At some point in your years of driving you may need to make an insurance claim, whether your vehicle is involved in an accident, or damage occurs to your or someone else's vehicle. However, there is never a guarantee that every claim will be approved.
Let’s explore the most common reasons why car insurance claims are denied, helping you steer clear of potential pitfalls.
If you did not disclose the most accurate information when you applied for your car insurance policy, you may find that your claim is denied. This can include inaccurate personal details, omitting information about your vehicle and any drivers, as well as where it is stored. Full disclosure to the insurance provider can help you avoid claim rejections.
Car insurance policies come with specific terms and conditions, and including exclusions for certain types of damage or incidents. Before you sign up for your policy, be sure to thoroughly review your policy, including the Product Disclosure Statement (PDS) to know what is covered and what is not.
If you have missed any premium payments, or did not renew your coverage in a timely manner, you run the risk of losing continuous coverage. If an event occurs within one of these gaps, it is likely that your claim may be rejected. Try to stay on top of your payments to ensure you are protected.
In most cases, your claim may still be approved if an unlisted driver was involved in an adverse event with your vehicle. You may instead need to pay an unlisted driver excess. However, an unlisted driver may not be covered if the driver is not legally allowed to drive the vehicle.
For example, in Australia a P-Plater is not permitted to drive a “high performance” vehicle, with more than “130kW of power per tonne” – calculated using the vehicle’s tare mass. In this instance your car insurance claim would likely be denied.
If you fail to inform your insurer of any vehicle modifications, your insurance claim may be denied. If you’re planning on customising your car, be sure to notify your insurance provider immediately so you avoid any coverage gaps or voiding your policy.
If you make an insurance claim regarding an accident or damages caused while you were driving under the influence of drugs or alcohol, your insurance provider will likely deny your claim. On top of avoiding any illegal activity, insurance providers also expect a level of responsible driving for your safety and those around you.
Speaking of responsible driving, an insurance provider may deny your claim if an incident resulted from negligent or reckless driving. This includes failure to look out and pay due care and attention to road rules and conditions, not driving defensively, not indicating, and more.
Every insurance policy type and provider will have its own rules and regulations around how promptly you must report an incident and file a claim; some of which are state and territory dependent. It’s worthwhile checking the time frame that your insurance policy requires you to file a claim.
For example, when it comes to CTP insurance, each state and territory has its own restrictions around when you must make a claim within the date of an accident or incident.
State or Territory | CTP insurance claim lodgement timeframe |
New South Wales | Within three monthsor within 28 days to claim back pay for loss of earnings from the day after the date of the crash. |
ACT | Within three months or within one month if you have enlisted legal help. |
Victoria | Up to one year from the date of the car accident. Exceptions apply for people under 18. |
Queensland | |
South Australia | Within six months. Exceptions made if other involved driver(s) cannot be identified. |
Tasmania | |
Western Australia |
Your insurance provider may also reject your claim if it finds that you have fabricated details or exaggerated any damages, as this can constitute insurance fraud. Not only can this result in denied claims, but it may lead to legal consequences and potential policy cancellation.
This article was reviewed by Mark Bristow before it was published as part of RateCity's Fact Check process.
