How Long Does The Insurance Provider Have To Respond To A Claim?

December 7, 2021    commerciallawyersinperth
How Long Does The Insurance Provider Have To Respond To A Claim?

Insurances serve great benefits to a person in a time of financial hardship. When things do not go as expected and a disaster occurs, leading to a substantial loss covered by the insurance policy, the person can claim with the insurance provider. However, policyholders should remain compliant with the terms and conditions of the policy. The claim is lodged to activate the insurance company’s response, and if the company accepts the claim, it will be bound to fulfill the promise as mentioned in the policy.

It may be done through covering legal fees, repairing or replacing damaged items or property, or through payment. For legal advice, you may consult an insurance lawyer Perth. This blog discusses all the details that you must know about making a claim.

How Much Do General Insurers Pay In Australia?

In Australia, the average amount that the general insurers pay each working day in response to the claims made by the policyholders is $135.9 million. Only 3.6% of claims are declined, which makes Australian insurance companies highly reliable. Here we share two statistics that will further confirm this fact.

  • In 2017-18, about 3.3 million claims were approved by the insurers.
  • In the December quarter of 2018, about 15.7% of motor vehicle policyholders and about 6.9% of home and contents policyholders lodged their insurance claims.

What Do We Mean By A Claim?

When you lodge a claim on an insurance policy, you officially notify the insurance provider about a loss or damage you have suffered, which is believed to be covered by the insurance policy. Through a claim, you are also requesting an action.

  • Once you lodge your claim, the insurer will first review it and check if the policy covers the risks associated with the event or the circumstances.
  • As a policyholder, you will be required to provide valid evidence that it is a genuine claim. The insurer will also need to see whether the claim meets all the terms and conditions associated with your insurance policy.
  • If the insurance provider accepts your claim, they will replace or repair your property or make any payment. This repayment is called payout or benefit. Before completing it, the insurer will figure out the total value of the claim and pay the appropriate benefit as mentioned in the insurance contract.

You can consider taking legal assistance from a certified insurance claim lawyer from Perth to lodge your claim smoothly.

When Will Your Insurer Advice If It Accepts Your Claim?

After you lodge your claim, your insurer will assess it. Officials may have further questions about the claim, and you have to respond to those queries. If you think you can answer them, do it as soon as possible. If they seem difficult to answer, let your insurer know that. Your insurer should also let you know how long it will take to assess your claim.

According to Clause 9 under the General Insurance Code of Practice, the insurance company may not satisfy all the usual timelines if there are a significant number of claims. If the claim is pretty complex, the insurer may want to make negotiations to arrange a different time frame for your claim.

On the other hand, the usual timeline according to Clause 7 under the Code is as follows.

  • Once the assessment is complete, the insurer should inform their decision to reject or accept the claim within 10 business days of receiving a complete claim.
  • 10 business days is also the timeframe for an insurer to notify the policyholder whether they will appoint a loss adjuster or a loss assessor or require any further information. The insurer also has to provide an initial estimate of the time needed to decide on the claim.

However, these two conditions will not apply if there is an urgent financial need.

In general, insurers are required to provide updates on the progress of assessing the claim at least every 20 working days. If you wish, you can also call your insurer to check on progress and get updates on timelines.

If you have an urgent need for money, the insurer must be informed about it through a written letter.

What To Do If You Have Not Received A Decision From Your Insurer About Your Claim?

Sometimes it may occur when you have submitted a complete claim but not have received a positive answer from your insurer. Further, your insurer may keep saying that your claim is still under process or they need more information every time you call them.

According to Clause 7.9 under the Code, an insurer is liable to respond to a claim within 10 working days of receiving it. If they really require any further information, they must be notified within that 10-day timeframe. They must outline the following points, including:

  • If they require any further information
  • If they need to appoint a loss assessor or a loss adjuster
  • An estimated timeframe required to decide on the claim

Suppose they are not making any decision and not asking you for further information or not telling you the reasons behind a delay. In that case, you may consider sending a letter to the insurer.

If they do not even respond to your letter, you should send a complaint letter to the Insurance Code Compliance Committee. Usually, a written complaint helps a policyholder get the response. But if this step is also unsuccessful, you will have no option but to refer the issue to the Australian Financial Complaints Authority (AFCA).

Legal advice may be essential in all the stages involved in this process. Commercial litigation lawyers in Perth can also help you in this case.

Final Words

Certified commercial lawyers Perth can serve in a range of law areas, including insurance claims. You can easily find their contacts on the relevant websites or from any law firm. Whenever you choose to hire a professional, make sure you check their background.

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