Car insurance companies are required under Australian law to carry out certain duties and obligations to their consumers. When you sign up to a policy with an insurer, you enter into a contract. If the insurer fails to uphold the duties stated under this contract, you may have valid grounds for a dispute.
What happens in the event of a car insurance dispute?
The first port of call you should consider is to contact your insurer and try to come to a reasonable solution. If you’re unable to reach an agreement or the dispute has escalated, one next port of call could be contacting the Financial Ombudsman Service (FOS).
The FOS is a not-for-profit, non-government organisation that aims to provide accessible and independent dispute resolution for financial services providers and consumers. The FOS is paid a membership fee by insurers so consumers can access the services for free.
Process for car insurance claims through an ombudsman
There are three main stages involved in the FOS dispute resolution process:
- Registration and referral: After the consumer submits an application, the FOS usually contacts the financial services provider and requests they respond to the claim. Some financial service providers also seek to resolve the dispute directly with the applicant rather than continue with the dispute resolution process.
- Case management: The dispute is then typically allocated to a case owner who commences the dispute resolution process. This involves a series of negotiations between the parties.
- Decision: If the dispute is still not resolved between the parties after stage two, it will be reviewed by an ombudsman who will make a final determination. Once accepted by the applicant, it cannot be reviewed or appealed.
What will the ombudsman look at?
After receiving a complaint, the ombudsman will consider if the insurance provider:
- was fair and prompt in their response
- took adequate steps to facilitate a prompt repair to reduce the applicant’s burden (if they choose to repair the vehicle)
- offered a “fair” and “sufficient” cash settlement to cover repairs that would be covered by the claim
- based the cash settlement on a quote for repairs by an authorised reparier
- attempted to negotiate a “fair and workable solution” with the applicant, such as when sourcing difficult-to-find parts for repairs
- was prompt in resolving the applicant’s claim
Should your claim be found to be warranted, the ombudsman can make your insurer pay your claim (or a sum of money); drop outstanding debt; vary, reinstate or cancel your contract; or change, refund or waive a fee.
What to do before contacting the financial ombudsman service
It’s important not to jump to conclusions and contact the FOS without exercising all your options.
Consider talking to your car insurance provider first. This could include speaking with their customer complaints department by phone, email or sending a letter. If you have exhausted all avenues and are still unable to reach an agreement, you have up to six years to make an application to the FOS.
It is worth noting the FOS cannot interfere with matters currently within a legal case, assist with CTP insurance disputes or provide assistance if your insurer is not one of their members.
Compare car insurance policies
If you’re unhappy with your current car insurance provider, it may be time to consider a new policy or switching providers. Fortunately, Canstar compares over 60+ car insurance policies.
If you’re considering car insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for a 30-39 year old male seeking cover in NSW without cover for an extra driver under 25. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the providers’ website. Use Canstar’s car insurance comparison selector to view a wider range of policies.
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