Common Insurance Disputes and How to Resolve Them
Insurance disputes can be a significant source of stress and financial strain for many New Zealanders. Understanding common insurance disputes and knowing how to resolve them effectively is crucial for protecting your interests and ensuring fair treatment from insurance providers. Let’s explore some of the most frequent insurance disputes in New Zealand and discuss strategies for resolving them.
Claim Denials
One of the most common insurance disputes arises when an insurer denies a claim. This can happen for various reasons, including:
- Policy exclusions
- Perceived non-disclosure of relevant information
- Disagreements over the cause of damage or loss
How to Resolve:
- Review Your Policy: Carefully read your policy document to understand the terms, conditions, and exclusions.
- Request a Detailed Explanation: Ask your insurer for a written explanation of why your claim was denied.
- Gather Evidence: Collect all relevant documentation, photos, and expert opinions to support your claim.
- Internal Dispute Resolution: Lodge a formal complaint through your insurer’s internal dispute resolution process. The Insurance Council of New Zealand recommends this as the first step in resolving disputes.
- Seek External Help: If you’re unsatisfied with the outcome, you can escalate the matter to the Insurance & Financial Services Ombudsman (IFSO) Scheme, which provides free and independent dispute resolution services.
Undervaluation of Claims
Another frequent dispute occurs when policyholders believe their claim has been undervalued by the insurer.
How to Resolve:
- Get Independent Assessments: Obtain quotes or valuations from independent experts to support your claim value.
- Negotiate: Present your evidence to the insurer and negotiate for a fair settlement.
- Consider Mediation: The IFSO Scheme can provide mediation services to help reach a mutually agreeable solution.
- Seek Legal Advice: If the dispute involves a significant sum, consider consulting a lawyer specialising in insurance law.
Non-Disclosure Issues
Insurers may dispute claims if they believe the policyholder failed to disclose relevant information when taking out or renewing the policy.
How to Resolve:
- Review Your Application: Check the information you provided when applying for or renewing your policy.
- Provide Additional Information: If you inadvertently omitted information, provide it to your insurer along with an explanation.
- Understand Your Rights: The Insurance Law Reform Act 1977 provides some protection against claim denials based on non-disclosure, particularly if the non-disclosure was innocent or irrelevant to the claim.
- Seek Advocacy: The Citizens Advice Bureau can provide guidance on your rights and obligations regarding insurance disclosure.
Delays in Claim Processing
Excessive delays in processing claims can cause significant stress and financial hardship for policyholders.
How to Resolve:
- Regular Follow-ups: Maintain consistent communication with your insurer, requesting updates on your claim’s progress.
- Document All Communications: Keep records of all interactions with your insurer, including dates, names, and content of conversations.
- Understand Timeframes: The Fair Insurance Code, administered by the Insurance Council of New Zealand, sets out timeframes for insurers to acknowledge and respond to claims.
- Escalate if Necessary: If delays persist, escalate the matter to a senior claims manager or use the insurer’s complaints process.
Disputes Over Policy Interpretation
Disagreements can arise over the interpretation of policy wording, particularly regarding coverage limits or exclusions.
How to Resolve:
- Seek Clarification: Ask your insurer for a detailed explanation of how they interpret the relevant policy clauses.
- Consult Industry Guidelines: The Insurance Council of New Zealand provides general guidance on policy interpretation that may be helpful.
- Consider Expert Opinion: In complex cases, consider obtaining an opinion from an insurance law expert.
- Use Dispute Resolution Services: The IFSO Scheme can provide an independent interpretation of policy wording.
Natural Disaster Claims
In the wake of natural disasters, such as earthquakes or floods, disputes often arise over the extent of coverage and the assessment of damage.
How to Resolve:
- Understand EQC Coverage: For natural disasters, claims often involve both the Earthquake Commission (EQC) and private insurers. Familiarise yourself with EQC coverage limits and processes.
- Coordinate with Both Parties: Ensure clear communication between yourself, EQC, and your private insurer to avoid delays or misunderstandings.
- Seek Expert Assessments: Consider engaging independent experts to assess damage, particularly for complex or high-value claims.
- Be Aware of Timeframes: The Canterbury Earthquakes Insurance Tribunal provides a specific dispute resolution process for earthquake-related claims in the Canterbury region.
Insurance disputes can be complex and frustrating, but understanding your rights and the available resolution pathways is crucial. Always start by thoroughly reviewing your policy and communicating clearly with your insurer. If disputes persist, don’t hesitate to use the free and independent services provided by the IFSO Scheme or seek advice from consumer advocacy groups.
Remember, persistence and documentation are key. Keep detailed records of all communications and gather as much evidence as possible to support your case. While the process can be challenging, many disputes can be resolved satisfactorily through patience, clear communication, and a willingness to negotiate.
Lastly, consider reviewing your insurance policies regularly to ensure they meet your current needs and that you fully understand the terms and conditions. This proactive approach can help prevent disputes from arising in the first place.
By being informed and prepared, you can navigate insurance disputes more effectively, ensuring fair treatment and appropriate coverage when you need it most.