How insurance claims process work

When it comes to insurance, it pays to know how a claim is processed. It simply makes sense to know what you’re entitled to if and when it comes to claiming on the policy you’ve been paying for. Whether it’s for car insurance, life, health or any other type of insurance policy, there are certain steps you can take to ensure a smooth claim process.

Tips to get your claim accepted

Firstly you should contact your insurance provider as soon as possible after the event you’re claiming for. Have all the details of the incident ready and, if possible, gather together any additional information like receipts, photos or notes to back up your claim.
To give your claim the best chance of being accepted, use these tips:
  • make sure you’ve disclosed all relevant information when applying for or renewing your policy (your details can and will be checked);
  • check your Product Disclosure Statement (PDS) to ensure your claim is not subject to any exclusions;
  • be aware of waiting periods which may need to be served before a claim can commence and co-payments or excesses that may need to be paid; and
  • make sure your premiums are up-to-date so there is no cause for your policy to be cancelled.

Your insurer’s claim process

All general insurers in Australia must abide by the General Insurance Code of Practice. Under Section 3.1 of the Code, your insurer has to let you know whether your claim has been accepted or rejected within 10 business days of lodgement. They should also let you know:
  • if they need any further information from you and what form it will take;
  • if they need to appoint a loss assessor to investigate your claim; and
  • their estimated timeframe to make a decision.
After you receive notice of their initial assessment, your insurer should then contact you every 20 days to update you on how your claim is progressing. If you need more frequent updates, you can request them from your insurer.
Life insurance claims procedures are not subject to the Code of Practice, but the insurer will generally be able to tell you how long a claim will take on average. Because the level of complexity is usually greater, life insurers may need to consult with a number of third parties, including your doctors and Medicare.
In all cases you can assist the process by:
  • completing all claim forms in full and providing all requested documentation at the earliest opportunity;
  • ensuring that you keep good records of any events leading to the claim, particularly in relation to home and motor vehicle claims;
  • providing authority for the insurer to contact third parties in order to verify the statements made in your claim; and
  • being available to answer any questions that may arise.

Why is my claim taking so long?

It can be inconvenient when insurance companies take their time to process your claim, but keep in mind that they have to do their due diligence to ensure that your claim is genuine. It sounds self-explanatory, but unfortunately it’s a myth that insurance scams are a ’victimless crime‘. In reality, insurance fraud costs Australians $2 billion every year (Insurance Fraud Bureau of Australia). The time it takes for insurance companies to decide that your claim is legitimate is due to a process that helps them detect insurance fraud, which ultimately helps to keep your premiums down.
If there are any question marks or loose ends with your claim, they will need to investigate it thoroughly so this may also take some time. However they are required to manage claims in a reasonable time period and, where applicable, keep within the timeframe outlined in the Code of Practice. If you haven’t heard from your insurer within 10 days of lodging your claim, contact them again to obtain an update. If your insurer does not keep you regularly informed of the progress of your claim you should follow this up also. If there is no clear explanation for a delay you could consider formalising your concerns with a letter or call and requesting that a final decision be made. If you still don’t hear from them, write a letter of complaint to the Financial Ombudsman Service. This can be lodged at www.fos.org.au.
If you need more information on insurance claims, check these websites:
  • Insurance Council
  • Insurance Law

These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.