With 12,879 motor vehicle insurance complaints lodged with the Australian Financial Complaints Authority in 2024-25 alone, up 18% from the year before, the odds of a car insurance claim turning into a dispute are climbing for Australian drivers. That number represents real people waiting on repairs, arguing over fault, or chasing a payout that never came. In cash terms, it means tens of thousands of households are sitting on delayed or reduced settlements every year.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Comprehensive motor vehicle insurance alone makes up one-third of all insurance cases that reach the ombudsman. That means the policy type most Australians hold is also the one most likely to land in dispute. The common thread across these cases isn’t bad luck — it’s how claims are documented, communicated, and challenged. Understanding what the numbers actually reveal about claim outcomes is the first step to getting a fair result. Here’s what you actually need to know.
Before you start negotiating, you need to understand one term that appears in almost every disputed claim: non-disclosure. It’s the most common reason insurers give for reducing or denying a payout.
What I tend to notice is that most people don’t realise how often non-disclosure is raised months after a policy was taken out, not at the point of application. The fix is simple: read every question on the application form twice, and keep a copy of what you submitted.
How Complaint Data Reveals Where Car Insurance Claims Actually Break Down
The AFCA complaint numbers for 2025 tell a clear story about where the system fails. Delay in claim handling was the single most complained-about issue across all financial services, with 9,274 complaints. That’s more than one in four of all general insurance complaints. Denial of claim came in fourth with 6,362 complaints, up 32% from the prior year. Misleading product or service information accounted for 8,457 complaints.
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| Complaint Category | Number of Complaints (2025) | Annual Change |
|---|---|---|
| Delay in claim handling | 9,274 | — |
| Misleading product/service information | 8,457 | — |
| Denial of claim | 6,362 | +32% |
| Motor vehicle insurance (all issues) | 12,879 | +18% |
These aren’t abstract figures. A delay of even a few weeks means you’re covering a hire car out of pocket, or watching repair costs climb while the insurer reviews your file. The 32% spike in denial complaints suggests insurers are taking a harder line on what they will and won’t cover. For a driver with a comprehensive policy, this means a denied claim could leave you with a wrecked car and no payout — while you still pay the premium.
What this means in practice: if your claim is delayed or denied unfairly, the compensation you can recover isn’t limited to the repair bill. The non-financial loss component is a negotiating lever that most people never know exists. My first move in any dispute would be to document how the delay has affected your daily life — dates, costs, missed work — because that’s the evidence AFCA looks for when awarding the $6,300 cap.
Three Mistakes That Undermine Your Settlement Before You Start Negotiating
Reporting the incident late
Most policies require you to notify the insurer within a specific window — often 24 to 48 hours for an accident. Miss that window and the insurer can argue that the delay made it harder to verify the damage, assess fault, or recover costs from the other party. In the AFCA data, delay in claim handling was the top complaint category, and late reporting is a major contributor. The fix: report online or by phone the same day, and follow up in writing within 48 hours. Keep a record of the time and date you reported it.
Failing to document the scene properly
Photos that are too dark, too distant, or too blurry are a common reason claims stall. Insurers need clear evidence of the incident scene, the damage, and the surrounding context. A single wide shot of a dented bumper tells them almost nothing. What they need: multiple angles, close-ups of impact points, photos of the other vehicle’s licence plate, and shots of road conditions if relevant. Without this, the loss adjuster works from assumptions — and assumptions tend to favour the insurer’s bottom line. If you’re unsure what to capture, a dash cam can provide an independent record of the incident itself, reducing reliance on after-the-fact photos.
Not knowing what your policy actually excludes
Flood versus storm surge. Wear and tear versus sudden damage. Personal use versus ride-share driving. The difference between covered and excluded is often a line in the Product Disclosure Statement that most people never read. When a claim is denied, the most common reason is that the event falls under an exclusion the policyholder didn’t know existed. The fix: before you file a claim, pull out your PDS and read the exclusions section out loud. If you’re unclear on any term — “seepage,” “gradual deterioration,” “mechanical breakdown” — call the insurer and ask for a written explanation. A quick legal consultation can clarify whether a disputed exclusion is enforceable under the Insurance Contracts Act.
- Did you report the incident within the policy’s required timeframe?
- Do you have clear, well-lit photos from multiple angles of all damage?
- Have you read the exclusions section of your PDS and understood every term?
- Do you have a written record of all communication with the insurer (dates, names, reference numbers)?
- Have you kept damaged items or the vehicle untouched until the insurer inspects them?
How to Negotiate a Fair Car Insurance Settlement in Australia
Build your evidence file before you pick up the phone
Negotiation starts before the first conversation. Gather everything: clear photos and videos, police report number if the accident was attended, witness names and contact details, repair quotes from two independent shops, and proof of purchase for any stolen or damaged items. Create a detailed inventory with description, purchase date, original price, and estimated current value. The stronger your file, the less room the insurer has to lowball the assessment. Retain damaged items as evidence until the insurer tells you in writing that they can be disposed of.
Understand the loss adjuster’s role and your own
The loss adjuster works for the insurer, not for you. Their job is to assess the damage, determine cause, and recommend a settlement. You are entitled to a fair assessment, but you are also entitled to challenge it. If the adjuster’s estimate is lower than an independent repair quote, submit the independent quote in writing and ask the insurer to explain the discrepancy. The key is to keep every exchange professional and in writing — email is best because it creates a timestamped record. A warranty-covered repair reimbursement guide covers similar ground for those dealing with repair-related disputes.
Escalate through the formal dispute pathway if you hit a wall
If the insurer rejects your claim or offers a settlement that doesn’t cover your losses, you have two free options. First, Internal Dispute Resolution (IDR) — the insurer must respond in writing within 30 calendar days. Submit your complaint in writing, clearly stating which clause or evidence you are disputing, and include copies of all supporting documents. If the insurer misses the 30-day window or you’re not satisfied with the outcome, escalate to the Australian Financial Complaints Authority (AFCA). AFCA resolved 45% of general insurance complaints at the referral stage and handled 11,516 cases at the full case management stage in 2025. The service is free, and you don’t need a lawyer to use it.
What to do if your car is written off
If the repair cost exceeds the vehicle’s market value, the insurer will declare it a total loss and offer a cash settlement based on market or agreed value depending on your policy. The most common mistake is accepting the first offer without checking whether it reflects the actual market. Search online listings for the same make, model, year, and approximate kilometres — if the insurer’s offer is below that range, provide the listings as evidence and ask for a revised settlement. A guide to protecting your investment against a write-off walks through the valuation dispute process in detail.
Upcoming changes that could affect your claim rights
The 2025 AFCA data shows a 120% increase in compensation awarded, suggesting the ombudsman is taking a more active role in holding insurers accountable. There is also ongoing regulatory discussion around standardising claim timeframes and improving transparency around cash settlements. If you have an active claim, the direction of travel is in your favour — but only if you have the documentation and timeline to support your case. Keep everything, and don’t accept a verbal offer without seeing it in writing.
Frequently Asked Questions About Car Insurance Claim Negotiation
Can I negotiate a payout if I’m not at fault? ▾
What happens if the insurer takes longer than 30 days to respond to my complaint? ▾
Will my excess be refunded if I’m found not at fault later? ▾
Can AFCA award compensation for stress and inconvenience? ▾
Do I need a lawyer to take my claim to AFCA? ▾
What if the insurer offers a cash settlement instead of repairs? ▾
The Shift in Who Holds the Leverage in a Claim Dispute
The record $643 million in compensation secured through AFCA in 2025 — up 120% year-on-year — tells a story that most insurers would rather not advertise. Consumers and small businesses are winning more disputes than ever, and the ombudsman is awarding compensation at a scale that changes the risk calculation for insurers who drag their feet or deny claims unfairly. The leverage in a claim negotiation is no longer one-sided. But it only shifts if you have the documentation, the timeline, and the knowledge of the dispute pathway to use it. Those three things are within your control.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read are online comparison sites really helping you save on car insurance.
Sources and Further Reading
Driving coverage tips for car insurance in Australia — practical advice on understanding what your policy covers before you need to claim.
Easy ways to save on car insurance for young Aussies — cost-saving strategies that don’t leave you underinsured.
Finance Directory Australia (2025). Insurance Claim Denied? Fight Back. 🔗
Insurance Quote Online (2025). Tips for Filing Insurance Claim. 🔗
Right2Drive (2025). Vehicle Insurance Claim Process. 🔗
Youi (2025). Guide to Claiming Car Insurance. 🔗
