit under an insurance policy by deception. A fraudulent claim may be made in a variety of ways, some examples include:
- deliberately giving the insurer false information in the claims process;
- knowingly making false statements when applying for insurance;
- buying a policy after an accident and falsely claiming the accident happened after the policy purchase;
- deliberately damaging insured property and then making an accident claim.
Fraud is a serious allegation and the onus of proof is on the insurer to prove the allegation. The insurer needs clear and cogent evidence to show 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.
Where fraud is established:
- The insurer can reject your claim and cancel your policy.
- The insurer may be refer the issue to police to investigate and you may be charged with a criminal offence.
- You may not be able to get insurance in the future. Insurers usually ask about fraud, your claims history and policy cancellations when new policies are taken out, and at renewals when they ask you to confirm your information is still accurate moving forward. Fraudulent claims may be listed on your insurance report.
You should get legal advice if you have concerns you may have lied or misled your insurer, or have concerns about the consistency of information the insurer has. There are some limited protections in the Insurance Contracts Act 1984 (ICA), for instance:
- 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 (section 56)
- 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 (section 54)
The way these protections work in practice can be complex and it is very important you get legal advice on your situation. Legal advice is confidential and can help you make the best decision about which way you want to go with the claim and what risks are involved.
If the insurer cannot prove fraud, other reasons they may use to reject your claim could include:
- breach of the duty of utmost good faith- if they believe that you have provided inconsistent information or not cooperated with their investigations; or
- you have not proved that you suffered loss covered by your policy.
REQUESTS FOR INFORMATION AND DOCUMENTS
Most general insurers have subscribed to the General Insurance Code of Practice.
Section 67 of that Code says that:
When we (the insurer) are assessing your claim, we will only ask for and rely on information that is relevant to our decision. If we ask you for information, then we will tell you why we need it.
“Relevant information” can be interpreted very widely. When investigating fraud, you will typically be asked for:
- financial records including bank statements, credit card statements, loan statements, lines of credit and mortgage documents;
- information relating to the insured property, 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 .
IMPORTANT: If you refuse to provide requested information, there is a risk that the insurer will reject your claim on the basis that you have not complied with your duty of utmost good faith to cooperate with reasonable investigations.
If you are unable to provide information that the insurer has requested, you can:
- write to the insurer to explain why you are unable to provide the information and what attempts you have made
- offer to sign an authority so the insurer can contact other organisations (such as phone companies or banks) to obtain the information they need directly.
IMPORTANT: Before signing any authorities to allow the insurer to access personal information about you, make sure you check that the scope of the request is reasonable. For instance, you want to limit the organisations, time period and/or the type of accounts the insurer can access
If you believe the insurer’s request is unreasonable, see below for information about how to make a complaint. Complaints can take time to resolve, and you should consider getting legal advice if you’re not sure if a request is reasonable.
INFORMATION FROM OTHER PEOPLE
Insurers cannot force people who are not part of the policy, to cooperate in their investigations. Insurers also cannot rely solely on that person’s refusal to participate to reject your claim – though it can be considered as one factor among many in the overall circumstances of your claim.
You do not have to:
- obtain information held in another person’s name; or
- compel your friends and relatives to answer questions from an investigator.
However, your duty to cooperate with your insurer usually extends 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 helps to prove that the loss occurred, and the credibility of what you have told the insurer.
As you want your claim paid, it is generally in your interests for other people to make themselves available to corroborate your version of events.
WHAT IF THE INVESTIGATION IS TAKING TOO LONG?
The General Insurance Code of Practice sets out that insurers should:
- Make a decision on your claim within 10 business days of completing their investigations (clause 76)
- Decide the claim within 4 months (clause 77) – however they can extend that out to 12 months if your claim is fraudulent (or they reasonably suspect that) or you do not respond to their reasonable enquiries or are difficult to contact (clause 78)
The insurer also has a duty of utmost good faith, so they still need to be progressing your claim even if they are within the time limits above.
If you think an investigation is taking too long (e.g. there is no sign the claim is progressing, or the insurer seems to be delaying), see below for how to complain to the insurer.
It can be helpful for you to provide a timeline setting out dates of contact by the insurer or investigator.
Make sure you have provided all the information requested of you! You do not want the insurer arguing that you caused the delay.
If you think the delay is unreasonable you can request that the insurer pay interest from the date on which it became unreasonable for the insurer to withhold payment of the claim. For further information see AFCA’s Approach to motor vehicle insurance claim delays.
The insurer may ask to interview you. Our tips for preparing for an interview:
- You can negotiate with the insurer for the interview to be held at 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.
- 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.
- Do not guess an answer:
- 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.
- 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.
- Try to remain calm.
- Take your time to think through questions before answering them.
- Ask for a break if you need one.
- Most interviews are voice recorded, you can ask for a digital copy or transcript of the interview later. You can also record the interview yourself (e.g. on your phone) but make sure you ask for permission first as it can be an offence depending on where you live.
- Do NOT sign anything you are unsure of.
WHAT CAN I DO IF THE INSURER REJECTS MY CLAIM?
You should ask for:
- Written reasons for their decision; and
- 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 81-82 and Part 12 of the General Insurance Code of Practice, and their duty of utmost good faith towards you, to argue that they should provide it.
The insurer cannot unreasonably refuse your request and must give you reasons. Refusal may occur under section 163:
- where a law — for example, the Privacy Act 1988 — says we do not have to;
- in the case of a claim where the claim is being or has been investigated, and giving access would have an unreasonable impact on the privacy of other individuals or government agencies; or
- if doing so may be prejudicial to us in relation to a Complaint or a dispute about your insurance cover or your claim — however, even in this circumstance we must give you access to any External Experts’ reports we relied on.
COMPLAINING ABOUT THE INSURER
The usual process is:
- Go to the insurer’s complaints section (also called their internal dispute resolution section). You can find their contact details here: https://www.afca.org.au/make-a-complaint/findafinancialfirm
- If the complaint is not resolved within 30 days, you can lodge a dispute with the Australian Financial Complaints Authority (AFCA). See our Insurance dispute resolution fact sheet. This is a free consumer complaints service, but it does take time. An insurer has to follow AFCA’s decision if you accept it. If you do not agree with AFCA’s decision, you can choose to reject it and go to court (time limits apply).
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: March 2022.