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Insurance Claim Declined? How to Dispute It (Australia)

Updated 27 July 2026 · FairClaim Guides

A letter declining your claim is not the end of the matter. Whether your insurer called it declined, denied or rejected, the same thing has happened and the same options are open to you. 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 declined, dragged out, or settled for less than it should be, you can dispute it — for free — through the Australian Financial Complaints Authority (AFCA), whose determinations are binding on the insurer.

The short answer

To overturn a declined claim: ask the insurer in writing for its full reasons and the evidence it relied on, lodge an internal complaint, and if that fails or stalls, take it to AFCA. It costs you nothing, and you do not need a lawyer.

The single most useful thing you can do first is get the insurer to commit its reasons to writing. A decline that cannot be explained clearly is often a decline that does not survive scrutiny.

Why claims get declined — and which reasons are challengeable

Most declines fall into a few categories: the insurer says the event is not covered, that an exclusion applies, that something was not disclosed, that a policy condition was breached, or that the damage pre-existed the policy. Each of those is a factual assertion, and each can be wrong.

A decline based on something you did or failed to do deserves particular attention, because the law limits how far an insurer can rely on that kind of reason.

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 decline 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 dispute a declined claim

  1. Ask the insurer in writing for the full written reasons for the decline and the evidence it relied on, including any expert or assessor report.
  2. Read the decline against your policy wording. Identify the specific exclusion or condition being relied on, and whether it actually fits what happened.
  3. Lodge an internal complaint with the insurer. Say plainly that you are disputing the decision and what outcome you want.
  4. Gather your policy, the claim, the decline letter, photos, quotes, invoices, and your full correspondence trail with dates.
  5. If the internal complaint fails or stalls, lodge a free complaint with AFCA at afca.org.au.
  6. Set out what you want: the claim accepted and paid, a fair settlement figure, or proper reasons and reconsideration.

Get the assessor’s report

Declines are often built on an assessor’s or expert’s report you have never seen. Ask for it specifically and by name. If the report contains a factual error — the wrong address, the wrong date, damage attributed to a cause that does not fit — that error is the centre of your dispute, and it is much easier to argue about a document than about a decision.

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

How do I dispute a declined insurance claim?

Ask the insurer in writing for its full reasons and the evidence it relied on, then lodge an internal complaint saying you dispute the decision and what outcome you want. If the internal complaint fails or stalls, lodge a free complaint with AFCA, whose determinations are binding on the insurer.

Can a declined claim be overturned?

Yes. A decline is a decision by the insurer, not a final legal ruling. It can be reconsidered internally, and AFCA can substitute its own determination, which binds the insurer. Many declines turn on a factual assertion — an exclusion, a condition, a cause of damage — that can be shown to be wrong.

How do I appeal a declined claim?

There is no court-style appeal, but there is a two-stage process that works the same way: the insurer’s internal dispute resolution first, then AFCA. Both are free. Put everything in writing and keep the dates.

Why was my insurance claim declined?

The insurer must tell you, in writing, and must give you the information it relied on. Common reasons are that the event is not covered, an exclusion applies, something was not disclosed, a policy condition was breached, or the damage is said to pre-date the policy. Ask for the specific clause and the evidence — a reason that cannot be stated clearly is often one that does not hold up.

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 decline 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.