Your insurance claim was declined in New Zealand, what to do next

Last updated 23 June 2026. This is general information, not legal advice.

You paid your premiums for years, then made a claim, and the insurer said no. A declined claim feels final, but it very often is not. Insurers get decisions wrong, apply exclusions too broadly, and lean on non-disclosure arguments that do not hold up. There is a clear, free process for challenging a decline, and a lot of decisions are reversed along the way. This guide explains why claims get declined, how to push back, and how the free dispute resolution schemes work. It refers to the Fair Insurance Code and the dispute schemes that every insurer must belong to.

Why insurance claims get declined

Most declines fall into a handful of categories. Knowing which one you are dealing with tells you how to respond.

• Non-disclosure or misrepresentation. The insurer says you failed to tell them something important when you took out or renewed the policy, such as a prior claim, a medical condition, or a modification to the car.
• A policy exclusion. The loss falls within something the policy specifically does not cover, such as gradual damage, earthquake under a contents policy, or business use of a private vehicle.
• A breach of a policy condition. You did not do something the policy required, such as keeping the property secure, maintaining it, or notifying the claim promptly.
• Gradual damage or wear and tear. The insurer says the damage built up over time rather than being sudden and accidental, which most policies do not cover.
• Underinsurance. The sum insured is too low to cover the loss, so the payout is reduced or, with some policies, the claim is cut back proportionally.
• Suspected fraud. The insurer believes the claim is exaggerated or false. This is serious and you should get advice quickly if it is alleged.

The reason matters because the answer is different for each. An exclusion dispute turns on the wording of the policy. A non-disclosure dispute turns on what you were asked and what you knew. A gradual damage dispute usually turns on expert evidence about the cause of the damage.

Declines by type of insurance

The process for fighting a decline is the same whatever you are insured for, but the typical sticking points differ by policy.

• House and contents. Gradual damage, a maintenance or security condition not met, or an exclusion for a particular peril.
• Car. Non-disclosure of modifications, prior claims or other drivers, driving impaired, or using a private car for business or delivery work.
• Life and trauma. Non-disclosure of a medical condition or symptom that existed before the policy started.
• Health. A pre-existing condition exclusion, or treatment the policy classes as not covered.
• Travel. A pre-existing condition, an exclusion for a risky activity, or failing to take reasonable care of your belongings.

Whatever the type, the response is the same. Get the reason in writing, check the wording, and use the complaint process below.

The duty of disclosure and a change coming

Insurance in New Zealand runs on the principle of utmost good faith. Under the law as it currently stands, you have a duty to disclose everything that would be material to the insurer’s decision to insure you and on what terms, even if they did not ask about it directly. If you breach that duty, the insurer can in some cases treat the policy as if it never existed and decline the claim.

This is widely seen as harsh on ordinary consumers, who often have no idea what an insurer would consider material. Parliament has passed the Contracts of Insurance Act 2024, which softens the duty for consumers. Once it is in force, a consumer will only have to take reasonable care not to make a misrepresentation, judged by what a reasonable policyholder would do, and the remedy for an innocent mistake will be proportionate rather than all or nothing. That Act is not yet in force, however. It is expected to commence by 15 November 2027 at the latest, so for now the older and stricter duty of disclosure still applies. If your claim has been declined for non-disclosure, this is an area where good advice pays off, because the law is technical and insurers do not always apply it correctly.

First, get the decline in writing

Before you do anything else, get the decline in writing, in full. Ask the insurer for a written statement of the reason for the decline and the exact policy clause they are relying on. If it is non-disclosure, ask precisely what they say you should have disclosed and what question put them on notice.

You are also entitled, under the Privacy Act 2020, to the personal information the insurer holds about you and your claim, including the assessor’s reports and the file notes. Request it in writing. This is often where the real reason for the decline becomes clear, and where you find the weaknesses in it.

Step one, the insurer’s internal complaint

Every insurer operating in New Zealand must have an internal complaints process. This is your first formal step, and you have to go through it before you can escalate to the free external scheme.

Put your complaint in writing. State the claim, the decision you are challenging, why you think it is wrong, and what you want, usually that the claim be accepted and paid. Attach your evidence. Ask the insurer to confirm its final position in writing. If the insurer maintains the decline, it should send you a deadlock letter, a final response that confirms the dispute cannot be resolved internally and tells you which dispute resolution scheme it belongs to and how to contact it.

If the insurer simply goes quiet, you do not have to wait forever. If a reasonable time passes, usually treated as around two months, without a final answer, you can generally take the complaint to the external scheme anyway.

Step two, the free dispute resolution scheme

This is the part many people do not realise exists. Every insurer must belong to an approved dispute resolution scheme, and these schemes resolve insurance disputes independently, for free. The main ones are the Insurance and Financial Services Ombudsman, Financial Services Complaints Limited, and the Financial Dispute Resolution Service. These are three of the four approved schemes in New Zealand, the fourth being the Banking Ombudsman Scheme, and your insurer’s deadlock letter will tell you which one covers it.

The scheme investigates the complaint, looks at the policy, the evidence and the law, and reaches a decision. It can require the insurer to pay the claim, or part of it, and to compensate you. The Insurance and Financial Services Ombudsman can award up to $500,000 plus GST as a lump sum, with separate limits for regular payments and for special compensation. The service is genuinely free to you, and you do not need a lawyer to use it.

Two things to watch. First, the time limit. You usually have three months from the date of the insurer’s deadlock letter to take the complaint to the scheme, so do not sit on it. Second, the effect of the decision. If you accept the scheme’s decision, it is binding on the insurer and they must comply. If you do not accept it, you are not bound either, and you keep your right to take the matter to court. That makes the scheme a low-risk option, you can try it without giving up your other rights.

Building your case

Whatever stage you are at, a few things strengthen your position.

• Read the policy wording closely, especially the definitions and the exclusions. Insurance disputes are won and lost on the precise words. Where a clause is genuinely ambiguous, it is generally read against the insurer who wrote it.
• Get your own expert evidence. For a gradual damage or cause-of-loss dispute, an independent report from a builder, engineer or assessor that contradicts the insurer’s assessor can be decisive.
• Pin down the timeline. When did the damage happen, when did you notice it, when did you notify it. Many condition and gradual damage arguments turn on dates.
• Hold the insurer to the Fair Insurance Code. If your insurer is a member of the Insurance Council, it commits to clear timeframes and good communication, and you can quote the Code back when it falls short.
• Keep everything. Every letter, email, photo, invoice and file note. The schemes decide on documents.

When it is not a flat decline

You do not have to wait for an outright decline to use the complaint process. The same internal complaint and dispute scheme route is open to you when the problem is something short of a flat no.

• The insurer is dragging its feet, and an unreasonable delay in deciding or paying is causing you loss.
• The insurer has accepted the claim but offered far less than you believe it is worth, a partial payment dispute.
• You have been told you are underinsured and the payout has been cut back. It is worth checking how the sum insured was set, and whether you were given poor advice when you took out the cover.

Claims from natural disasters

Claims arising from natural disasters, floods, earthquakes, storms and the like, can be more complicated, because they may involve both your private insurer and the Natural Hazards Commission Toka Tu Ake. If you are stuck on a disaster-related claim, the New Zealand Claims Resolution Service offers free, independent support to help resolve it, including access to advice and, where needed, experts. It sits alongside the normal complaints route rather than replacing it.

The practical playbook

One. Get the decline in writing. The reason and the exact policy clause relied on.

Two. Request your file. Ask for the insurer’s assessor reports and file notes under the Privacy Act.

Three. Check the wording yourself. Read the exclusion or condition being relied on, and the definitions, word by word.

Four. Complain internally, in writing. Set out why the decline is wrong, attach your evidence, and ask for a final written position.

Five. Get the deadlock letter. It names the dispute scheme and starts the three-month clock.

Six. Take it to the scheme. Lodge with the IFSO, FSCL or FDRS within three months. It is free, and you keep your court rights.

Free help when you need it

• Insurance and Financial Services Ombudsman on 0800 888 202 for free, independent help with an insurance dispute.
• Financial Services Complaints Limited on 0800 347 257, another approved scheme.
• Financial Dispute Resolution Service on 0508 337 337, another approved scheme.
• Community Law Centres and the Citizens Advice Bureau on 0800 367 222 for free general advice.
• A loss assessor or claims advocate works for you, unlike the insurer’s loss adjuster who works for them. For a serious or high-value claim, engaging your own assessor can level the field.
• MoneyTalks on 0800 345 123 for free financial mentoring if a declined claim has left you struggling.

Frequently asked questions

Can I challenge a declined insurance claim in New Zealand

Yes. Start by getting the decline and the policy clause in writing, then make a formal internal complaint to the insurer. If they maintain the decline, take it to the insurer’s free dispute resolution scheme, the IFSO, FSCL or FDRS, within three months of the deadlock letter. The scheme is independent and free, and a lot of declines are overturned.

How long do I have to complain about a declined claim

You should complain to the insurer as soon as possible, and you generally have three months from the insurer’s final deadlock letter to take the complaint to the external dispute resolution scheme. If the insurer does not give you a final answer within about two months, you can usually go to the scheme anyway.

How much does it cost to dispute an insurance decline

The dispute resolution schemes are free for consumers. You do not pay a fee and you do not need a lawyer. The only costs are any you choose to incur yourself, such as an independent expert report to support your case. The scheme can award you compensation, up to $500,000 as a lump sum in the case of the Insurance and Financial Services Ombudsman.

What is non-disclosure in insurance

Non-disclosure is when the insurer says you failed to tell them something material when you took out or renewed the policy, such as a previous claim or a relevant medical condition. Under the current law you have a broad duty to disclose material facts. The Contracts of Insurance Act 2024 will soften this for consumers to a duty to take reasonable care not to make a misrepresentation, but that change is not yet in force as at 2026.

Is the insurance ombudsman decision binding

The decision binds the insurer if you accept it, so the insurer must pay or do what the scheme directs. It does not bind you. If you are not happy with the outcome, you are free to reject it and take the matter to court instead, so using the scheme does not cost you your other rights.

Can an insurance company refuse to pay in New Zealand

Yes, but only for a valid reason under the policy or the law, such as a genuine exclusion, a breach of a policy condition, or material non-disclosure. If you think the refusal is wrong, you can make an internal complaint and then take it to the insurer’s free dispute resolution scheme, which can overturn the decision.

How long does an insurance complaint take

The insurer has up to about two months to resolve your internal complaint. If it then goes to a dispute resolution scheme such as the IFSO, a straightforward case can take a few months and a complex one longer. The schemes are free, so the main cost is your time.

Has an insurer declined a claim on you? Tell us what happened, and how you got on, in the comments below.