We use cars day in and day out as they form an integral part of our work and personal life. Unfortunately, accidents happen, and while you may be insured for these accidents, navigating the claims process can sometimes be complex and stressful. However, do not fear—motor vehicle claims are common, and there are steps you can take to manage them effectively. This guide will provide you with the knowledge and strategies to handle your motor vehicle claims efficiently, ensuring you are well-prepared to tackle any obstacles that come your way.
Common Issues in Car Claims
When lodging a motor vehicle claim, common issues may arise that can complicate the process. Understanding these potential problems can help you prepare and manage your claim more effectively. Here are some typical challenges policyholders face and tips on how to address them:
1. Declined Claim: Claims can be declined for reasons like policy exclusions, misrepresentations, or non-disclosure. For example, if your vehicle was stolen this may be covered under your policy, however, as you left your keys in the vehicle the insurer may seek to impose a policy exclusion concerning your failure to take reasonable precautions in securing your vehicle. Always read your policy thoroughly so that you understand what is covered, what is not, your obligations and to ensure all the information you have provided to the insurer is accurate. A common reason for claim declines we see is a policyholder’sinadvertent failure to notify their insurer that their intended use of the vehicle is going to change, for example from private use to commercial use i.e. employment with a ride share or food delivery service or the modification of their vehicle. It is always important to notify your insurer if there is a change to your situation concerning the use of your vehicle.
2. Hire Car Issues: Disputes over hire car availability and duration can arise. For example, your policy might cover a hire car for only a certain number of days, leaving you without transportation if repairs take longer. Review your policy’s terms regarding rental vehicles to avoid unexpected costs. If you anticipate that you will require a hire car for longer than is expected you should immediately contact your insurer to let them know. If the delays are caused by the insurer then you should advise them of this and ask that the hire car be funded beyond the policy terms. If the insurer refuses to extend car hire, consider lodging a complaint with the insurer or AFCA (see below).
3. Dispute About the Value of the Car (Total Loss): Disagreements often occur regarding the car’s value. Insurers might offer a lower settlement based on market value. If you think you’ve been under settled, or your insurer is making a lower offer. You can use resources like RedBook or Glass’s Guide to look up the pre-accident value of your vehicle. You can provide screenshots of the values on these websites to argue that the market value of the car is higher. If the insurer is still unwilling to increase their offer make a complaint to the insurer or AFCA (see below).
4. Claim Delays: Delays can occur due to internal processing issues, prolonged investigations by the insurer or the availability of parts. If you experience delays, you can lodge a formal complaint with the insurer. When lodging the complaint you may wish to reference the General Insurance Code of Practice, which mandates insurers handle claims promptly and transparently. The Code has specific requirements for insurers to make decisions, including, but not limited to:
• Make a decision within 10 business days of receiving all required information;
• Make a decision within 4 months of receiving the claim;
• Tell you why they have appointed a loss adjuster or investigator;
• Specific requirements when undertaking investigations;
• Fast track claims in certain circumstances, for example if you’re experiencing financial hardship.
• Accept responsibility for the repair quality of authorised repairers.
• Provide information related to the claim and decision; and
• Specific requirements for managing complaints and disputes.
The Code ensures that insurers align with high standards of service and accountability and we would recommend you review the Code which can be obtained here.
5. Market Value vs Agreed Value: Market value can fluctuate, while agreed value is pre-determined at policy inception. For instance, a car insured for an agreed value may offer better protection against depreciation. Understand which type of coverage your policy includes to manage your expectations. When your car is a total loss there is usually very little room for negotiation ‘agreed value’ at claims time, because this is agreed when you take out the policy. However, market value varies, so always ensure you do your own research and challenge the insurer if you think their offer is too low.
6. Policy Inception Issues (e.g., Uber Drivers): If you’re using your car for rideshare services like Uber without telling your insurance company, you might lose your coverage, depending on your policy. It’s important to check that your policy specifically covers commercial use if you drive for companies like Uber. If you change how you use your car, make sure to inform your insurer.
If your insurer rejects a claim because of something you didn’t tell them, they must provide evidence showing that if they had known the information, they wouldn’t have insured you in the first place. The Australian Financial Complaints Authority (AFCA) offers easy-to-understand factsheets on this topic. We suggest reading their guides on ‘Non-disclosure and misrepresentation’ and ‘Motor vehicle insurance disclosure and ridesharing’ for more information.
7. Poor Claims Management Service: If you’ve experienced poor service during the handling of your insurance claim, it can be incredibly frustrating. Whether it’s delays, lack of communication, or mishandling of your claim, these issues can significantly impact your experience.
First, it’s important to raise your concerns directly with your insurer. Explain the issues you’ve faced and how they’ve affected you. Most insurers have a complaints process in place, and resolving the issue at this level is often the quickest way to get a satisfactory outcome.
If you’re not happy with the insurer’s response, you can escalate your complaint to the Australian Financial Complaints Authority (AFCA). They can help you resolve disputes with your insurer. However, it’s important to note that AFCA has limits on the compensation it can award for non-financial losses, such as stress or inconvenience. Compensation is capped at $6,300 per claim for complaints lodged on or after 1 January 2024. While they can acknowledge the poor service, the compensation for these types of losses may be capped or not awarded at all.
Each of these issues can pose significant hurdles, but with the right approach, they can be effectively managed and resolved.
Steps to Challenge an Insurer’s Decision
If you find yourself facing an unfavourable decision from your insurer, there are steps you can take to challenge it effectively. By following these steps, you can ensure that you are well-prepared to present a strong claim and seek a resolution that aligns with your rights and policy terms:
1. Review Claim Decision: Under the General Insurance Code of Practice, the insurer must provide you with any information they have relied on to make the claim decision. If you feel you have not received this information, you can request it. If you feel the decision is wrong, you should carefully review their decision in conjunction with the information they relied upon.
2. Review Your Policy: Carefully review your policy document to fully understand the terms, conditions, and coverage limits. It’s crucial to know the specific clauses your insurer may rely on when making decisions about your claim. If your insurer has made an adverse decision, they are obligated to specify the policy terms they used as the basis for their decision. If this information has not been provided, you should promptly contact your insurer and request a detailed explanation, including the relevant policy terms they are relying on. Additionally, keep a record of all communications with your insurer for reference if you need to challenge their decision later.
3. Gather Evidence: Collect all relevant documents, including, but not limited to, photos, repair bills, and correspondence with the insurer. You may wish to seek out an independent motor vehicle assessor who can assist you in determining the extent of damage and cost of repairs to your vehicle. Ensure that they are not specifically engaged with/contracted to any insurer and are impartial. If the insurer considers you at fault and seeks to reduce their cover based on liability, compile evidence to prove otherwise, such as witness statements, traffic camera footage, police reports, and dash cam footage.
4. Review AFCA Guidance Documents: The Australian Financial Complaints Authority (AFCA) offers a range of factsheets on their website that can be very helpful if you’re dealing with common insurance issues. These guides explain how AFCA handles specific situations and can give you a better understanding of what you’ll need to prove if you want to challenge an insurer’s decision.
For car insurance claims, some of the most relevant documents include:
| Document Title | Description | How This Might Help You |
| Motor vehicle totalloss | This document provides guidance on how AFCA approaches complaints involving a vehicle being declared a total loss. It covers what is considered fair and reasonable when an insurer decides to write off a vehicle, including the methods used to determine the payout and the obligations of both the insurer and the policyholder. | If your car has been written off and you disagree with the insurer’s payout offer, this document can help you understand the basis of the insurer’s decision and how to challenge it if it seems unfair. |
| Motor vehicle insurance claim delays | Focuses on how AFCA evaluates claims where there have been delays in processing, repairing, or settling a claim. It outlines what is considered a ‘reasonable’ time for resolving claims, the steps insurers should take if delays are unavoidable, and when compensation for non-financial loss may be appropriate due to these delays. | If your claim is taking too long to be processed or your car is stuck in repairs for an extended period, this document helps you understand your rights and what actions you can take to expedite the process or seek compensation. |
| Motor vehicle insurance disclosure and ridesharing | Provides insights into how AFCA handles disputes involving non-disclosure of ridesharing activities, such as using a vehicle for Uber. It explains the expectations on both insurers and policyholders regarding disclosure and the implications if this information is not provided. | If you use your car for ridesharing (e.g., Uber) and haven’t informed your insurer, this document can help you understand the risks and how to address a denied claim related to ridesharing activities. |
| Non-disclosure and misrepresentation | Details AFCA’s approach to complaints where an insurer has denied a claim due to non-disclosure or misrepresentation by the policyholder. It covers both innocent and fraudulent non-disclosure, the insurer’s obligations, and how prejudice to the insurer is assessed. | If your insurer has denied your claim on the basis that you didn’t disclose something important when taking out or renewing your policy, this document can guide you on what to do next, including how to challenge the insurer’s decision. |
| Non-financial loss claims | Discusses the circumstances under which AFCA may award compensation for non-financial losses, such as stress or inconvenience caused by an insurer’s handling of a claim. This document also outlines the limits on compensation for such losses. | If the delays or issues with your claim have caused you significant stress or inconvenience, this document explains how you might be able to claim compensation for those non-financial impacts. |
| Section 54 Prejudice | Explains the protections under Section 54 of the Insurance Contracts Act, which prevent insurers from denying claims due to certain non-disclosures or changes that occur after the policy has started, unless the insurer can demonstrate significant prejudice. This document is crucial for understanding the balance of interests between insurers and policyholders. | If your insurer is refusing to pay a claim because of something that happened after your policy started, this document can help you understand your rights and how Section 54 might protect you against an unfair denial. |
Read the latest version of all factsheets and information on AFCA’s website here.
5. Contact the Insurer: Write a formal letter to the insurer outlining your concerns and provide thorough supporting evidence. Detail why you believe their decision is incorrect. Reference that you want the insurer to manage the complaint in accordance with ASIC’s regulatory guidance 271 and the General Insurance Code of Practice (Part 11). This will ensure that the Insurer can’t argue that they didn’t know your correspondence was a complaint and strict timeframes and requirements will apply to their response. In general, the insurer has 30 calendar days to respond to your complaint. If your insurer has not responded within this timeframe, you should contact them and if you’re unhappy with their response immediately make a complaint to AFCA. Your insurer is required to acknowledge the complaint and communicate with you during the 30 calendar days.
Refer to our practical complaint template at the end of this blog.
6. Make an AFCA Complaint: If your insurer doesn’t respond to your complaint within 30 days, or if you disagree with their decision, you can take your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is a free service for consumers that provides an independent and fair way to resolve disputes with financial companies, including insurance providers.
AFCA can handle a wide range of complaints, such as those related to insurance, banking, credit, and superannuation. If you’re unhappy with how your insurer has handled your claim, AFCA can review the claim and make a decision. Importantly, while AFCA’s decisions are binding on the insurer, they are not binding on you. This means that if you don’t agree with AFCA’s decision, you can still choose to take further action, like going to court. AFCA offers a straightforward, accessible alternative to dealing with the courts, helping to resolve disputes fairly and efficiently.
You can read more about the AFCA process on their website here.
Practical Guidance – How to Make an AFCA Complaint:
1. Gather Your Documents: Collect all relevant information, like your insurance policy and any communication with your insurer.
2. Lodge Your Complaint: You can easily lodge your complaint directly on AFCA’s website by following the instructions provided here.
3. Follow AFCA’s Process: AFCA will review your complaint, try to resolve it through negotiation, and if needed, make a decision.
Tips to support your AFCA complaint
When submitting your complaint to AFCA, it’s important to be clear, factual, and detailed. Here are some tips to help strengthen your claim:
o Clearly State Why You Think the Insurer’s Decision is Incorrect: Begin by explaining exactly why you believe the insurer’s decision is wrong. Reference specific policy terms, conditions, or clauses that you think the insurer has misinterpreted or ignored. For example, if your policy covers a certain type of damage, but the insurer has denied your claim, point to the exact section in the policy that supports your position.
o Provide Relevant Information and Evidence: Include any documents, emails, or other evidence that support your argument. This might include photos of the damage, repair estimates, or communication with the insurer that shows how the claim was handled.
o Stay Factual and Objective: Focus on the facts of the claim rather than emotions. Clearly outline the sequence of events, what was said or done by the insurer, and how it contradicts the policy terms or the insurer’s obligations.
o Explain the Outcome You Are Seeking: Be specific about what you want to achieve from the complaint. Whether it’s a full payout of your claim, compensation for delays, extended car hire or another form of resolution, make sure you clearly state your desired outcome. This will also help the insurer understand what it will take to resolve the complaint. Ensure what you’re seeking is aligned to outcomes AFCA can award (see section about).
o Highlight Any Procedural Errors: If the insurer failed to follow proper proceduresor breached regulatory obligations, such as not responding within the required timeframes or not providing adequate reasons for their decision, mention these in your complaint.
o Describe How the Situation Has Impacted You: Explain how the insurer’s decision or the delay in resolving your claim has affected you or your family. For instance, if you don’t have a car because of the unresolved claim, mention how this has made it difficult to drop your kids at school, get to work, or attend important appointments. These personal impacts can help AFCA understand the real-world consequences of the dispute when calculating a non-financial loss allowance (if applicable).
o Treat the AFCA Claim Manager Politely and with Respect: Remember that the AFCA claim manager is there to help you. Treating them with politeness and respect can facilitate better communication and help them assist you more effectively. The claim managers at AFCA are independent and impartial. Keep in mind that while they may point out issues with your complaint or claim, they are likely doing the same with the insurer. The goal of the AFCA process is to resolve complaints, which can sometimes require compromises from both sides.
7. Seek External Help: Navigating the motor vehicle claims process can be complex and stressful, but you don’t have to do it alone. There are support resources available to help you understand your rights, gather necessary information, and challenge any unfavourable decisions:
1. Legal Advice: Consider consulting a lawyer for legal advice on your rights and options. They can help navigate complex insurance terms and disputes.
2. Community Legal Centres: These centres can offer free legal advice, assist with the claims process, and help you review an unfavourable claims decision.
3. Join Facebook Group: Join the Motor Vehicle Claims Support Group to share issues and see if others have had similar experiences. This community can provide support and practical advice from individuals who have faced similar challenges.
4. AFCA Database: Look at the AFCA website and review their database/library for determinations on other AFCA claims concerning motor vehicles. This can provide insight and precedents that may be relevant to your claim.
By leveraging these resources, you can gain valuable insights and assistance, making it easier to manage and resolve your motor vehicle claim effectively.
Motor vehicle claims can be complex and stressful, but understanding common issues and knowing the steps to challenge an insurer’s decision can help you navigate the process more effectively. By staying informed, gathering the necessary evidence, and utilising available support resources, you can better manage your claim and work towards a fair resolution. Remember, you are not alone—many people face similar challenges, and there are tools and communities available to assist you. With persistence and the right approach, you can overcome obstacles and ensure your rights are upheld.
This blog post provides general information only for educational purposes and does not take into account your specific circumstances. You should seek professional legal or financial advice tailored to your personal situation before making any decisions or taking any action based on the information provided in this blog.
Practical Complaint Template
When making a complaint to an insurer, it’s important to understand that claims managers are often handling a large volume of claims. By presenting your complaint clearly and concisely, you not only make it easier for them to understand your perspective but also increase your chances of a successful resolution. A well-structured complaint, supported by relevant evidence and a clear outline of the issues, helps the insurer see the validity of your claim and respond more effectively.
The template below is designed to help you organise your thoughts and present your complaint in a way that is straightforward for the insurer to review and act upon. Below is a template that you can use and adapt to suit your circumstances. Please note that this is a starting point only, and you will need to tailor the template for your own circumstances and claim.
Subject: Formal Complaint Regarding Claim [Claim Number]
Dear [Insurer’s Name/Claims Department],
I am writing to formally lodge a complaint regarding the handling of my insurance claim, reference number [Claim Number], under policy number [Policy Number]. I believe that the decision to [insert decision you’re disputing i.e. decline/reduce/handle] my claim is incorrect and does not align with the terms of my insurance policy.
1. Supporting Information and Evidence
I have attached the following documents to support my complaint:
• A copy of my insurance policy highlighting the relevant sections.
• [Photos, repair bills, communication records with your company, any independent assessments].
• [If relevant] A statement from an independent motor vehicle assessor confirming the extent of the damage and the expected cost of repairs.
2. Sequence of Events
To clarify the situation, here is a detailed timeline of events:
• [Date]: Description of what happened (e.g., the accident, the theft, the first communication with the insurer).
• [Date]: Your initial assessment and my response.
• [Date]: Your final decision and my concerns.
This timeline demonstrates how the handling of my claim has deviated from the expected process outlined in the General Insurance Code of Practice.
3. Reason Decision is Incorrect
With reference to the above information, I consider the claim decision is incorrect for the following reasons:
o [insert reasoning with reference to relevant information]
4. Impact on My Daily Life
The unresolved status of my claim has had a significant impact on my daily life:
• Transportation Difficulties: Without a vehicle, I am unable to [transport my children to school, commute to work, attend important medical appointments].
• Financial Strain: The delays in processing my claim have resulted in [additional expenses, missed work, loss of income].
5. Desired Outcome
I respectfully request that you reconsider your decision in light of the information provided. I am seeking [full claim payout, an extension of car hire, compensation for delays, etc.]. I believe this outcome is fair and in line with the coverage provided by my policy.
6. Reference to Relevant Codes and Regulations
Please manage this complaint in accordance with ASIC’s Regulatory Guide 271 and the General Insurance Code of Practice (Part 11). This ensures that my complaint is treated as such and that all necessary timeframes and obligations are adhered to.
7. Request for Prompt Resolution
Under the General Insurance Code of Practice, you are required to respond to my complaint within 30 calendar days. I would appreciate that you keep me updated throughout the process and if required call me to ensure that you fully understand my complaint and desired outcome.
8. Further Actions
If this matter is not resolved satisfactorily, I will escalate my complaint to the Australian Financial Complaints Authority (AFCA). I hope this step will not be necessary, as I trust we can resolve this matter directly.
Thank you for your attention to this matter. I look forward to your prompt and fair resolution of my complaint.
Yours sincerely,
[insert name]
Note: This blog post provides general information only for educational purposes and does not take into account your specific circumstances. You should seek professional legal or financial advice tailored to your personal situation before making any decisions or taking any action based on the information provided in this blog.