Can you guess the number one reason home insurance claims are denied?

Confused man scratching his head about why his home insurance claim got denied.

Recent figures from the General Insurance Code Governance Committee (GICGC) revealed that denied home insurance claims spiked in the last year.

The report found that home insurance claims were the second-largest proportion of claims filed within 2020 - 2021 (just behind car insurance), with a total of 731,318 claims, decreasing by -11% from the previous year.

However, what is concerning is that rejected claims for home insurance surged by nearly 25%, with contents insurance (domestic and personal belongings) upticking nearly 21%.

So why were so many claims denied, despite fewer people filing them in the first place?

Honey Insurance chief operating officer Angelo Azar reckons a big reason is because they weren't clear on the terms of their insurance.

"Most customers will be declined because of maintenance-related issues," explains Azar. "But most people don’t realise that that’s not covered. In all of my experience, that’s what I found. They aren’t claiming knowing they’re not covered, they’re claiming because they think they are.”

Azar stresses the importance of reading the product disclosure statement (PDS) beforehand so customers get across what the limits and exclusions are in their policy before buying itlet alone lodging a claim. If the exclusions don't match what you need in a policy, it isn't worth the money.

"The good thing is that exclusions have to be very clearly spelled out in the product disclosure statement today," says Azar. 

RELATED: What's the best home and contents insurance for catastrophes?

With intense flooding and new coverage loopholes slamming Aussies in the last year, it's not surprising that there's been more confusion around the terms and conditions. 

"While it has undoubtedly been another difficult year, these challenges have given many in the industry an opportunity to look at their existing business continuity plans and consider where these can benefit from review and improvement," says GICGC independent chair Veronique Ingram.

"Ideally, Code subscribers will emerge from this past year more flexible and resilient in the face of future crises."

The report made recommendations as to how providers could improve their customer service and avoid code breaches, including:

  • Improvements to claim processes
  • Making timely and accurate payments to customers
  • Giving more resources to staff
  • Providing remedial training for staff and performing system fixes.

“A key purpose of the 2020 Code is to ensure that consumers are treated in a fair, reasonable and ethical manner. It is therefore essential that the actions of subscribers reflect not only the letter of the Code, but also the spirit in which it is intended, to ensure that the best interests of consumers are prioritised,” says Ingram.  

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Search promoted home insurance below. Advertiser disclosure. Important information on terms, conditions and sub-limits.
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    Optional ExtraUp To 30% Of Buildings Sum Insured, Applied Automatically For Eligible Policies
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  • Home & Contents Insurance

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  • Home & Contents Insurance

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    Underinsurance protection
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    Optional ExtraUp To 25% Of Building Sum Insured
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  • Home & Contents Insurance

    Main events covered
    • fire
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    • theft
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    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
    Yes
    Underinsurance protection
    Underinsurance protection icon
    No
    New for old
    replacement
    Replacement icon
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  • Home & Contents Insurance

    Main events covered
    • fire
      Fire
    • theft
      Theft
    • storm
      Storm
    • flood
      Flood
    Monthly payments
    cost extra
    Calendar icon
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    Underinsurance protection
    Underinsurance protection icon
    Optional ExtraUp To 30% Of Building Sum Insured
    New for old
    replacement
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