Just because you have had a claim rejected it does not necessarily mean that you have no further recourse. It is always possible to go to court, although this is often and expensive and risky venture.
However, there are other dispute resolution mechanisms that you can try.
Alternative dispute resolution
This is where you attempt to find a solution to a dispute without (or before) resorting to court action. In general it is quicker and far less costly.
If your solicitor recommends court action, ask them to explain the advantages of disputing your claim through the courts rather than first seeking help from one of the resolution schemes.
The schemes described below are part of the financial industries structure.
Advantages of dispute resolution
The big advantage of these schemes is that they are free, and you do not have to pay the costs of the insurer if you lose your case.
If you go to court you will generally have to pay if you lose. You do not need a lawyer to use the schemes, but it is a good idea to get legal advice if the claim involves a large sum of money.
Remember, you are still entitled to take legal action if you lose the case under the scheme.
Financial Ombudsman Service
The new Financial Ombudsman Service (FOS) has been created as a merger between the former Banking and Financial Services Ombudsman, the Financial Industry Complaints Service, and the Insurance Ombudsman Service.
FOS is a dispute resolution service between consumers, including some small businesses, and participating financial services providers – it covers:
- general insurance;
- life insurance;
- financial planning;
- stock broking;
- managed funds; and
- pooled superannuation trusts.
Phone the Ombudsman Service on 1300 78 08 08 (toll free) to check if your insurance policy is covered.
If so, check with them how to proceed – probably the advice will be to first explain the issue to the insurer and ask them to resolve your complaint.
If you are not satisfied with the result you can ask that the dispute be referred to the insurer's Internal Dispute Resolution (IDR) process (again, contact the Ombudsman Service if you are not sure which person to speak to at the insurer's office).
Check with the Ombudsman how long the insurer has to be given to respond before you can proceed to lodge a complaint with the FOS.
If you are not satisfied with the IDR decision you can call the Ombudsman Service and ask for assistance. They will explain the procedure once they become involved.
This may involve conciliation or negotiation.. If a dispute cannot be resolved by mutual agreement, a detailed investigation will take place, and most often a Recommendation will be issued.
If a Recommendation is not accepted by either party, a Determination can be made.
Brokers - Insurance Brokers Dispute Limited (IBDL)
The IBDL hears disputes between consumers and insurance brokers or financial service provider (other than an insurance company).
Brokers must be members of the scheme in order to bring a dispute to the IBDF. There are strict restrictions that apply to this scheme unless the broker agrees to have the dispute heard.
IBD covers policies including insurance for:
- motor vehicle;
- home buildings and contents;
- sickness and accident;
- consumer credit;
- domestic property policies; and
- small business pak policies.
General Insurance Brokers' Code of Practice
Participating general insurance brokers subscribe to the General Insurance Brokers' Code of Practice. The Code outlines standards of good practice to be expected from your broker.
They include: communicating with you promptly and clearly, representing you properly in arranging your insurances, and providing support should you need to make a claim.
Contact the IBDL on 1300 780 808 (toll free).
Last Updated – April 2010