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If the insurer has refused your claim this refusal must be in writing. If the insurer telephones you and tells you your claim has been refused, ask them to put it in writing.
Your options once your insurance claim has been refused are to:
If English is your second language you should use an interpreter to assist with completing any further response to your insurer.
Remember that the insurance policy is a contract and the refusal of the claim is a legal dispute.
If your claim is rejected we recommend that you ask your insurer to internally review the decision straight away.
If your claim is rejected, the insurer must give you access to an internal and an external dispute resolution process. You must try to resolve a complaint through the insurer's internal review process before approaching the external scheme - the AFCA. While the structure of the internal dispute resolution process varies with each insurer, it usually means the decision is reviewed by someone at a more senior level. This can be useful in two ways:
You can get contact details for each insurer's internal dispute scheme from AFCA. The insurer is allowed to take a maximum of 30 days for the internal review of any decision (or failure to make a decision) under the General Insurance Code of Practice, but if the matter is urgent, this time should be shortened.
If your claim has still been denied after an internal review, the next step is to complain to the AFCA as soon as you can. AFCA can only hear complaints about insurers that are AFCA members.
The advantages of AFCA are:
The scheme's disadvantages are:
AFCA has terms of reference that state which cases it can hear. These can be altered from time to time. For a copy of the terms of reference, contact AFCA or visit: www.afca.org.au.
Where the claim is for $1,085,000 (or less), AFCA can make a final decision that is binding on the insurer about:
AFCA may consider a dispute outside the terms of reference if the insurer agrees. You should approach the insurer about a claim outside the terms of reference to see if they will agree to the panel hearing it.
The maximum compensation AFCA can award is $542,500.
When AFCA receives a complaint, it will write to the insurer asking it to provide a written response. The insurer can insist its written submission is confidential. However, AFCA will encourage the insurer to provide you with copies of the reports from its hydrologist, if this has not been done.
AFCA will try to resolve the dispute by mutual agreement. If a dispute cannot be resolved by mutual agreement, AFCA conducts a detailed investigation and may offer an initial view on the merits of the dispute if it is likely to assist the parties to reach a resolution.
In most instances AFCA issues a recommendation. If a recommendation is not accepted by either party, a determination can be made.
Determinations are often made by a panel. The panel consists of three people:
Generally, the panel's decision is based on written submissions and reviewing documents, rather than interviews with the people involved. In flood cases, the panel may visit the storm scene, inspect the area and speak to the people involved.
Like all decision makers at AFCA, the panel must make its decision based on what is fair and reasonable in all the circumstances, and in line with good insurance practice, the policy terms and established legal principles. This is broader than the issues a court would consider.
The panel's decision is binding on the insurer. However, you can choose whether to accept the decision. If your claim is still refused by the panel, you can reject the panel's finding and take the insurer to court.
Your written submission should include:
Your policy may also say you need to let your insurer know about the damage as soon as possible. It may be a basis for refusing your claim, so don't delay.
If your property insurance claim resulted from a catastrophe or a disaster, you have 12 months from finalisation of your claim (if finalised within one month of the disaster) to ask for a review of your claim (clause 90 General Insurance Code of Practice).
If your insurer refuses to assess your claim because you cannot pay the excess, you should ask for an internal review and external review (if necessary). You may be able to argue that, under section 54 of the Insurance Contract Act, insurers cannot rightfully refuse your claim simply because you cannot afford to pay the excess in a lump sum.
If the review is refused or partially rejected then you can complain about this to the insurer's Internal Dispute Resolution department.
The General Insurance Code of Practice states insurers will respond to your request for internal review within 30 business days if they receive all necessary information and have completed any investigation required.
Each insurer designates senior officers to look at claims in an internal review and to make a final decision about the complaint.
If your insurer is not complying with their code obligations, you can contact the General Insurance Code Compliance Committee.
Your time limit for lodging a complaint with AFCA will expire on the earliest of:
If AFCA receives a complaint that has not been through the internal review, they will ask you to go back to the insurer for internal review. The insurer will then make a final decision that can be taken back to AFCA within two years.
AFCA generally will not grant the right to lodge a dispute outside this time frame without the agreement of the insurer. When you lodge your complaint (AFCA calls this a "dispute"), you will be asked to fill in a form called a "notice of referral". You must complete and return this form by the date specified or you may lose your right to complain to AFCA. It is worth putting in a late complaint with reasons for the delay. Seeking legal advice about what to say is recommended.
Once AFCA has received a complaint (called "lodging a dispute"), a decision is likely to be made within three to six months but could take longer.
If your matter is unsuccessful at AFCA, you can still take it to court. You must start your claim within six years from when the claim arose (which may be six years from the date of the 'insured event' - eg storm or flood - depending on what your policy says).
If AFCA's decision maker finds in your favour, it can make a decision ordering the insurer to pay:
AFCA's decision makers have the power to order the insurer to pay legal costs (in very limited circumstances) or expenses - such as hydrologist reports - where it is appropriate to do so.
AFCA has limited power to order the insurer to pay damages.
While AFCA is designed for people who do not have lawyers, some flood insurance cases are difficult and may need help from a lawyer.
Legal Aid Queensland can provide advice and some assistance for disputes with insurers. You can call Legal Aid Queensland on 1300 65 11 88.
Last updated 22 March 2022