Few letters land as heavily as a denial from your insurer. You paid your premiums, you lodged the claim in good faith, and now — after a flood, a fire, a car accident, a serious illness or a death in the family — you've been told the answer is no. It can feel final. It usually isn't. In Australia, a denied insurance claim is the start of a process, not the end of one, and many decisions are overturned once they're properly challenged.
This guide walks through how claim denials work, the rights you have, the deadlines that matter, and the practical steps to take next. It is general information only and not legal advice — every policy and every claim is different, so it's worth getting your own situation looked at.
First, understand why it was denied
An insurer must give you reasons in writing. Under the General Insurance Code of Practice and the Life Insurance Code of Practice, insurers are required to explain their decision in plain language and tell you how to dispute it. Read that letter carefully — the reason given shapes everything you do next. Common grounds for denial include:
- Non-disclosure or misrepresentation — the insurer says you didn't tell them something relevant when you took out or renewed the policy.
- A policy exclusion — the event falls within a clause that the policy says isn't covered (for example, flood versus storm, or a pre-existing condition).
- A definition not being met — in income protection or TPD claims, the medical or occupational definition is said not to be satisfied.
- Late notification, fraud allegations, or unpaid premiums.
If the letter is vague, you are entitled to ask for the specific policy term relied on and a copy of the information the insurer used to reach its decision. Insurers must respond to reasonable requests for the documents and reports behind their decision.
You have a right to internal review
Every insurer that subscribes to the industry codes must offer a free internal dispute resolution (IDR) process. You simply tell them, in writing, that you disagree and want the decision reviewed. A different, more senior person looks at the claim afresh. Under the codes, the insurer generally must give you a final IDR response within 30 calendar days.
This stage matters. A clear, calm letter that points to the policy wording, attaches the right evidence, and answers the insurer's stated reason will often change the outcome — without anyone going near a court.
If you're still not satisfied: AFCA
If the internal review confirms the denial, or the insurer misses its deadline, you can take the dispute to the Australian Financial Complaints Authority (AFCA) — a free, independent ombudsman service that handles insurance, superannuation and other financial complaints.
- AFCA is free for consumers and small businesses.
- Its decisions are binding on the insurer (if you accept them), but not on you — you keep your right to go to court if you'd rather.
- You generally have two years from the insurer's final IDR response to lodge with AFCA, so don't sit on a refusal.
AFCA can award you the benefit you were owed plus, in some cases, compensation for loss caused by the insurer's handling. Many disputes settle once they reach this stage, because the insurer knows an independent decision-maker is now involved.
A denial is the insurer's opinion of your claim — not the final word on it. The right evidence, the right argument and the right deadline can change the answer.
The law is often on your side
Insurance contracts in Australia are governed by the Insurance Contracts Act 1984 (Cth), which imposes a duty of utmost good faith on insurers, not just on you. The rules around non-disclosure changed for consumer insurance contracts: in many cases an insurer can only refuse a claim for innocent non-disclosure if it can show it would have done things differently had it known. Exclusion clauses must be clearly worded and properly notified. None of this is automatic — but it means a denial that looks airtight often isn't.
What to do right now
- Keep the denial letter and note the dates — IDR and AFCA deadlines run from them.
- Don't sign anything or accept a partial payment as "final" before getting advice.
- Gather your evidence: the policy schedule and PDS, your original application, photos, quotes, invoices, medical or expert reports, and all correspondence.
- Request, in writing, the reasons and the documents the insurer relied on.
- Put your dispute in writing and ask for internal review — and get advice before AFCA if the amount is significant.
How Pasha Legal can help
For more than 25 years we've helped Melbourne people stand up to insurers who said no. We'll read your policy and your denial letter properly, tell you honestly whether the decision is wrong, and — if it is — write the internal review, assemble the evidence, and run the AFCA complaint or court claim with you. You won't be talked down to, and you won't face the insurer alone. If you've had a claim denied or underpaid, call us on (03) 9848 7275 or book a confidential consultation — and bring the letter.