When Your Insurer Delays Your Claim: Your Rights and Options

If your insurer is delaying your claim, they are likely breaching the General Insurance Code of Practice, which requires them to make a decision within 10 business days for straightforward claims or 4 months for complex ones. You can lodge a formal IDR complaint about the delay itself, and if they still don't respond within 30 days, escalate directly to AFCA. Delays are one of the most common and most successful grounds for AFCA complaints.

Key takeaways

• The Code of Practice requires a decision within 10 business days for straightforward claims, 4 months for complex ones.
• You can lodge an IDR complaint about the delay itself, separate from the claim outcome.
• If the insurer does not respond to your IDR complaint within 30 days, escalate directly to AFCA.
• Delays are one of the most common and most successful grounds for AFCA complaints.

What the Rules Say About Claim Timeframes

When you lodge an insurance claim, your insurer does not get unlimited time to make a decision. The General Insurance Code of Practice 2020 sets clear timeframes that every subscribing insurer must follow. And since every major insurer in Australia has signed up to the Code, these rules almost certainly apply to yours.

Under the Code, your insurer must make a decision on your claim within 10 business days of receiving all the information and documentation it reasonably needs. That is roughly two calendar weeks. If your insurer cannot meet that deadline, it must tell you in writing why it needs more time and give you an expected date for a decision.

For claims that remain unresolved after four months, your insurer must provide you with written updates at least every 20 business days. These updates must explain the reason for the delay and give you a revised timeline.

These are not suggestions. They are binding obligations under the Code, and breaching them can have real consequences for your insurer.

When Delay Becomes Unreasonable

Not every slow claim is an unreasonable delay. Insurers sometimes need more time to gather expert reports, assess complex damage, or investigate potential fraud. That is fair enough, as long as the insurer keeps you informed and the delay is genuinely necessary.

Delay becomes unreasonable when your insurer:

• Fails to tell you why a decision is taking longer than 10 business days
• Repeatedly asks for the same information you have already provided
• Goes silent for weeks or months without any update
• Sets artificial deadlines for you while ignoring its own
• Requests excessive or irrelevant documentation that has no bearing on your claim
• Assigns your claim to a new assessor who starts the process from scratch without good reason

If any of this sounds familiar, your insurer may be in breach of its obligations under both the Code of Practice and the Insurance Contracts Act 1984 (Cth).

Delay and the Duty of Utmost Good Faith

Section 13 of the Insurance Contracts Act 1984 requires both you and your insurer to act with the utmost good faith. This is not just a principle. It is a legally enforceable obligation.

Unreasonable delay in handling your claim can itself constitute a breach of the duty of utmost good faith. Courts and AFCA have consistently found that dragging out a claim without legitimate reason, failing to communicate, or using delay as a tactic to pressure you into accepting a lower settlement all fall short of this standard.

If your insurer breaches the duty of utmost good faith, it may be liable for additional damages beyond the original claim amount. This is a powerful lever, and it is one that many policyholders do not know they have.

Your Right to Escalate

If your insurer is stalling, you do not have to sit and wait. You have formal escalation rights, and using them properly can break a deadlock.

Internal Dispute Resolution (IDR)

Your first step is to lodge a formal complaint through your insurer's Internal Dispute Resolution process. Every insurer is required to have one. When you lodge an IDR complaint, your insurer must acknowledge it within one business day and provide a final response within 30 calendar days.

The IDR process puts your complaint on the record and forces a senior person within the insurer to review your claim. In many cases, this alone is enough to get things moving.

AFCA (Australian Financial Complaints Authority)

If your insurer does not resolve your complaint through IDR within 30 days, or if you are unhappy with the outcome, you can escalate to the Australian Financial Complaints Authority. AFCA is a free, independent dispute resolution service, and its decisions are binding on insurers.

You can also go directly to AFCA if your insurer has not responded to your claim within the timeframes set out in the Code of Practice. You do not always need to complete IDR first if the insurer has already exceeded its obligations.

AFCA has the power to require your insurer to pay your claim, pay compensation for delays, and change its decision entirely.

Financial Hardship and Fast-Tracking

If the delay is causing you financial hardship, you have additional protections. Under the Code of Practice, if you tell your insurer that you are experiencing financial hardship as a result of the claim, it must prioritise your claim and fast-track its assessment.

Financial hardship might mean you cannot afford temporary accommodation after a house fire, you are unable to work because your vehicle has not been repaired, or you are falling behind on bills because you are waiting on a payout. You do not need to be destitute. You just need to show that the delay is causing you genuine financial difficulty.

When you notify your insurer of financial hardship, do it in writing. Be specific about how the delay is affecting you and keep a copy of everything you send.

Interim Payments

While your claim is being assessed, you may be entitled to an interim payment. This is a partial payment made before the final decision, designed to help you manage immediate costs.

Under the Code of Practice, your insurer should consider making interim payments where it is clear that at least part of your claim will be accepted. For example, if your home has been damaged and the insurer has not yet determined the full repair cost, it should still pay for emergency repairs and temporary accommodation in the meantime.

If your insurer has not offered an interim payment and you are struggling, ask for one in writing. Reference the Code of Practice and explain your immediate needs.

Practical Steps to Put Pressure on a Slow Insurer

Here are the concrete steps you can take to move things along without damaging your claim:

1. Put everything in writing. Phone calls are fine for quick questions, but anything important should be followed up by email so you have a paper trail.
2. Keep a log of every interaction, including dates, names of people you spoke with, and what was discussed.
3. Set deadlines. When you write to your insurer, give them a specific date by which you expect a response, and reference the Code of Practice timeframes.
4. Ask for reasons. If your insurer says it needs more time, ask for a written explanation of exactly what is causing the delay.
5. Lodge an IDR complaint early. You do not need to wait months before escalating. If your insurer has missed the 10 business day window without a good explanation, lodge a complaint.
6. Notify your insurer of financial hardship if it applies. This triggers additional obligations and can accelerate the process.
7. Contact AFCA if IDR does not produce results within 30 days. Do not let the process drag on indefinitely.
8. Do not accept a lowball offer out of frustration. Insurers sometimes count on delay wearing you down. A rushed settlement is rarely in your best interest.

How The Fair Claims Co Can Help

Dealing with a stalled insurance claim is stressful, especially when you are already dealing with the damage or loss that prompted the claim in the first place. You should not have to become an expert in insurance regulation just to get what you are owed.

The Fair Claims Co prepares professional dispute documents, IDR complaints, and AFCA submissions for everyday Australians. We know the Code of Practice, the Insurance Contracts Act, and AFCA's processes inside and out. If your insurer is dragging its feet, we can help you put together the right documents to get your claim moving again.