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Insurance Claim Denied, Delayed or Underpaid? How to Challenge It

Updated 26 June 2026 · FairClaim Guides

A denial letter is not the end of the matter. Insurers must act in good faith, give proper reasons, and follow the law and their industry code. If your home, contents or motor claim was denied, dragged out, or settled for less than it should be, you can challenge it — for free — through the Australian Financial Complaints Authority (AFCA), whose decisions are binding on the insurer.

Your key protections

  • Under section 54 of the Insurance Contracts Act 1984 (Cth), an insurer generally cannot refuse a claim because of some act or omission that could not have caused or contributed to the loss.
  • A denial must come with adequate written reasons — you are entitled to know exactly why, and the information the insurer relied on.
  • Claims must be handled within the timeframes in the General Insurance Code of Practice; unreasonable delay is itself a problem you can raise.
  • A cash settlement should reflect the demonstrated cost to repair or replace — not an unexplained lower figure.

How to challenge a denial

  1. Ask the insurer in writing for the full written reasons and the evidence they relied on, and lodge an internal complaint.
  2. Gather your policy, the claim, the denial letter, photos, quotes or reports, and your correspondence.
  3. If the internal complaint fails or stalls, lodge a free complaint with AFCA (afca.org.au).
  4. Set out what you want: the claim accepted and paid, a fair settlement, or proper reasons and reconsideration.

How FairClaim helps

FairClaim takes you through what happened, checks it against the Insurance Contracts Act and the General Insurance Code, flags the arguments your facts genuinely support, and drafts a structured AFCA complaint. Free to start.

Check your rights and build your complaint — free to start

Answer guided questions or just describe what happened. FairClaim checks your facts against the relevant law and drafts your complaint.

Start your insurance claim denial complaint

Frequently asked questions

Does it cost anything to complain to AFCA about my insurer?

No. AFCA is free for consumers, its process is independent, and its determinations are binding on the insurer (you remain free to go to court if unsatisfied).

What is the section 54 rule?

Section 54 of the Insurance Contracts Act generally prevents an insurer from refusing a claim because of an act or omission that could not have caused the loss. It is one of the most powerful protections for policyholders and is worth raising where a denial seems disproportionate to what happened.

My insurer is just delaying — is that a breach?

Claims must be handled within the timeframes set by the General Insurance Code of Practice. Unreasonable delay, repeated requests for the same information, or a lack of updates can each be raised as claim-handling failures.

They offered less than my repair quote — can I push back?

Yes. A cash settlement should reflect the demonstrated cost to repair or replace. Provide your quotes or an independent report, and if the insurer will not move to a fair figure, take it to AFCA.

Related guides

This guide is legal information, not legal advice. It describes general rights under Australian consumer credit law and may not account for the specifics of your situation. For advice about your circumstances, contact a community legal centre, the National Debt Helpline (1800 007 007), or a qualified legal practitioner.