Because insurance companies aim to maximise profits, the fewer claims they pay out, the bigger the profits.
There are several reasons an insurance claim may be denied, including non-disclosure, exclusion clauses, fraud, policy cancellation and non-insured loss.
Non-disclosure
When an insured party fails to disclose every matter known to them that is relevant to the insurance company’s decision as to whether or not they will agree to provide you cover, that failure to disclose material information may be classified as an act of non-disclosure and permit the insurance company from denying your claim. However, not all non-disclosure is significant enough to allow an insurer to deny your insurance claim. Gibbs Wright can assess whether you have an argument to review a decision made against you based on non-disclosure.
Under the Insurance Contracts Act 1984 (Cth), the insured party must provide all information that a reasonable person would know to be relevant to an insurance company.
However, the duty of disclosure does not require disclosing information that diminishes the insurance company’s risk, that is common knowledge, or that the insurer should know.
Common examples of non-disclosure include not disclosing prior insurance claims or existing damage to property.
Exclusion clauses
The insurance company may claim that certain clauses in the policy exclude coverage for the type of loss suffered or the particular event that caused the loss.
Exclusions may include depreciation, storm damage, intentional damage, government seizure or vermin damage.
It is important to ensure that the insurance company is not denying a valid claim, and not all exclusions are as far-reaching as the insurance company may have you believe. It is important for our insurance lawyers to obtain the most up-to-date product disclosure statement (PDS) and speak to you about any representations that were made to you when you took out the cover (whether via phone, which we may be able to obtain recordings of), published on the insurer’s website, or some other advertising that you relied on when taking out the cover.
Fraud
The insurance company may claim the insured party acted fraudulently in some way.
If only a minimal or insignificant part of an insurance claim is made fraudulently, the insurer may be ordered to pay the remainder of the claim.
It is also important to obtain legal representation when there is suspected fraud, to avoid you having to speak to the insurance company directly, or to one of their assigned investigators (for litigation and criminal purposes). Unfortunately, it is not uncommon for innocent claimants to have an insurance company delay their matter to investigate allegations of fraud. In the circumstances that the insurance company and you have a contract, the insurance company will have to prove, on what is known as the ‘Briginshaw’ standard, the allegations of fraud in order to avoid having to pay your claim. The Briginshaw standard basically means that the more serious an allegation is (a fraudulent claim), the more compelling the evidence against you must be in order to prove the allegation on the balance of probabilities. A mere suspicion of fraud will ordinarily not be enough.
Gibbs Wright will ensure that you are represented and that the insurance company will not simply deny your claim without a fight.
Non-insured loss
The insurance company may claim that the particular damage or loss (for which compensation is being sought) was caused by an event not covered by the policy.
Similar to exclusion clauses, Gibbs Wright can review the most up-to-date product disclosure statement (PDS) and misleading or deceptive conduct in any of the advertisements or statements made to you about the policy.
It is, perhaps surprisingly, not uncommon for representatives of the insurer to misunderstand or misstate the insurance policy to you. Retaining a litigation lawyer to handle your insurance dispute will assist you in exploring the avenues to receive your payout.
