Insurance policies are taken out to safeguard businesses, in the hope that they’ll never need to be used. In the unfortunate event that the worst does happen and your business is negatively affected by an unforeseen circumstance, your insurance safety net will save you from huge out of pocket expenses. In some cases however, it’s not that simple as the insurer can reject your claim.
Insurance Claim Rejected: Statistics
Around 97% of all claims are accepted and paid to the limits of the policy’s terms and conditions [Financial Ombudsman Service Guide Insurance, Code of Practice Overview for the Year 2011-2012]. However, Australian insurers write more than 50 million general insurance policies annually [APRA Quarterly General Insurance Performance Statistics, 2013], which means up to 1,500,000 are rejected each year.
Most often, businesses don’t have the financial assets to survive a costly payout, and rely on their insurance to take the hit. If you are unsatisfied with the insurer’s decision, there are a few steps you can take before admitting defeat.
What To Do If Your Claim Is Denied
Step 1: Find Out Why your Claim Was Rejected
If you understand why your claim was rejected, you can better determine whether it’s worth appealing the decision. Insurance policies are denied for a number of reasons:
- The policy does not cover the presented claim.
- The payout claimed exceeds the limits of your policy.
- Your cover has lapsed.
Under the above circumstances, the insurer has fairly denied your claim. If you have researched the specifics of your policy and still feel the decision was wrong, you can take further action
Step 2: Dispute the Decision
You have the right to dispute or appeal an insurance claim rejection if you think that the reason for denial doesn’t reflect the facts of your claim. If you decide to dispute the decision, you should write to the insurance company and state where you think they were wrong, providing documentation that will support your reasoning. They are unlikely to respond to your query quickly, so don’t get frustrated and be persistent.
In some cases, the company will not budge and you may have to take the claim further. Your options are:
- Refer to the General Insurance Code of Practice: As a regulated industry, most insurance companies operate under the General Insurance Code of Practice. By following the Code, the company is committed to 12 service standards, and obliged to offer fair, transparent and timely resolution of disputes. Refer to the Code and if you feel that one of the standards has been breeched, you can take matters further.
- Internal Dispute Procedures: If you are unsatisfied with a product, service or possible code breach, you can notify the complaints manager of the insurance company and launch an internal dispute. They will issue you with a final decision, however if the matter is unable to be resolved to your satisfaction, you can take it further.
- Financial Ombudsman Service: If you remain dissatisfied, you have the right to refer your complaint to the Insurance Broking division of Financial Ombudsman Service (FOS) for further consideration and/or adjudication. The complaint will be referred to a FOS Case Manager who will conciliate with a view to seeking a solution acceptable to both parties.
How an Insurance Broker Can Help
In the event that a claim is rejected, pursuing your desired outcome can become a long and tedious process. Having an Insurance Broker to act on your behalf can not only speed up the process, but also help you obtain the payout your business needs.
A good insurance broker will know the specifics of your policy inside out and will be readily able to advise you whether your claim rejection is just or not. In the event that they deem the claim rejection unfair, they will liaise with the insurer on your behalf to reach the desired outcome. In most cases, the insurance broker will have a professional relationship with the insurance provider, which gives them leverage to negotiate on your behalf.
PSC Insurance Brokers know how important it is that your insurance cover fully protects your business. Speak to one of our brokers for obligation-free advice.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.
