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What's the next step after the insurer declines your insurance claim?

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Your insurance adviser will ensure the underwriter/ assessor/ adjuster has received all relevant documentation and information before the insurer decides to decline part or all of the claim. So, what can you and your insurance advisor do next?

Understand why your claim was declined

Firstly, it’s important to understand why your claim or part of the claim is not covered.

The reason(s) will be stated in the letter sent by the insurer, which may need an explanation from your insurance adviser.

If you believe the reasoning is incorrect or have further information that will assist the insurer in changing their decision, you can lodge a Complaint with the insurer. This will trigger the Insurer’s Complaints process. All insurers must have similar complaint management; the first part is internal dispute resolution (IDR).

Lodge a complaint with the insurer - Internal dispute resolution (IDR) process

Initially, all insurance disputes must be made to the insurer. All insurers have the same standard timeframes and requirements for managing complaints and disputes through an internal dispute resolution (IDR) process. The IDR review by the insurer is a complete review of the claim, policy coverage and your information and documents. It is managed by a different team than the claim team that declined the claim.

Complaints and Vulnerable clients

If you’re a ‘Vulnerable’ person, ensure the insurer is reminded of your issue. Insurers have special duties to vulnerable clients with domestic violence, health or financial matters.

Insurer IDR response

After the IDR process is completed, the insurer will provide their final decision, with either action to be taken by the insurer to fully resolve the complaint about the claim or reconfirm the reasons for rejection or partial rejection of the claim.

If you’re still unsatisfied with the outcome of the insurer’s IDR process, you can discuss lodging a complaint to AFCA (Australian Financial Complaints Authority) with your insurance adviser.

Complain to AFCA

Australian Financial Complaints Authority is a government service designed to assist consumers and small businesses to reach agreements with insurers about how to resolve their complaints.

AFCA is impartial and independent and does not act for either the insurer or the client.

If the insurer and their client cannot reach an agreement about the claim, AFCA will decide the outcome. AFCA’s decisions are binding on the insurer only, not the client involved in a complaint. Clients have the right to take legal action against the insurer if not satisfied with the decision of AFCA.

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Complaints involving your insurance adviser

Your insurance adviser is a member of the National Insurance Brokers Association (NIBA) and adheres to the Insurance Brokers Code of Practice. Insurance brokers and advisers are required to manage complaints in the same way as insurers. If you remain unsatisfied with the resolution put forward by the insurance adviser, the complaint becomes a dispute and is managed through a similar IDR process.

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General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Insurance Advisernet, ABN 15 003 886 687, AFSL 240549

This article originally appeared on Insurance Advisernet News and has been published here with permission.