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Why claims fail
Common grounds for rejection — and whether they're valid
The real issue
Insurers are businesses that manage claim costs. A declined claim letter is not a legal ruling — it is a commercial decision that can be challenged. The Insurance Contracts Act 1984 (Cth) and the General Insurance Code of Practice set limits on what insurers can and cannot use to decline your claim. Some of the most common rejection reasons are challengeable.
| Rejection reason | Is it valid? | Your position |
|---|---|---|
| Non-disclosure of a pre-existing condition | Sometimes — depends on whether it was material and whether you knew | Under ICA s.21, you only need to disclose what a reasonable person would know was relevant. Innocent non-disclosure may reduce — but not eliminate — your claim. |
| Excluded event (e.g. flood vs storm) | Sometimes — definitions matter | Policy definitions of "flood" and "storm" are narrow and regularly disputed. The cause of the event determines which definition applies — this is frequently overturned at AFCA. |
| Failure to take reasonable precautions | Rarely — threshold is high | Insurers must show your actions were reckless, not just imperfect. Forgetting to lock a door or leaving a ladder visible does not usually meet the legal threshold. |
| Claim outside the policy period | Valid if the event occurred before cover began | Check the exact dates. If there's ambiguity about when the event started, this is worth disputing. |
| Claim not reported promptly | Only valid if delay caused prejudice to the insurer | Under ICA s.54, failure to report promptly is not grounds to void the claim unless the insurer can show the delay actually harmed them. |
| Underinsurance — settlement below actual loss | May be contractually valid but negotiable | If your sum insured was set using insurer-provided calculators, this may constitute mis-selling grounds. Worth challenging at AFCA. |
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Your evidence
What to gather before you appeal
| Document | Why you need it |
|---|---|
| The rejection letter | States the specific ground for rejection — this is what you are appealing. Every point must be addressed. |
| Your policy document (PDS) and certificate of insurance | The contract between you and the insurer. Highlight the specific clauses they are relying on and any clauses that support your claim. |
| Photos and video of the damage | Timestamped where possible. Document everything before any remediation work begins. |
| Receipts, valuations, or replacement quotes | Proof of value and cost of loss. Get at least two independent quotes for repairs or replacement. |
| Expert reports (builder, repairer, assessor) | A second independent assessment can directly contradict the insurer's assessor findings. |
| Weather bureau records (for weather-related claims) | BOM (bom.gov.au) records show wind speed, rainfall, and weather event classifications — useful to dispute flood vs storm classifications. |
| All communications with the insurer | Keep every email, letter, and note of phone calls (date, time, name, what was said). These form the record of the dispute. |
Request the insurer's claim file. You are entitled to request all documents the insurer relied on in making their decision — including the assessor's report. This often reveals inconsistencies or errors in the assessment. Make this request in writing as part of your appeal.
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Appeal process
How to lodge an internal dispute — and what to write
Every insurer regulated in Australia must have an Internal Dispute Resolution (IDR) process. This is mandatory under the General Insurance Code of Practice. Lodge a formal written dispute — do not rely on phone calls.
| Step | Action |
|---|---|
| 1. Write a formal dispute letter | Address it to the insurer's Complaints or IDR team. State clearly: "I am formally disputing the rejection of claim [reference number] under your internal dispute resolution process." |
| 2. Address each rejection ground | Take each reason from the rejection letter and respond to it specifically. Attach your supporting evidence for each point. |
| 3. Cite the relevant policy clause | Quote the specific policy wording that supports your claim being covered. If the insurer's interpretation contradicts plain reading, say so explicitly. |
| 4. Request their assessor's report | Include in your dispute letter: "Please provide all documents, reports, and assessments relied upon in making this decision." |
| 5. Note your AFCA rights | End the letter: "If this dispute is not resolved to my satisfaction within 30 days, I will escalate to AFCA." This signals you know the process and typically accelerates the response. |
Closing paragraph for your dispute letter
"If this matter is not resolved within 30 calendar days, or if I receive a response that does not address my grounds for dispute, I will escalate to the Australian Financial Complaints Authority (AFCA) without further notice. I request a written response that specifically addresses each ground of dispute raised in this letter."
Timeframe: Insurers must acknowledge your dispute within 5 business days and resolve it within 30 calendar days (or 45 days for complex claims). If they miss this, you can escalate to AFCA immediately.
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AFCA escalation
Taking it to AFCA — what to expect
AFCA (Australian Financial Complaints Authority) is the external dispute resolution scheme for financial services. It is free for consumers, and its decisions are binding on financial firms — including insurers. You cannot go to AFCA without first completing the internal IDR process (or waiting 30 days with no resolution).
| AFCA fact | Detail |
|---|---|
| Cost to you | Free. AFCA is funded by member firms, not by complainants. |
| Binding on the insurer | Yes — if AFCA makes a determination, the insurer must comply. You can choose to accept or reject AFCA's determination; the insurer cannot. |
| Time limit to lodge | Within 2 years of receiving the insurer's IDR response (or 6 years from the event for most complaints). Do not delay. |
| What AFCA considers | The policy wording, the Insurance Contracts Act, fairness, industry codes, and evidence from both parties. |
| Success rate | AFCA resolves a significant proportion of insurance complaints in favour of the complainant — particularly flood/storm definition disputes and non-disclosure cases. |
| How to lodge | afca.org.au — online lodgement. You will need your policy number, claim number, insurer's IDR response, and your supporting evidence. |
AFCA: afca.org.au · 1800 931 678 — Lodge online. Free. Binding on the insurer. If your claim involves significant amounts, consider engaging a public loss assessor or insurance lawyer for the AFCA submission — their fee is often recoverable from the insurer if you win.