What to Do If Your Car Insurance Claim Is Denied?

Being in an accident is tough. To add to the situation, there are a number of situations in which your insurance provider may delay or refuse a claim. It can be overwhelming, especially if you are facing the prospect of paying for the repairs yourself.

Being in an accident is stressful, but it’s even worse when your insurance provider refuses to pay your claim or delays the process. Sometimes, you may wonder whether you’ll have to cover the repair costs yourself.

The good news is, you’re not without options. In this guide, we’ll walk through the common reasons why an insurance claim might be denied and what you can do to dispute the decision and get the support you deserve.

Reasons why an insurance provider may not pay

There are several situations where your insurer might deny coverage for a claim, even after an accident. Understanding these common exclusions is important so you’re not caught off guard.

According to insurance experts at Finder.com.au, here are some of the most common reasons an insurer may reject a car insurance claim:

Driving under the influence of alcohol or drugs immediately voids your coverage.
Unroadworthy vehicles — worn brakes, tyres, or broken lights can make your car ineligible for claims.

Undisclosed modifications may mean your vehicle no longer meets the conditions of your policy.
Unlisted or restricted drivers, such as drivers under 25, are not covered by the policy.
Unpaid registration or an invalid licence can breach your policy terms.
Unsafe loads, such as carrying unsecured or excessive cargo.
Too many passengers, beyond your car’s legal or designed capacity.
Vehicle repossession or legal confiscation.
Reckless driving, including racing or unsafe behaviour.
Using your car for hire, like ridesharing or delivery, is not covered in your policy.
Missed premium payments can cancel your coverage entirely.

If your claim has been rejected, review your Product Disclosure Statement (PDS) to see if one of these exclusions applies.

Sheen Panel Service supports you through the repair process, even when your insurer won’t. We also provide resources on how to claim car insurance.

Sheen team member assisting two women with insurance paperwork near a red car after an accident.

Main reasons for refusal

As mentioned above, there are a number of situations in which an insurance provider will not pay, and these are grouped into four main categories:

Reason	Description
Non-disclosure	Failing to tell your insurer important details like prior damage, modifications, or who drives the car.
Policy exclusions	Situations not covered under your policy, such as drink driving, unauthorised use, or using your car for business purposes like ridesharing.
Fraud	Making a dishonest or false claim — e.g. misrepresenting how the accident occurred.
Policy cancellation	Your cover has lapsed or been cancelled due to missed payments or policy breaches.

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What should you do if your insurer refuses to pay your claim?

You still have options if your car insurance won't pay your claim. It is likely that your insurer will provide you with a letter stating their reasons for denying your claim.

Non-disclosure

If your claim has been denied for non-disclosure, you can:

Write to your insurer and ask them to specify what you did not disclose. You may wish to argue that you did disclose certain information, or that it was reasonable that you did not disclose certain information.
Ask for a copy of the underwriting guidelines to confirm whether they would have provided you with cover if you had provided the relevant information.
You can file a complaint with the Australian Financial Complaints Authority (AFCA), but you must be aware of any time limitations.

Exclusions

In the case that your claim has been denied due to a breach of an exclusion, your insurer must show that the relevant exclusion applies (for example, the driver's date of birth makes them under 25 years of age) and show a connection between the exclusion and the damage.

For example, your car tyres may make your car unroadworthy, but if you were hit from behind, your tyres did not cause the accident, and your insurer must pay.

Fraud

This is a serious allegation, and the insurance provider needs to prove that you acted in a certain way to meet the criteria for fraud. In serious cases, fraud can be reported to the police. If you are being investigated for fraud, it is recommended that you seek legal advice immediately.

Cancellation

If you have not paid your policy, you are no longer covered by the insurance provider, and they are not obliged to cover your claim. It is difficult to do more in this instance, but you should get advice about whether your insurer had sufficient reasons to cancel your policy.

You can dispute their decision by making a complaint to AFCA.

Contact Sheen

If your car insurance claim has been denied or you're struggling with your insurer, Sheen is here to help. We understand how frustrating and confusing the claims process can be, especially when you're already dealing with the aftermath of an accident.

Along with our expert panel beating and towing services, we’ll guide you through every step, whether you're fully insured, not at fault, or navigating a dispute.

Need support after your insurer won’t pay? Contact your local Sheen branch and let us help you get back on the road with confidence.

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