Your Insurance Claim Was Rejected: What to Do Next

🤍 A rejection isn't the end🔗

Insurers reject claims for a range of reasons. Some are legitimate. Some aren't. A meaningful share of rejections, especially in life and TPD insurance, are overturned through the dispute process. The system exists precisely because insurers don't always get it right the first time.

🎯 The essential: Internal Dispute Resolution (IDR) is mandatory before AFCA. You can't skip straight to AFCA, but IDR is free, doesn't require a lawyer, and is often where rejections get overturned before you ever need to escalate further.

🔍 Why insurers reject claims🔗

Understanding why your claim was rejected is the first thing to figure out, because the reason shapes how you challenge it.

• Non-disclosure at application. If the insurer believes you left something out when you applied, a pre-existing condition, a past injury, they may use that to reduce or void the claim. But they can only do this if the non-disclosure was material (it would have changed how they assessed your risk) and they can actually prove it. A vague claim of non-disclosure isn't enough.
• A specific policy exclusion. Your policy may explicitly exclude certain events, conditions or activities. A pre-existing condition exclusion is common, and so are exclusions for certain sports or occupations. If the insurer is relying on an exclusion, they must point you to the exact clause in your policy document, not just say "it's excluded."
• Doesn't meet the policy definition. This is one of the most common rejection reasons, and one of the most successfully challenged. For TPD insurance, the difference between an "any occupation" and an "own occupation" definition is enormous, and most people don't know which one they have. If your claim involves TPD, our guides on why TPD claims get rejected and the most common TPD claims in Australia go into the decline-rate data in detail, it's genuinely eye-opening how much the definition alone decides the outcome.
• Missed premium payments or a lapsed policy. If your policy wasn't active when the claim event occurred, because premiums lapsed or a payment was missed, the insurer can decline the claim. Check your payment history carefully. Policies can lapse without the policyholder realising, especially cover held inside super.
• Insufficient evidence or documentation. The insurer didn't have enough medical, financial or other evidence to approve the claim. This is one of the more fixable reasons. It doesn't mean the claim is invalid, it means the file wasn't complete.

📝 Step 1: Get the rejection in writing and request your file🔗

If you only got a phone call or a vague letter, start here. You're entitled to the insurer's written reasons for rejection. Ask for them in writing if you haven't already received them.

More importantly, request your full claim file and assessment notes. This includes everything the insurer used to make its decision: medical assessments, internal notes, and any independent medical examination (IME) reports it commissioned. You can't challenge a decision you can't see.

Put your request in writing (email is fine) and keep a copy. If the insurer stalls or refuses, that itself becomes relevant if you escalate.

🪜 Step 2: Use the insurer's Internal Dispute Resolution (IDR) process🔗

Before you can go anywhere else, you need to go through the insurer's own complaints process, called Internal Dispute Resolution (IDR). It's not optional, it's the mandatory first step under Australian law.

Every Australian insurer is required to have an IDR process under ASIC's Regulatory Guide 271 (RG 271). It's not a favour they're doing you, it's a legal obligation.

How to lodge an IDR complaint. Write a formal complaint to the insurer's complaints team, including:

• Your policy number and claim reference
• A copy of the rejection letter
• Your claim file (or a request for it, if you haven't received it)
• Any additional evidence you have: specialist reports, financial records, correspondence
• A clear statement of why you believe the rejection is wrong and what outcome you're seeking

Send it in writing and keep a copy of everything.

IDR is free. You don't need a lawyer for this step, though having one review your complaint before you send it can be worthwhile for higher-value claims.

⚖️ Step 3: If IDR fails, escalate to AFCA🔗

What is AFCA? The Australian Financial Complaints Authority is a free, independent external dispute resolution scheme. You pay nothing to use it, and insurers are required by law to be AFCA members. AFCA can investigate your complaint, attempt to conciliate a resolution between you and the insurer, and, if that doesn't work, issue a binding determination.

You can reach AFCA:

• Online: afca.org.au/make-a-complaint
• Phone: 1800 931 678 (Monday to Friday, 9am to 5pm)
• Email: info@afca.org.au
• Post: GPO Box 3, Melbourne VIC 3001

When can you go to AFCA? You can lodge once you've received the insurer's IDR response and you're not satisfied with it, or once the insurer hasn't responded within the 30-day IDR timeframe (you don't have to wait forever).

🎯 The essential: Time limit: you generally have 2 years from the date of the insurer's IDR response to lodge with AFCA (or up to 6 years from when you first became aware of your loss, if you haven't gone through IDR at all). Don't sit on this.

AFCA's monetary limits. These figures are AFCA's published limits, effective 1 January 2024. AFCA adjusts them every three years in line with wage or CPI growth, so the next scheduled update is expected around January 2027, meaning these remain the current figures as of mid-2026.

The jurisdictional limit is the maximum claim amount AFCA can consider. The compensation cap is the maximum it can award. For most Australians with a rejected insurance claim, these limits are high enough that they won't be an issue, and if your claim is through superannuation, there's no cap at all.

How long does AFCA take? It varies. Simple cases that resolve through conciliation can wrap up in a few weeks to a few months. Complex cases, especially those that go all the way to a formal determination, can take 6 to 12 months or longer. Set realistic expectations. The good news is that most cases resolve before a formal determination, AFCA's conciliation process resolves a large proportion of disputes without needing a full hearing, which is faster and less stressful for everyone.

Are AFCA decisions binding? They're binding on the insurer, but not on you. If AFCA issues a determination in your favour and you accept it within 30 days, the insurer must comply and pay. If you don't accept it, because you think you can do better in court, for example, you're free to pursue other options. You're never locked into an AFCA decision you don't like.

🤝 Getting help, you don't have to do this alone🔗

Navigating an insurance dispute is stressful enough without doing it solo. Here are three tiers of help, from free to paid.

1. Financial counsellors (free). Call the National Debt Helpline on 1800 007 007, weekdays 9:30am to 4:30pm (online chat available weekdays 9am to 8pm). Financial counsellors are free, independent and confidential. They can help you understand the process, navigate IDR, and work out your next steps. They're not lawyers and can't give legal advice, but for many disputes, especially simpler ones, they're exactly what you need to get started.

2. Insurance claims specialists and advocates (no-win-no-fee). Some firms specialise in insurance claim disputes and work on a no-win-no-fee basis, meaning you pay nothing unless they win. This is worth considering for mid-to-high value claims where the complexity justifies specialist help. They know the system and the insurers, and they deal with these disputes every day.

3. Lawyers (no-win-no-fee for many). For complex, high-value or legally nuanced disputes, non-disclosure arguments, policy interpretation battles, claims over roughly $50,000, a lawyer who specialises in insurance is worth a consultation. Many insurance lawyers also work on no-win-no-fee for strong cases, and the initial consultation is often free.

⏳ How long does the whole process take?🔗

Here's a realistic timeline:

• IDR: up to 30 days for the insurer's response (sometimes faster)
• AFCA (if needed): anywhere from a few weeks (conciliation) to 12+ months (formal determination)
• Total realistic range: 3 months on the optimistic end, 2+ years for complex cases that go the full distance

That's a long time. But most disputes don't go the full distance, conciliation resolves a lot of them earlier, and the process is free, so there's no financial reason not to pursue it.

❓ Frequently asked questions🔗