Home insurance claim rejected - what to do

What to do if your insurance claim is denied

So, your insurance claim has been denied, now what?

It can feel frustrating and like a dead end. But the good news is, a “no” from your insurer doesn’t always have to be the final word. There are steps you can take to challenge the decision.

The first step is to contact your insurer. Ask for a written explanation of why your claim was not accepted and any supporting evidence the insurer may have to support its decision.

“The important thing to remember is that an insurer’s decision is not always final,” Canstar’s data insights director Sally Tindall says.

“Insurers often rely on consumers not challenging rejected claims, so asking for a review of the decision can be an important first step.”

Statistics show that challenging a denied claim can make a difference. About a quarter of all denied claims lead to a complaint, and nearly half of those complaints are overturned in favour of the consumer, according to a 2023 General Insurance Code Governance Committee’s report.

How to challenge a denied home insurance claim

If you’re still unhappy after speaking with your insurer, you can lodge a complaint through the insurer’s internal dispute resolution (IDR) process. Contact details should be available from the insurer.

The Financial Rights Legal Centre (FRLC) recommends keeping copies of all correspondence, as well as notes from phone calls, including dates, times and names. Clearly explain why you believe the claim was unfairly rejected and what you want reviewed.

If the issue is not resolved or you’re unhappy with the response you can escalate the complaint to the Australian Financial Complaints Authority (AFCA). In the three months prior to 30 September 2025, AFCA received 8,827 general insurance complaints, with almost 30%relating to home building and contents insurance. Importantly, AFCA found that 42% of general insurance complaints (including home insurance) were resolved at the earliest stage.

You can contact AFCA free of charge on 1800 931 678.

How often are insurance claims denied?

An ASIC study of more than 218,000 home insurance claims lodged with six insurers in 2022 found that only 8% were declined.

The study revealed  76% of claims were accepted or partially accepted, 12% were withdrawn, and 4% were still pending when the study ended. These six insurers cover around 60% of the Australian market. 

ASIC’s review of claims handling

ASIC looked at how insurers handle claims and found that while many companies have made improvements, progress across the industry has been uneven.

On the positive side, ASIC found that many insurers have:

• Set up a single point of contact to make communication easier for customers.
• Created specialist teams to better support vulnerable customers.
• Hired more claims staff, especially to deal with the rise in extreme weather events.

However, ASIC also found ongoing problems. These included poor oversight of external experts, not clearly telling customers about their right to review a cash settlement, not keeping up with growing claim volumes and disputes, and about one in six unhappy customers not being properly directed to their insurer’s complaints process.

Why do insurers deny home insurance claims?

According to the Insurance Council of Australia, common reasons a claim may be denied include:

• Policy exclusions
• Unmet policy conditions
• A cancelled or lapsed policy
• Non-disclosure or fraud.

The Financial Rights Legal Centre, which provides consumer advocacy and advice across Australia, explains how these issues typically arise and how insurers may apply them when assessing claims.

1. Non-disclosure

Non-disclosure occurs when your insurance company says you failed to tell them about something that should have been disclosed when taking out the insurance policy.

The FRLC says consumers must take “reasonable care” to avoid giving any wrong information (misrepresentation) to an insurer when taking out a policy. This may include failing to disclose:

• Previous insurance claims;
• How the property is used;
• Existing damage to the property.

“If you are not sure whether you need to tell the insurer about something, the safest option is to tell them,” the FRLC says. “This helps ensure the policy you are paying for will cover you if something happens.”

2. Policy conditions or exclusions

If your claim has been denied, it may be because your insurer believes you didn’t meet certain policy conditions, or that your claim falls under an exclusion.

Here’s what that usually means:

Policy conditions (what you’re expected to do)

These are the basic requirements you agree to when you take out your policy. According to the Financial Rights Legal Centre (FRLC), examples can include:

• Keeping your home in a reasonable state of repair;
• Having keyed locks on windows;
• Installing deadlocks on external doors.

Common exclusions (what’s typically not covered)

Some types of damage simply aren’t covered by most policies, such as:

• General wear and tear or poor maintenance;
• Faulty construction or design defects;
• Subsidence, ground movement or erosion.

Policy conditions and exclusions are usually outlined in the Product Disclosure Statement (PDS) and other policy documents.  Check this carefully to ensure the home and contents insurance cover you take out is appropriate.

3. A cancelled policy

A policy may be cancelled mid-term for various reasons, such as missed premium payments.

The FRLC says a policy may also be cancelled if you disclose information that the insurer considers makes the risk unacceptable. It adds that your claim could be rejected if the insurer later discovers changes that would have led to the policy being cancelled earlier.

This highlights the importance of keeping your insurer informed of any changes (see non-disclosure, above) that may affect your home and contents insurance.

4. Fraud

Fraud is a serious allegation and the FRLC says an insurer must show you intended to deceive them or acted with “reckless indifference” about whether the insurer was deceived.

If the insurer proves fraud, the law centre says your insurance claim can be rejected and your policy cancelled. In serious cases, you may be referred to the police, and you may be charged with a criminal offence.

What if I’m still not happy my insurance claim was rejected?

If you’re still dissatisfied after going through the complaints process, you may consider legal action. Before doing so, you may want to check what free legal help is available in your state or territory, or talk to a solicitor. But the FRLC warns that legal action can be a significant expense.

You may be required to pay the other party’s legal costs if you lose, and in some cases even if you win. Again, if you’re not sure what to do, you might want to seek qualified legal advice to help you consider your options.