What to Do if You Disagree With a Home Insurance Claim Decision

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Disagreeing with a home insurance claim decision

A home insurance claim dispute in Australia can happen when a policyholder disagrees with an insurer's decision to deny a claim, reduce a payout, apply an exclusion, choose a repair method or offer a settlement that does not seem to reflect the loss.

Disputes can be stressful, especially after storms, floods, bushfires, theft, vandalism or accidental damage. However, you do not have to accept a claim decision without understanding the reasons behind it. You can ask questions, request written explanations, provide further evidence and use formal complaint pathways if the issue remains unresolved.

This article explains the practical steps Australians can take if they disagree with a home or contents insurance claim decision. It is general information only and does not take into account your personal circumstances, policy wording or claim facts.

First, understand what the insurer has decided

Before challenging a claim outcome, make sure you know exactly what the insurer has decided and why. A claim decision may involve several separate issues, including whether the event is covered, whether an exclusion applies, the amount of damage accepted, the repair scope, the settlement amount, the excess payable or the way the insurer proposes to settle the claim.

Ask the insurer to explain the decision in writing if it has not already done so. Useful details to request include:

• the policy clauses, exclusions, limits or conditions relied on;
• the assessor's findings or repair scope, where relevant;
• how the settlement amount was calculated;
• why any part of the claim was declined or reduced;
• what evidence the insurer considered; and
• what options you have if you disagree.

Having the insurer's reasons in writing can help you identify whether the dispute is about policy interpretation, evidence, repair costs, causation, depreciation, underinsurance or another issue.

Review your policy and claim documents

Your policy documents are central to any home insurance settlement dispute. Read the Product Disclosure Statement, policy schedule, certificate of insurance and any relevant endorsements or special conditions. Pay attention to what is covered, what is excluded and whether limits or excesses apply.

Common areas that can affect claim outcomes include:

• insured events: whether the cause of damage is included under the policy;
• exclusions: events, causes or circumstances the policy does not cover;
• maintenance conditions: whether wear and tear, gradual deterioration or lack of maintenance is relevant;
• sum insured limits: whether the insured amount is enough to cover the loss;
• contents limits: limits for valuables, collections or specific categories of items;
• repair or replacement terms: whether settlement may be by repair, replacement or cash payment; and
• temporary accommodation or additional costs: whether these are covered and subject to limits.

If policy wording is unclear, these tips to understand your home insurance policy may help you work through the main documents before you respond to the insurer.

Gather evidence before you dispute the decision

A stronger dispute is usually based on clear evidence rather than general disagreement. The evidence you need will depend on the reason for the insurer's decision.

Consider gathering:

• photos or videos of the damage before and after any temporary repairs;
• receipts, invoices, valuation records or proof of ownership;
• repair quotes from licensed tradespeople, where relevant;
• reports from builders, plumbers, electricians, engineers or other specialists;
• weather event information, where the claim relates to storm, flood, bushfire or similar damage;
• maintenance records, if the insurer has raised maintenance concerns;
• copies of emails, letters, claim forms and settlement offers; and
• notes of phone calls, including dates, names and what was discussed.

Do not alter, dispose of or repair damaged property beyond necessary temporary safety work without checking the insurer's requirements, unless urgent action is needed to prevent further damage or danger. Keep receipts for urgent temporary repairs.

Ask questions before making a formal complaint

Sometimes a claim issue can be clarified before it becomes a formal dispute. Contact the claims handler and ask targeted questions about the decision. For example:

• Which policy clause is the decision based on?
• What evidence would change or clarify the assessment?
• Can I provide an independent repair quote or expert report?
• How was the cash settlement calculated?
• Can you explain any deductions, depreciation or limits applied?
• What happens if I disagree with the repair scope?
• Can the claim be reviewed by another claims officer or assessor?

Keep your communication factual and organised. If you speak by phone, follow up with a short email summarising what was discussed. This helps create a clear record if the matter later moves to internal dispute resolution insurance processes.

Use the insurer's internal dispute resolution process

If informal questions do not resolve the issue, you can make a formal complaint through the insurer's internal dispute resolution process, often called IDR. Insurers in Australia are expected to have a complaints process for customers who disagree with a claim decision or service issue.

Your complaint should clearly explain:

• your policy number and claim number;
• the decision or settlement offer you disagree with;
• why you believe the decision is wrong or incomplete;
• the evidence you want the insurer to consider;
• what outcome you are seeking; and
• how you would prefer the insurer to contact you.

Ask the insurer to confirm that your complaint has been registered as an internal dispute resolution complaint. Keep a copy of the complaint and any acknowledgement you receive.

Example structure for a complaint

You do not need complex legal language. A clear structure can be enough:

• Background: Briefly describe the event, claim and decision.
• Issue: State what you disagree with, such as denial of cover, repair scope or settlement amount.
• Reasons: Explain why you believe the decision should be reviewed.
• Evidence: List the documents, photos, reports or quotes you are providing.
• Requested outcome: Say what you want the insurer to do, such as reassess the claim, consider a report, revise the repair scope or explain the calculation.

Common reasons home insurance claims are disputed

If the dispute is about a cash settlement

A cash settlement may be offered instead of the insurer arranging repairs or replacement. If you disagree with a home insurance settlement offer, ask for a detailed breakdown before accepting it. This may include labour, materials, demolition, debris removal, fees, temporary accommodation, contents replacement and any deductions or excesses.

Consider whether the settlement accounts for the full repair scope and any policy limits. If you have an independent quote that differs from the insurer's assessment, provide it and ask the insurer to explain any differences.

Be careful before signing any settlement agreement or release. Ask what rights, if any, you may be giving up by accepting the payment. If you are unsure, consider getting independent guidance before agreeing.

If your insurance claim is denied

If your insurance claim is denied, ask the insurer to identify the exact exclusion, condition or policy term it is relying on. A denial may be based on the cause of damage, lack of cover for a particular event, policy conditions, non-disclosure issues, maintenance concerns or insufficient evidence.

Check whether the insurer has considered all relevant facts. If you believe information is missing or incorrect, respond with specific evidence. For example, if the insurer says the damage was caused by wear and tear, you may need evidence about the sudden event that caused the damage or maintenance records showing the property was reasonably maintained.

For broader claim preparation tips, see this guide to common household insurance claims mistakes and how to prevent them.

Escalating to AFCA for a home insurance complaint

If your insurer's internal dispute resolution process does not resolve the complaint, you may be able to take the matter to the Australian Financial Complaints Authority, known as AFCA. AFCA is an external dispute resolution body that handles eligible complaints about financial firms, including many general insurance disputes.

An AFCA home insurance complaint may be relevant where you disagree with a claim denial, settlement amount, repair decision, delay or complaint handling outcome. AFCA has its own rules, jurisdiction limits and time limits, so it is important to check the official AFCA information before relying on this pathway.

In general, you should usually complain to the insurer first and give it the opportunity to respond through internal dispute resolution. If the insurer gives you a final response and you remain dissatisfied, or if the applicable complaint response period has passed, AFCA may be an option if the complaint is eligible.

When to consider independent help

Some claim disputes are straightforward. Others involve technical policy wording, building issues, expert evidence or significant settlement amounts. Depending on the situation, you may consider getting help from a qualified professional such as a builder, engineer, legal adviser, community legal service, financial counsellor or insurance specialist.

If you are still comparing policies or trying to understand policy wording before a claim happens, the brokers page may be a useful starting point for learning how brokers can assist with policy questions. Broker availability, services and suitability will depend on your circumstances and the broker's criteria.

Keep a clear dispute timeline

A dispute timeline can make it easier to explain your complaint to the insurer, AFCA or an adviser. Create a simple document that records:

• the date of the insured event;
• when you lodged the claim;
• each major contact with the insurer;
• inspection or assessment dates;
• documents you supplied and when;
• the date of the claim decision or settlement offer;
• when you complained and what you asked for; and
• the insurer's responses.

Keep copies of supporting documents in one place. If possible, save emails and documents in a format that can be easily shared.

What not to do during a claim dispute

During a dispute, avoid actions that could make the issue harder to resolve. In particular:

• do not ignore letters, emails or document requests from the insurer;
• do not exaggerate the damage or provide information you know is inaccurate;
• do not dispose of damaged items before checking whether the insurer needs to inspect them, unless there is a safety or health reason;
• do not start major non-urgent repairs without understanding the claim requirements;
• do not accept a settlement if you do not understand what it covers; and
• do not rely only on verbal assurances where the issue is important - ask for confirmation in writing.

How claim disputes can inform future policy comparisons

A claim dispute can highlight why it is important to understand claims processes before choosing or renewing cover. When comparing home and contents insurance, do not look only at the premium. Also consider exclusions, limits, excesses, repair options, settlement wording, complaint processes and the level of support available during claims.

You can start with Household Insurance Online when learning about home and contents insurance in Australia and comparing policy features. Any quote, policy option or claim outcome will depend on your circumstances, the information you provide and the insurer's criteria.

Final thoughts

If you disagree with a home insurance claim decision, start by getting the reasons in writing and checking them against your policy. Gather evidence, ask clear questions and use the insurer's internal dispute resolution process if the issue is not resolved.

If you remain dissatisfied after internal dispute resolution, an AFCA home insurance complaint may be available for eligible disputes. The key is to stay organised, keep records and focus on the policy terms, evidence and outcome you are asking the insurer to reconsider.

Published: Saturday, 29th Apr 2023
Author: Paige Estritori