Have a dispute with your car insurance provider? Here’s what you can do about it.
If your car insurance provider hasn’t held up its end of the bargain, then you may have valid grounds for a dispute. Financial service providers, including insurance companies, are required to live up to their obligations in good faith. Naturally, the exact obligations depend on which type of car insurance policy you have.
If you have a car insurance dispute, you can contact the Financial Ombudsman Service (FOS) for a resolution. The FOS is responsible for settling issues between consumers and financial service providers. If you have exhausted all other options, then it might be time to give them a call.
What can the FOS do?
The Financial Ombudsman Service is an impartial, non-profit organisation that offers dispute resolution to customers having difficulties with a financial service provider. Reputable insurers are FOS members and they pay membership fees to ensure that FOS services remain free for consumers.
When you go to the FOS with a dispute, they will:
- Determine whether your car insurer, or financial services provider (FSP), acted fairly and promptly to resolve the claim. Familiarise yourself with what to do in the event of an accident to make sure you’ve taken the appropriate steps from the beginning.
- Look at which steps the FSP took to expedite repairs and help ease your burdens.
- If a cash settlement was offered, the FOS will determine whether it was a fair offer and enough to cover all the repairs.
- Decide whether you and the FSP tried to come to a reasonable solution first and whether any excuses given, such as difficulty finding spare parts for repairs, are legitimate.
- Determine whether either party is in the right and what kind of compensation is in order.
If they find that you’re in the right, the FOS can make the insurer take certain action including:
- Paying your claim
- Paying you a sum of money
- Forgiving outstanding debt
- Varying, reinstating or cancelling a contract
- Repaying, waiving or varying a fee
What can’t the FOS do?
The Financial Ombudsman Service cannot:
- Help with CTP insurance disputes. You will need to contact your state authority instead.
- Decide on matters currently undergoing legal proceedings.
- Offer assistance if the insurer is not an FOS member. However, you can safely assume that all legitimate insurers are FOS members.
What to do before contacting the FOS
Pay special attention to step 4 above and do not contact the FOS until you have first tried to come to an agreement with your insurer. It’s a good idea to use email when trying to resolve an issue as it automatically keeps written records, which may be important later if the FOS needs to make a decision.
- If you have not tried to settle the issue with your insurer, then the FOS will not help.
- After you have received a final answer from the insurer, you have two years to get in touch with the FOS if you want to pursue the issue.
The FOS handles a grey area
Issues are not always cut and dried. Sometimes an insurer might be obligated to do one thing, but also has reason to decide on a different course of action. Consider this example.
Mark crashed into a parked car in a parking lot, causing thousands of dollars of damage. He had recently lost his job and was unable to afford the excess, so the insurer denied his claim, leaving him with few options. After first trying to sort it out with the insurance company, as well as a free financial counsellor, Mark eventually turned to the FOS for a resolution.
- The insurer was obligated to pay Mark’s claim because the damage was covered by the terms of his insurance policy.
- The insurer was not obligated to pay Mark’s claim because he had not paid the excess.
The FOS was in favour of neither of the parties, so instead mediated between them to sort out a plan that worked for both. The insurer was ordered to cover the costs, as per the terms of the policy, and Mark was ordered to pay off the excess in affordable monthly instalments.
What happens after I make a complaint to the FOS?
Generally, you should not make a complaint until you have been through the insurer’s internal dispute resolution process. Doing so streamlines the FOS procedures, and shows that you have made an effort to reach an agreement.
In each stage, an agreement may be reached. If not, the dispute keeps progressing through the stages.
- Registration: The FOS will get in touch with you and the insurer, requesting that both of you respond. If you have tried internal dispute resolution, the insurer has 21 days to respond, if not, they have 45 days. During this period, the insurer may offer settlements, or they might otherwise look for ways to resolve the issue before the FOS steps in.
- Case management: The dispute will be allocated to a case manager. They will gather information on it and be in touch with both parties. The case manager will try to resolve the issue through negotiation, conciliation or by pointing out the relevant issues that might come into play if the dispute progresses to the decision stage.
- Decision: Taking into account all relevant factors, situational, legal and otherwise, the caseworker will reach a decision. In complex cases this decision might end up in front of a panel rather than an individual.
You do not have to accept the decision. If you reject it, the insurer is freed from the terms of that decision and is not required to do anything in particular. Your remaining option is then to pursue legal action.
Your insurer does have to accept the decision. As FOS members they are required to accept it. If you need a car insurance ombudsman to settle a dispute, there is a clear option available.