Insurance companies sometimes get a bad rap for trying to weasel their way out of legitimate claims. We’ve all heard more than our fair share of stories about companies that have denied claims on technicalities, upholding the letter etc. This is not in the spirit of the contract.
In Australia, however, it’s rare for reputable insurance providers to deny a claim. In fact, according to a study published by the Financial Ombudsman Service, only 3% of all insurance claims are denied.
But you’re probably wondering… what if I end up in the 3%? Can my family or my business survive a costly liability? Isn’t that why you’ve been paying for insurance in the first place?
Why are Insurance Claims Refused?
If you ever receive a rejected insurance claim, turn to your broker for assistance to understand the finer points of the insurance policy, and how your circumstances fit within the policy.
The 3 most common reasons for insurance claims being denied are:
1. Limited coverage that does not include the damage within your claim.
2. Claims in excess of the policy limit.
3. Lapsed coverage which can arise for a variety of reasons, including failure to pay your monthly insurance premium.
If your claim is denied for one of the above reasons, the insurance company’s decision may be legitimate. Or, if you’ve done your research, you may still feel the denial is unreasonable. Either way, you should reach out to your broker for help taking further action.
Your broker can quickly help you determine whether there are grounds for challenging the insurer’s decision. Specifically, most insurers subscribe to the General Insurance Code of Practice. This code is in place to ensure fair and timely resolution of customer disputes. If your insurer has violated the code, you can use that violation to demand a fair, equitable, and prompt resolution. Specifically, section 10 of the code deals with complaints and disputes. There are strict time periods in place in which insurers must deal with complaints.
Leverage your Broker’s network
Perhaps the most confusing thing about navigating a rejected insurance claim is the variety of protocols and institutions that play a role in the appeal process.
Under Australian law, insurers are required to provide two separate avenues for appeal.
1. Internal Disputes: Every Australian insurance company MUST provide an internal dispute resolution process, allowing you to appeal the denial directly with the insurer. Most insurance companies don’t promptly reply to these inquiries, so be prepared to wait for a response. However, under law, insurers are required to respond to you within 15 days. Because your broker is often well connected with the insurance company, he/she can help you receive a response as quickly as possible. They can also help you to provide all required information on the first submission so that the review process is not held up further.
2. External Financial Ombudsman Service: Once you’ve gone through the proper internal dispute channels, you can appeal the decision to an independent Australian agency called the Financial Ombudsman Service (FOS). If you’re still not satisfied with the results of your internal dispute, ask your broker to provide you with the proper contacts to initiate an external adjudication through the FOS-.
Your Broker knows your policy
You can measure the quality of your insurance broker by the depth of their knowledge about your policy. The best brokers will know the finer detail about your policy, allowing them to effectively mediate with your insurer if/when your claim is refused.
If you want to know more about whether your insurance policy has you correctly covered please feel free to call us on 1300 167 143.