Insurance Claim Denied? What To Do Next

There are few envelopes less welcome than the one that starts with “We regret to inform you…”

You paid the premiums.You did the paperwork, chased the medical certificates, took the photos of the water damage. And now, at the exact moment you actually needed the thing you were paying for, someone you’ve never met has decided the answer is no.

It’s infuriating. It’s also, quite often, not the end of the story.

Here’s the thing most people don’t realise about having an insurance claim denied in Australia: the denial letter is the on-field decision, not the final score. There is a formal, free, well-established process for sending it upstairs, and a surprising number of decisions get changed along the way.

So, have you had an insurance claim denied? What to do depends on a few factors:

First, A Bit of Perspective

If you’re feeling like you’re the only person who has had an insurance claim denied, you are emphatically not.

Australians lodged a record 119,949 complaints with the Australian Financial Complaints Authority (AFCA) in 2025–26 – the third year running that complaints have topped 100,000. The three most common issues across all financial products were delays in claim handling, service quality, and claim rejection.

In general insurance alone there were 36,022 complaints, and complaints about rejected claims jumped 47% in a single year. On the life insurance side, denial of claim has been the single biggest complaint category, with TPD (total and permanent disability) disputes climbing sharply too.

43% of general insurance complaints were resolved before they ever reached AFCA’s formal decision-making stage. Most disputes that go the customer’s way don’t go the distance. They get sorted early, once someone puts the right evidence in front of the right person.

Why Insurance Claims Get Denied

Before you fire off an angry email, it helps to understand what’s actually happened. Most denials fall into a handful of buckets:

• The event isn’t covered. Flood versus storm surge, wear and tear versus sudden damage.
• A waiting period or exclusion applies. Common with income protection, trauma and travel cover.
• The medical definition wasn’t met. Enormously common in TPD, trauma and income protection claims. The policy defines “totally and permanently disabled” in a very particular way, and the insurer says you don’t fit it.
• Non-disclosure or misrepresentation. The insurer says you didn’t accurately answer their questions when you took out the policy.
• Documentation gaps. Missing reports, unanswered requests, an incomplete claim form.
• The policy had lapsed. Premiums stopped — sometimes without the policyholder realising, which happens a lot with cover held inside superannuation.

Some of these are genuinely fatal to a claim. Plenty of them are not. And a few (particularly the non-disclosure ones) are far more arguable than most people assume.

Insurance Claim Denied: What To Do, Step By Step

1. Read the denial letter properly

The letter should tell you the specific reason for the decision and point to the part of the policy the insurer is relying on. If it doesn’t, that’s a problem in itself, and worth raising.

Then read your Product Disclosure Statement (PDS) and policy schedule alongside it. You’re looking for one thing: does the reason they gave actually match what your policy says? You’d be surprised how often a claim is knocked back under a clause that doesn’t quite fit the facts.

2. Ask for the information they relied on

This is the most underused right in Australian insurance.

Under the General Insurance Code of Practice, you can ask your insurer for the information they relied on when assessing your claim, including copies of reports from loss adjusters, investigators and external experts. They must provide it, free of charge, generally within 10 business days of you asking. Life insurers operate under a similar code with comparable obligations.

Insurers are required to make fair decisions supported by relevant information. When a claim is knocked back on the strength of an expert report (a doctor who never examined you, an engineer’s assessment of your roof) you cannot challenge that report until you’ve actually read it. Once you have, you can see exactly where the reasoning is thin.

Half the battle in a disputed claim is simply finding out what the other side is holding.

3. Check the reason against the law — especially if it’s “non-disclosure”

If your claim was denied because the insurer says you didn’t tell them something, don’t just accept it.

For consumer insurance policies taken out from 5 October 2021, the old duty of disclosure was replaced with a duty to take reasonable care not to make a misrepresentation (section 20B of the Insurance Contracts Act 1984). It’s a meaningfully different test, and it’s far more forgiving of ordinary human error.

Under this duty, what matters includes how clear and specific the insurer’s questions were, how well they explained the consequences of getting them wrong, and your particular circumstances. Importantly, you’re not automatically treated as having made a misrepresentation just because you didn’t answer a question or gave an obviously incomplete answer.

4. Lodge a formal complaint with the insurer (this is called IDR)

This is a formal step with legal teeth, not a phone call to a call centre.

Every insurer and super fund must run an Internal Dispute Resolution (IDR) process that meets ASIC’s standards under Regulatory Guide 271. Put your complaint in writing, say clearly that you are making a formal complaint about the claim decision, set out why, and attach your evidence.

The maximum response times are set by regulation:

If your claim was declined, they must give you that response in writing, with reasons, and tell you how to escalate to AFCA. If the deadline passes without a proper response, you can generally go to AFCA anyway.

Keep it factual and unemotional. Dates, documents, policy clauses. The person reading it did not deny your claim and is not your enemy, they’re often your best chance of a quick reversal.

5. Escalate to AFCA

If the insurer holds firm, the Australian Financial Complaints Authority is your next stop.

AFCA is free for consumers, independent of your insurer, and its determinations are binding on the financial firm (but not on you – you keep your right to go to court). It can require an insurer to pay a rejected claim, award interest on delayed payments, and award compensation for non-financial loss such as distress and inconvenience.

AFCA covers home and contents, motor, travel, pet, strata, sickness and accident, and small business insurance, as well as life insurance including income protection, trauma, TPD and funeral cover. It does not handle private health insurance (that’s the Private Health Insurance Ombudsman) or workers compensation.

Watch the time limits. As a general rule you need to lodge within two years of the insurer’s final IDR response, or six years from when you first became aware of the loss, whichever comes first. Different rules apply to some superannuation and TPD complaints. AFCA can extend time limits in special circumstances, but that’s a mercy, not a plan.

6. Get someone in your corner

You are allowed to have help if you have an insurance claim denied. You do not have to do this alone while also recovering from surgery, running a business, or sorting out a house with a hole in the roof.

A financial adviser who knows your policy can review the decision, work out whether the reason given actually stacks up, help assemble medical and financial evidence, and deal with the insurer on your behalf. For complex TPD, income protection or estate-related matters, legal input can be worth its weight.

That’s exactly the situation two of our clients found themselves in, one told to expect nothing on a trauma claim, another managing a serious health event while an insurer sat on the paperwork. Both claims were ultimately paid. You can read their stories on our testimonials page.

What Not To Do

• Don’t ignore it and hope. Time limits are real and AFCA generally won’t extend them.
• Don’t cancel the policy. Especially with life or income protection cover — you may not be able to get it back, and cancelling can complicate a dispute.
• Don’t accept a low settlement offer just to make it stop. Once you sign, that’s usually that.
• Don’t guess on the paperwork. If you’re unsure of a date or a detail, say so rather than estimating. Inconsistencies get used against you.
• Don’t assume “denied” means “denied forever.” It’s a decision made by a person, reviewable by other people.

Timeframes At A Glance

Talk To A Human

If your insurance claim has been denied and you’re not sure whether the reason holds up, don’t sit on it. The clock is running, and the strength of your case usually comes down to evidence gathered early.

Our advisers in Brisbane and Toowoomba can review your policy, tell you honestly whether the denial looks arguable, and help you take the next step, whether that’s a formal complaint, an AFCA lodgement, or simply getting your cover right so this doesn’t happen again.

Book a chat with the HPartners team or call 1300 656 260.

Frequently Asked Questions

Can a denied insurance claim be reversed? Yes. Insurers regularly change their position when new evidence is provided or a decision is reviewed internally. Many disputes are resolved through the insurer’s own complaints process before they ever reach AFCA, which is why lodging a proper written complaint with supporting evidence is such an important step.

How much does it cost to complain to AFCA? Nothing. AFCA is free for consumers and small businesses. It’s funded by the financial firms it oversees, and its decisions are binding on the firm if you accept them. You also keep the right to go to court instead.

How long do I have to dispute a denied insurance claim? Generally, you must lodge with AFCA within two years of receiving the insurer’s final internal complaint response, or six years from when you first became aware of your loss, whichever comes first. Some superannuation and TPD complaints have their own rules. If in doubt, act sooner rather than later.

What if the insurer just isn’t deciding my claim at all? Unreasonable delay is itself a valid ground for complaint. You don’t have to wait for a formal denial. Insurers are expected to decide a claim within 10 business days of having all the relevant information, and to keep you updated at least every 20 business days.

My claim was denied because of something I didn’t disclose. Is that the end of it? Not necessarily. For consumer policies entered into since October 2021, the test is whether you took reasonable care not to make a misrepresentation, which takes into account how clear the insurer’s questions were and your own circumstances. Non-disclosure denials are among the most successfully challenged, so it’s worth having the decision reviewed.

Does AFCA handle private health insurance complaints? No. Private health insurance complaints go to the Private Health Insurance Ombudsman, and workers compensation is handled separately again. AFCA covers general insurance (home, motor, travel, pet, strata, small business) and life insurance including income protection, trauma, TPD and funeral cover.

Should I get help, or can I do this myself? You can absolutely do it yourself! The process is designed to be accessible without a lawyer. That said, claims involving medical definitions, income calculations for self-employed people, or cover held inside superannuation get technical quickly. If your claim is significant, a second set of eyes is usually worth it.

Useful Links

Related reading from HPartners

• Insurance Advice & Risk Protection
• Navigating an Unexpected Health Event
• Car Insurance Premiums Just Increased 8% — Why?
• Superannuation & Retirement Advice
• Our Legal Services
• Meet our advisers

Official sources

• AFCA — making an insurance complaint
• AFCA — the complaints process and time limits
• General Insurance Code of Practice (Insurance Council of Australia)
• ASIC Regulatory Guide 271 — Internal Dispute Resolution
• AFCA Annual Review — general insurance complaints

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.