Waiting on an Insurance Payout? What Australian Businesses Can Do
Insurance Claim Gap
Business owners and directors · Insured loss, payout months away · Careful guidance
An Australian business insurance claim can be accepted, quantified and still unpaid. This guide shows what each stage means, what to ask for in writing, who may receive the proceeds, how to measure the real cash gap, when finance fits, and what happens if the payout is delayed, short, staged or redirected.
Quick Answer
Before an Australian business borrows against a delayed insurance payout, it should confirm in writing whether the claim is accepted, quantified, who will receive the money, and what still prevents payment, then ask for any available advance or interim payment. Most commercial property and business interruption cover sits outside the Code's Part 8 claim clock, but the insurer still owes efficient, honest and fair claims handling and settlement. Treat the claim as a possible exit only after the accepted amount, payee and payment path are documented. Free, independent help remains the first route where the real problem is the claim, tax, lease or solvency rather than finance.
| Your question | Short answer |
|---|---|
| How long can the insurer take? | For most commercial policies, no Code deadline applies. The Code's claim timeframes, including a decision within 4 months, cover Retail Insurance and not Wholesale Insurance. |
| Is 4 months the normal wait? | No. AFCA treats the Code timeframes as a longstop rather than a schedule, and says a simple claim that is plainly covered should generally not take 4 months to accept. |
| My claim is accepted. When do I get paid? | Accepted is not the same as quantified or paid. Ask for the accepted amount, payee, release conditions and expected payment date in writing. |
| Who does the loss assessor work for? | Under the Australian Code, loss assessor and loss adjuster are one defined term for a party the insurer contracts. A separately engaged policyholder representative is a different role. |
| Can I get money before the claim finishes? | Ask for an advance or interim payment before borrowing. The Code's urgent-need advance applies only where its Retail Insurance claims rules cover the policy, while a commercial policy may separately allow interim or progress payments. |
| Why is the settlement less than my quote? | Usually the GST credit your business recovers itself, cost escalation between the loss and the rebuild, or a sum insured below what recovery costs. |
| Does my financier get the money? | Often, in part or in full. Proceeds may reduce existing debt or be released in stages, and a new payment direction or assignment does not automatically override earlier security. |
| Can a business borrow against a claim? | Potentially, through business-purpose finance secured by assets. Treat the claim as part of the exit only when the accepted amount, payee and payment path are documented, with existing security and a backup exit resolved. |
| Who can I call for free help? | The Small Business Debt Helpline on 1800 413 828 for the business's finances, your insurer's internal complaints team then AFCA for the claim, and a community legal centre or Legal Aid for claim conduct. |
Which claim problem do you actually have?
An Australian business insurance claim is not one status. It moves through operational stages, and finance should not be sized until the accepted amount, payee and payment path are clear. The labels are not uniform legal definitions, so ask the insurer to state what each one means on your file.
Swipe sideways to compare all columns.
| Stage | What it usually means | What to get in writing | Finance implication |
|---|---|---|---|
| Claim lodged | The insurer has been notified and created a file. | Claim number, acknowledgement and the initial information request. | No. The existence of a claim is not evidence of a repayment source. |
| Information gathering | The insurer is collecting documents, quotes and evidence. | One consolidated list of what remains outstanding and the expected process. | No. Liability, amount and timing are still open. |
| Expert assessment | An assessor, engineer or forensic accountant is preparing an opinion or report. | Who was engaged, when, the report due date and any delay explanation. | Usually no. The report may change coverage, scope or amount. |
| Accepted in principle | The insurer may have accepted part of the policy response while scope, amount or conditions remain unresolved. | Exactly what is accepted, what is not, and every condition still outstanding. | Not by itself. It is not the same as an agreed amount or payment date. |
| Accepted | The insurer has accepted all or part of the claim. | A written decision identifying the accepted and disputed components. | Potentially, but only after the amount, payee and payment path are also clear. |
| Quantified | The accepted scope or amount has been calculated or agreed. | The calculation, scope, settlement figure and any deductions or holdbacks. | This is materially stronger, but it is still not cash in the business account. |
| Payment path confirmed | The insurer has identified how, when and to whom the money is intended to be paid. | Payment date or internal authorisation status, payee, release conditions and any staged-payment process. | The claim may support an exit once existing security and a backup plan are resolved. |
| Paid | Funds have reached the business, financier, repairer or controlled account. | Remittance, allocation of funds and any final release or settlement document. | Use the actual net funds, not the headline settlement, to repay or restructure finance. |
Operational labels vary between insurers and policies. This table is a customer triage tool, not a legal definition of any individual claim status.
Once the stage is clear, the loss usually falls into one of three practical problems. A timing gap means the accepted amount, payee and payment path are documented, but cash has not arrived. A decision still pending means liability, scope or amount is still being assessed. A shortfall or contest means the policy response, quantum or cost of recovery is disputed or inadequate. Only the first is straightforwardly a finance question.
This page is written for the commercial insured side: a business or director dealing with damage to premises, plant, stock or trading capacity. If you are a homeowner or a personal claimant, the free services in the who to call section are the right door rather than a business finance guide. If you are searching for a loan against a personal injury settlement, that is litigation and consumer lending, a different product in a different legal frame, and it is not what this page covers. Whichever case you are in, the free routes below cost nothing and foreclose nothing, which is why they appear before any lender is mentioned. Understanding your own cashflow position and what is left of your working capital is the honest starting point.
What should you do in the first week, before anyone talks about money?
Make the site safe, photograph everything before you move it, keep every damaged item until the insurer says in writing that you can dispose of it, and ask your insurer in writing before you carry out anything beyond making safe. Those four steps cost nothing and they protect the number you will later be trying to fund.
Making safe and repairing are different things. Preventing further damage is not the same as reinstating, and most policies deal with the two separately. That is why the safe answer on permanent repairs is to ask first and get the answer in writing, and the safe answer on damaged stock and plant is to keep it until you are told otherwise. A business that has already skipped and replaced the evidence has made its own claim harder to prove and its own funding gap harder to size.
Ask before you claim, if you are unsure whether to claim at all. The Code allows you to ask your insurer whether the policy covers a particular loss before you actually make a claim, and it says that when the insurer answers, it will not discourage you from making a claim and will tell you that a claim would be fully assessed. That is a Retail Insurance provision, so on a commercial policy it is a reasonable request rather than an entitlement, but there is no cost to asking. The Code also limits what the insurer can ask you for: when assessing your claim it will only ask for and rely on information relevant to its decision, and where it asks for information it will tell you why it needs it.
Start the paper trail on day one. Record who told you what and when, keep every invoice for make-safe work, temporary premises and replacement hire, and keep a simple log of trading you could not do. The evidence you will need six months from now, whether for the claim, for a complaint or for a lender, is created in the first fortnight and cannot be reconstructed later. The specific questions to put to your insurer in writing are set out in what to put in writing below.
If you lease the premises, whose claim is it?
The building is generally the landlord's asset and their insurer's problem, while your fit-out, stock, plant and lost trading sit with your own policy. Establishing that split in writing in the first week is the difference between a tenant who starts their own claim immediately and one who waits three months on somebody else's.
The practical consequence is uncomfortable but worth facing early: the reinstatement timetable is not yours to control. Your landlord's insurer decides the scope and the pace on the building, and your trading recovery sits behind it. Ask your landlord in writing for their insurer's claim reference and their expected reinstatement timetable, because your own funding plan depends on a date you cannot influence.
Your rent obligation while the premises are unusable is a different question again, and it is not an insurance question at all. It is governed by your lease and by the retail or commercial lease legislation in your state or territory, which differs across jurisdictions and has been changing. That is a solicitor's answer, and your state's small business commissioner or equivalent office is a free first call. This guide does not advise on leases, and a tenant who assumes rent simply stops while the premises are unusable is making an assumption their lease may not support.
How long can an insurer take to settle a business claim?
If your policy is Retail Insurance, the Code requires the insurer to tell you what information it needs within 10 business days and to decide within 4 months. If it is Wholesale Insurance, which most commercial property and business interruption cover is, none of those timeframes apply at all. What remains in both cases is the licensee obligation to handle and settle the claim efficiently, honestly and fairly. This is the single most misunderstood point in the whole subject, and the 4 month figure you have probably already read somewhere is very likely not your deadline.
The layer that always applies. Handling and settling an insurance claim is a financial service. ASIC's guidance for insurers, Information Sheet 253, puts it plainly: if you undertake certain specific activities in relation to an insurance product, you are providing insurance claims handling and settling as a financial service. Under section 912A(1)(a) of the Corporations Act 2001, a licensee must do all things necessary to ensure that the financial services covered by its licence are provided efficiently, honestly and fairly. The obligation is written as attaching to the service under the licence. An insurer cannot simply sit on a commercial claim indefinitely and treat the absence of a published timetable as permission.
The layer that depends on your policy. The General Insurance Code of Practice sets the timeframes most people mean. But the Code says expressly how far it reaches. Paragraph 12 states that the whole Code applies to Retail Insurance, and that a list of parts do not apply to Wholesale Insurance. That list includes part 8, Making a claim, which is where every claim timeframe below lives. The Code then defines Retail Insurance as a general insurance product provided to an individual or for use in connection with a small business and which is one of 7 listed types: motor vehicle, home building, home contents, sickness and accident, consumer credit, travel, and personal and domestic property. Commercial property cover and business interruption cover are not on that list. The Code also does not cover workers compensation, marine, medical indemnity, motor vehicle injury or domestic builders insurance at all, which matters if your loss is to a vessel or to goods in transit.
Two different small business thresholds, routinely confused. The Code's own definition of a Small Business is a business employing fewer than 100 people if it manufactures goods, and fewer than 20 otherwise. AFCA's rules use a flat definition of fewer than 100 employees for complaint eligibility. So a manufacturer with 40 staff and a retailer with 40 staff sit differently under the Code even though both can complain to AFCA. Check which one you are before you rely on either.
Swipe sideways to compare all columns.
| What the insurer must do | Para | By when | Whose policies |
|---|---|---|---|
| Tell you what information it needs, and give its estimate of the likely decision timeframe | 68 | Within 10 business days of receiving the claim | Retail only |
| Fast-track the claim, or pay an advance, where the event left you in urgent financial need | 64 | Advance within 5 business days after you demonstrate the need | Retail only |
| Tell you it has appointed a loss assessor or loss adjuster, and what their role is | 72 | Within 5 business days of appointment | Retail only |
| Tell you about the progress of the claim | 70 | At least every 20 business days | Retail only |
| Respond to your routine enquiries about progress | 71 | Within 10 business days | Retail only |
| Ask any external expert it engages to report | 74 | Within 12 weeks of engaging them | Retail only |
| Give you information or copies of reports it relied on, when you ask | 82 | Within 10 business days of your request | Retail only |
| Decide whether to accept or deny, and tell you | 76, 77 | Within 10 business days of having all relevant information, and within 4 months of receiving the claim | Retail only |
| Decide within the extended timeframe where paragraph 78 applies | 78 | Within 12 months of receiving the claim | Retail only |
| Agree a reasonable alternative timetable with you where the usual timeframes are not practical | 83 | By agreement, or it must give you its complaints process | Retail only |
| Handle and settle the claim efficiently, honestly and fairly | Corporations Act s912A(1)(a) | No fixed period; the standard is the conduct, not a date | Expressed as applying to the financial services covered by the licence |
4 months is a longstop, not a schedule. Even where the Code binds your policy, the timeframes are not a permission slip to use the whole period. AFCA's published approach to general insurance claims handling treats the Code as good guidance on timeframes and conduct while making clear those are standard timeframes and are not, of themselves, conclusive about whether a claim has been handled fairly or reasonably promptly. Its own example is that a simple claim that is plainly covered should generally not take the insurer 4 months to accept. If your insurer is quoting the 4 months at you on a straightforward loss, that is a point to make in a complaint.
Three mechanisms extend a claim past 4 months, and only one is the catastrophe limb people expect. Paragraph 78 stretches the decision to 12 months where the claim arises from an Extraordinary Catastrophe as the Code defines it, where fraud is suspected, where you do not respond to reasonable requests, where the insurer has difficulty communicating with you, or where you requested a delay. Limb (c), your own failure to respond, is the one you control. Separately, paragraph 83 lets the insurer agree a reasonable alternative timetable with you where the usual timeframes are not practical, for example on a complex claim. And paragraph 74 gives an external expert 12 weeks from engagement to report, which on a large commercial loss is frequently the real bottleneck. Ask which of the three is operating on your file.
Two honest qualifications travel with that table. Every Code timeframe is counted in business days except the 4 month and 12 month decision limbs, and the clock generally runs from when the insurer received the claim rather than from the date of the loss. And the Code is being rewritten: the Insurance Council records that public consultation on a draft Code ran from 24 June to 21 July 2026 and that submissions have now closed, with the October 2023 version still the one in effect. Your policy schedule and product disclosure statement will tell you what class of product you hold, and the difference between a business pack, a commercial property policy, a business interruption section and a comprehensive motor policy is exactly the difference that decides whether the clock above binds your insurer. If you cannot tell, ask your insurance broker, because that is their question rather than ours.
Your claim is accepted. When do you actually get paid?
The Code sets deadlines for the decision, not for the payment. Read the claims part end to end and every timeframe in it runs to the point where the insurer accepts or denies. There is no paragraph setting a period within which an accepted claim must actually be paid. That gap is where most businesses in this position get caught, because acceptance feels like the finish line and is very often the start of a second wait.
What fills that second wait is usually mundane and entirely predictable: agreeing a scope of works, obtaining or approving quotes, resolving the GST treatment, confirming whether the money goes to you or to your financier, and deciding whether the claim is settled in cash or by reinstatement. None of that is unreasonable on its own. What makes it dangerous is planning as though acceptance and payment are the same event, and sizing a facility, or a payroll, against the wrong one.
Two things follow. First, the obligation that does not stop at the decision is the licensee duty to handle and settle claims efficiently, honestly and fairly, and settling is expressly part of the service that duty attaches to. An accepted claim sitting unpaid without explanation is squarely within that. Second, ask for a date in writing and ask what specifically remains outstanding to release the payment, so a vague wait becomes a list of items you can actually work through. If a date is given and passes without explanation, that is a complaint, not a phone call.
Who does a loss assessor or loss adjuster work for?
Under the Australian Code, both terms describe a party the insurer contracts, not one who acts for you. The Code's definitions treat loss assessor and loss adjuster as a single defined term meaning a company or person the insurer contracts to examine the circumstances of your claim, assess the damage or loss, determine whether your claim is covered under the policy, assist in obtaining a repair or replacement quote, and help settle the claim. The Code lists them alongside investigators and collection agents as service suppliers, and notes that an appointed loss assessor or adjuster may also be an employee of the insurer. ASIC's Information Sheet 253 says the same thing from the licensing side, describing a loss assessor as able to provide claims handling services on behalf of the insurer.
The distinction you have read elsewhere is imported. Search this question and most results will tell you that a loss adjuster acts for the insurer while a loss assessor acts for you. That is a United Kingdom convention. It is not what the Australian Code's defined term describes, and if you are treating the assessor who arrives at your site as your advocate on that basis, you have misread the room. They are not hostile, and their report is often the single most useful document on the file. They are simply not working for you.
You can engage your own representative, and that is a different thing. Claims preparers, claims advocates and insurance brokers can act for a policyholder in preparing and presenting a claim, you pay for that, and whether it is worth it depends on the size and complexity of the loss. Choosing one is a question for an insurance broker or a solicitor rather than a finance broker, and this guide does not advise on it. What matters for the money is narrower: where the Code applies, the insurer must tell you within 5 business days that it has appointed an assessor or adjuster and what their role is, and you can ask for a copy of any report it relied on, which the insurer must provide within 10 business days. That report is what turns a guess about scope into a number a lender can read.
Can you get money from your insurer before the claim is finalised?
Yes, and you should ask before you approach any lender. Under paragraph 64 of the Code, where the event that caused your claim also caused you to be in urgent financial need of the benefits you are entitled to under the policy, the insurer will fast-track both the assessment and the decision process, or pay you an advance amount to help ease that urgent financial need, or both. Where an advance is paid, the Code sets it at within 5 business days after you demonstrate the urgent financial need. Most businesses in this position have never heard of it and go straight to borrowing.
Three qualifications, adjacent rather than buried. It is an advance against your claim, not an extra payment, so it reduces what is left to come. It depends on you demonstrating the need rather than merely asserting it, which in practice means saying in writing what the money is for, what it costs, and why the timing is urgent. And paragraph 64 sits in part 8 of the Code, so the retail scope limit in the previous section applies to it as well. If your commercial policy is Wholesale Insurance, the insurer is not bound by that paragraph.
Ask anyway, and ask in writing. Many commercial policies provide for interim or progress payments in their own terms, so read your policy wording before you assume the answer is no. If the answer is no, that refusal is not a dead end either: it is evidence for the complaint path below, and it is the first thing a lender will want to see when you explain why you need finance at all. A business that has asked and been declined presents very differently from one that never asked.
Is this a timing gap, a sizing gap or a contest?
A timing gap is a date problem, a sizing gap is a shortfall problem, and a contest is an outcome problem, and only the first can safely be funded on the claim itself. A lender who is told this is a timing problem and discovers a contested claim will decline, and a business that funds a contest on a short facility has bought itself a second problem on top of the first. The three cases below are not shades of the same thing.
Signs it is a timing gap
- The claim is accepted, in writing, not merely progressing well
- The scope of works or the settlement figure is agreed or close to it
- An assessor has reported and you have seen the report
- The only genuinely open question is the date the money lands
Signs it is a sizing gap or a contest
- The sum insured looks light against what reinstatement now costs
- The insurer has raised an average or co-insurance provision
- Liability, quantum or whether the policy responds is in dispute
- Nobody can tell you a figure, only a process
Swipe sideways to compare all columns.
| Case | What is actually uncertain | Is the claim an exit? | Where to go next |
|---|---|---|---|
| Timing gap | The payment timing, after acceptance, amount, payee and release conditions are documented | Potentially, with existing security and a backup exit resolved | The finance response, then what a lender reads |
| Sizing gap | How far the settlement will fall short of the cost to recover | Partly. The documented claim funds part of recovery and another source funds the measured shortfall | Why the settlement is less than the quote, then help that is not a loan |
| Contest | Whether the claim pays at all, and on what basis | No. A disputed outcome is not a dependable repayment date | If the insurer denies or underpays, then who to call |
Most real files are a blend, and the useful discipline is to size each part separately rather than treat the whole loss as one number. On financed plant or equipment the settlement mechanics differ again, and the practical detail is covered in our note on asset finance and an equipment insurance settlement. If the loss is to a commercial building you own, the reinstatement question eventually lands on a commercial property loan rather than on anything short term.
Which bill can you not pay?
Name the bill before you name the product, because three of the five most common ones are answered by something that is not credit. Businesses in this position usually search for a loan when what they actually have is a specific obligation falling due on a specific date, and each of those obligations has its own relief route that costs less than borrowing.
| The bill | Try this first | Is it a finance question? |
|---|---|---|
| Wages and superannuation | The advance for urgent financial need, then any interim payment your policy provides for. Unpaid superannuation and PAYG withholding can reach directors personally through the director penalty regime, so this is the one to move on first | Only after the first two are answered, and after your accountant has looked at the director exposure |
| ATO lodgement and payment | The ATO's disaster support, which can include deferring payments and pausing correspondence in affected areas | No. Call the ATO before you price it as debt |
| Rent or your existing loan repayment | Your landlord or financier directly, in writing, at the same time as you tell them about the loss | Sometimes, once you know their position |
| Make safe, temporary premises, replacement plant | The advance, then the policy's own provisions for increased costs of working | Potentially, after the accepted or undisputed amount, payee and payment path are documented and the gap is measured |
| Suppliers and trade creditors | A financial counsellor, free, before you convert trade debt into secured debt | Rarely, and never first |
The pattern underneath that table is the whole argument of this page. Every row that says no or not yet is a row where borrowing would have added a certain cost to an uncertain recovery. The wages row deserves particular care, because the consequences of unpaid superannuation and withholding are personal to directors rather than confined to the company, and that is an accountant and insolvency question well before it is a lending one. If the trading interruption rather than the physical damage is the problem, working capital finance is the tool that fits, and where your customers still owe you money the debtor ledger is a separate and often better source than anything secured on the damaged asset.
Why is business interruption the slowest part of the claim?
Business interruption is usually the slowest part of a commercial claim because the loss has to be reconstructed from your financial records rather than observed at the site. Damage to a building can be photographed and quoted. Lost gross profit has to be modelled from what the business would have earned, which means someone has to go through your trading history before anybody can name a figure.
That someone is usually a forensic accountant, and the Code gives them 12 weeks. Where the insurer engages an external expert to provide a report it needs to assess the claim, and the Code applies to your policy, it must ask that expert to report within 12 weeks of engaging them, and must tell you and keep you informed if that timeframe is not met. That single provision explains the pattern almost every business in this position sees: the property section of the claim settles while the interruption section stays open for months. It is also the most useful question you can ask, because the answer converts an indefinite wait into a date.
The indemnity period is the number that decides your funding gap. Business interruption cover responds for a defined window after the loss, and once that window closes the disruption is uninsured even if it continues. If your reinstatement is likely to run past it, the trading shortfall on the far side is a funding question rather than a claim question, and it is entirely foreseeable in week two rather than month ten. Whether the period on your policy is appropriate, and whether it can be extended, is a question for an insurance broker rather than a finance broker, and this guide deliberately does not advise on cover design.
Business interruption records pack
- Monthly profit and loss and sales reports for the pre-event period and the affected period.
- BAS records, tax returns, business bank statements, payroll and wage records that reconcile to the trading figures.
- Budgets and forecasts, plus evidence of seasonality, growth, decline, new contracts or other trends that would have changed turnover.
- Lost, cancelled or deferred orders, customer notices, contracts and enquiries that show trading the business could not complete.
- Saved expenses and increased costs of working, including temporary premises, equipment hire, overtime, freight, outsourcing and extra marketing.
- A dated record of mitigation decisions: what the business did to reduce the loss, what it considered, and why a step was or was not practical.
- The repair and reinstatement program, the realistic return-to-normal date and the policy's indemnity-period end date.
This is a preparation list, not a calculation method. Policy wording controls what is covered and how it is measured. The accountant and the business's insurance adviser should confirm the evidence required for the particular claim.
Three things move a business interruption claim faster, and all three are yours to do. Get your accountant to prepare the pre-event trading figures before you are asked for them. Keep a contemporaneous record of the trading you could not do, including orders declined and contracts lost, because that record cannot be reconstructed later. And ask, in writing, when the external expert was engaged and when their report is due. A business that can hand a lender a dated expert report and a measured interruption is in a different position from one that can only describe a process.
Why is the cash settlement less than the repair quote?
A cash settlement usually lands below the repair quote for three reasons: the GST input tax credit your business recovers itself, cost escalation between the loss and the rebuild, and a sum insured that sits below what recovery actually costs. The reasons are structural rather than adversarial, and this is usually the real question behind a finance enquiry, because the funding need is the difference between the two numbers rather than the whole loss.
First, the goods and services tax. Where a business is registered for GST and has notified the insurer of its entitlement to a full input tax credit on the premium, the ATO's guidance for insurers records that, under the terms and conditions of the policy, the insurer can adjust settlement amounts paid under the policy to reflect the insured's possible input tax credit entitlement on use of the settlement funds. In plain terms: the cash figure can be calculated on the footing that your business will itself recover the GST through its activity statement. A business that budgets off the GST-inclusive quote is short from the first day, and it usually discovers this after the facility is already sized. The ATO sets this out in its material on a cash settlement to the insured. This is a matter for your accountant, not your broker, and it is worth a phone call the same week.
Second, cost escalation. Prices for materials and labour move between the loss and the rebuild, and the Insurance Council's own cash settlement fact sheet says so directly: prices for materials and labour can go up over time, which may increase the overall cost of repairs. That fact sheet is a home building instrument and its obligations are not commercial obligations, so treat the principle as sound and the entitlement as policy-specific. On a commercial reinstatement with a long lead time on plant, escalation is frequently the larger of the two effects described here.
Third, underinsurance, and it has a statutory mechanism. Where the sum insured sits below what recovery actually costs, the shortfall is the policyholder's. Where the policy contains an average or co-insurance provision, the settlement can be reduced in proportion to that shortfall rather than simply capped at the sum insured. The Insurance Contracts Act 1984 regulates when such a provision can operate: under section 44, an insurer may not rely on an average provision in a general insurance contract unless, before the contract was entered into, it clearly informed the insured in writing of the nature and effect of that provision, including whether it is based on indemnity or on replacement value. Note the limit of that protection carefully. The Act's proportional relief for a sum insured at or above a set share of value is expressed for residential building and contents, so a commercial policyholder generally has the written-notice requirement and not that floor. The Insurance Council calls the difference between the cover in place and the actual cost of recovery the insurance protection gap, and it is the reason a business can be insured, accepted and still short.
Do not size recovery or finance from the headline settlement. The working number is the net recovery funds that will actually be available after earlier advances, payout directions, staged holdbacks, tax treatment and temporary debt are accounted for.
| Calculation item | What to do | Why it matters |
|---|---|---|
| Accepted or proposed settlement | Start with the amount the insurer has documented, not an estimate or repair quote. | This is the headline, not necessarily usable cash. |
| Advance already received | Deduct any urgent-need, interim or progress payment already paid. | An advance is usually part of the claim, not extra money. |
| Excess and settlement deductions | Account for the policy excess, agreed deductions and any unpaid contribution. | These reduce the amount available for recovery. |
| Existing financier or repairer | Deduct or separately track amounts paid directly to a mortgagee, asset financier, builder or repairer. | The business may never receive that part in its bank account. |
| Staged release or holdback | Separate the amount available now from money released only after invoices, inspections or milestones. | A facility may need to cover each stage rather than one final date. |
| GST and tax treatment | Use the amount advised by the registered tax agent after input tax credits and the character of each payment are considered. | Property, stock, plant and lost trading can have different treatment. |
| Temporary finance payout | Allow for principal, accrued interest, agreed fees and the cost of releasing security. | Repaying the facility may consume part of the insurance money. |
| Net recovery funds available | Compare the remaining cash with the cost of reopening, replacing assets and restoring working capital. | This is the figure the recovery plan and any refinance should use. |
Tax outcomes depend on the policy, asset, accounting treatment and facts. This table identifies the questions; it does not provide tax advice.
Put those three together and the picture is clearer than it looks from inside the week of the loss: you are usually not funding the claim, you are funding the distance between the settlement and the cost of getting the business back. Size the finance to that distance, and do it after the accountant has looked at the GST position rather than before.
What if the insurer denies the claim or offers less than the quote?
Get the report the decision was based on, then deal with the evidence rather than the argument. A denial or a partial payment is a decision made on material you are entitled to see, and almost every productive challenge starts by reading it rather than by disputing the outcome in the abstract.
What a denial has to come with. Where the Code applies to your policy, a denial or a decision not to pay in full must come to you in writing setting out the aspects of the claim not accepted, the reasons for the decision, your right to ask for the information about you that the insurer relied on, your right to copies of any service suppliers' or external experts' reports relied on, and details of the complaints process. Ask for the reports specifically, because the Code gives the insurer 10 business days to provide them once you ask. On a commercial policy outside the Code's retail scope, ask for exactly the same five things in writing anyway. A refusal to provide them is itself something to put in a complaint.
On who has to prove what. The common commercial denial is a causation argument: the insurer says the damage is wear and tear, gradual deterioration or a pre-existing condition rather than the insured event. As a general matter of Australian insurance law, an insured proves that the loss falls within what the policy covers, and an insurer that relies on an exclusion to refuse carries the burden on that exclusion. How that principle applies to your policy wording and your facts is a legal question, not a broking one, and it belongs with a solicitor or one of the free legal services below. What it means practically is that "we think it is wear and tear" is a position the insurer has to support with evidence, not a conclusion you have to disprove from nothing.
Before you accept a partial payment, be clear what you are accepting. This is the moment where businesses under cashflow pressure make an expensive mistake, because the money is needed and the document is long. A payment of an undisputed amount is a different thing from a release or a full and final settlement of the claim. Before you accept anything, ask in writing whether the payment is offered in full and final settlement or as payment of the undisputed portion, state in writing that you accept it on the second basis if that is your intention, and have any release, discharge or deed reviewed before you sign it. A solicitor or a free legal service can usually turn that around quickly, and it is a great deal cheaper than discovering later that the claim is closed.
Practically, three things strengthen the file at this stage: your own trade or engineering report on causation, the photographs and damaged material you kept from week one, and a written complaint that states the outcome you want rather than the frustration you feel. All three also happen to be what a lender reads, which is covered in what a lender looks for below. And a claim in this state is not a fundable exit, which is the whole point of the diagnosis section.
Does your lender get the insurance payout on a financed asset?
Where the damaged asset secures a loan, the settlement may be paid to your financier rather than to you, in part or in full. That changes both how much you need to borrow and what the exit on that borrowing actually looks like, and the assumption that the money is yours to spend quietly wrecks more recovery plans than any other on this page.
On mortgaged property. The Insurance Council tells policyholders with a mortgage to speak with their lender about their situation and options, and notes that banks differ in how they handle insurance cash settlements. The Australian Banking Association's fact sheet on the treatment of cash settlements sets out the mechanics: the insurer contacts the bank when it is settling under a cash settlement, and the proceeds may be paid into the loan and redrawn in progressive payments made directly to the builder or repairer, or may partially reduce the loan balance with the remainder released to the customer. Progressive valuations may be required at stages of the construction or repair. Both of those documents are written for home lending, so read them as the shape of the problem rather than as your entitlement. On commercial facilities the obligation is contractual: it lives in your own loan terms and general conditions, not in any regulator's guidance.
On financed plant, vehicles and equipment. For most small and medium businesses this is the more likely loss, and the same problem exists in a different statute. The Personal Property Securities Act 2009 generally excludes interests under a policy of insurance from its reach, but it carves an exception straight back in: the exclusion does not extend to a transfer of a right to an insurance payment, or other payment as indemnity or compensation, for loss of or damage to collateral or proceeds of collateral. In other words, a financier's security interest can reach the payout on a destroyed machine or vehicle in much the same way a mortgagee's can reach the payout on a building. Before you assume an equipment settlement funds a replacement, read the finance contract on the destroyed asset and check the registration position. The same logic runs through what happens when a business needs a vehicle refinance after an insurance claim, and it is the reason replacing destroyed plant is usually a fresh equipment finance conversation rather than a redirection of the settlement.
A new payment direction or assignment does not automatically move a new lender ahead of existing security. Existing loan and security documents, the policy terms, the insurer's notice and acknowledgement process, the legal effect of the proposed document, and PPSR priority may all matter. Resolve those points before drawdown, and obtain legal advice where an assignment of proceeds is proposed.
Ask the existing financier, in writing: who receives the proceeds; whether funds are released in stages; what invoices, valuations or proof it requires; whether it must consent to new security, a payment direction or an assignment; and what must happen for its security to be released or refinanced. Those answers determine the net cash, the feasible structure and the real exit.
What finance can a business use while a claim is assessed?
An insurance claim can support the exit only when the insurer has documented acceptance, the amount or undisputed amount, the payee and the payment path. Until then, the facility needs a repayment plan that does not depend entirely on the claim. A file with a documented payment path is a different risk from a claim still being assessed or contested.
An insurance claim is not a trade receivable. Invoice finance funds invoices issued for goods or services supplied to customers, so the claim itself cannot be factored, although an operating debtor ledger may still support invoice finance. Where an accepted claim forms part of the exit, a lender may seek a direction to pay or an assignment of proceeds where legally effective. Neither document automatically overrides an existing financier, policy condition, insurer payment process or earlier security interest. Resolve the payee, consent, notice, priority and backup exit before the facility is drawn.
Swipe sideways to compare all columns.
| Option | Fits when | Secured by | The exit | Cost shape |
|---|---|---|---|---|
| Caveat loan | A short measured gap, property equity available, and the claim payment path documented | Caveat over property equity you hold | Documented settlement proceeds, refinance or another evidenced exit | Short term, higher cost |
| Private lending | A non-standard or longer recovery where property security and a backup exit are available | First or second mortgage over property | Settlement proceeds plus a refinance or asset sale where appropriate | Short to medium, higher cost |
| Second mortgage | A larger or staged recovery where the existing lender consents | Second-ranking behind your existing lender | Reinstated asset refinanced or another evidenced exit | Medium term, above senior debt |
| Commercial property loan | The reinstated building is the answer | The commercial property itself | Term debt. The destination, not the gap | Longer term, conventional |
| Working capital | Trading interruption, not physical loss | Business cashflow, sometimes property | Restored trading, documented interruption payment or refinance | Short to medium, cashflow-priced |
| Invoice finance | Customers still owe you money | The debtor ledger. Not the claim | Your customers paying | Per-invoice or facility |
The mechanics of the first two live on their own pages rather than being re-taught here: how caveat loans work in Australia and the private lending guide, and the choice between them is set out in private lending versus caveat loans. All of this is business-purpose credit. ASIC's guidance records that the National Credit Code applies where credit is provided wholly or predominantly for personal, domestic or household purposes, or for residential property investment, which is why finance for a commercial recovery sits outside it. That is part of why it is available at speed. It is also why the protections are thinner, and the lender-file section below says so plainly.
What happens after the insurer pays, or the expected payment changes?
The recovery plan must work for more than the best-case payout. Before borrowing, model what happens if the money arrives on time, arrives late, is paid in stages, is paid somewhere else, is lower than expected, or stops being a reliable exit.
Swipe sideways to compare all columns.
| What happens | Effect on the insurance money | Effect on temporary finance | Immediate action |
|---|---|---|---|
| Payment arrives as documented | Funds follow the agreed payee and release path. | Repay or reduce the temporary facility, then obtain the required release or discharge. | Request the final payout figure before the insurer releases funds and coordinate settlement instructions. |
| Payment is delayed again | The expected exit date moves, even though the claim may remain accepted. | Interest, extension costs and maturity risk continue. | Tell the lender before the due date and provide the insurer's written explanation and revised payment path. |
| Payment is lower than expected | Less money is available for reinstatement, working capital and debt repayment. | A residual balance or refinance gap may remain. | Recalculate net recovery funds before accepting terms or extending the facility. |
| Payment is staged | Only part of the settlement is available at each milestone. | The facility may need staged reduction rather than one repayment date. | Match lender milestones, insurer releases, invoices and inspections in one cashflow schedule. |
| Payment goes to an existing financier or repairer | The business may receive only a residual amount or no direct cash at that stage. | The temporary lender may not control the expected exit proceeds. | Resolve payment priority and release requirements before drawdown. |
| Part of the claim is reopened or disputed | The amount or timing is no longer dependable. | The claim should not remain the sole exit. | Switch to the documented backup exit and obtain insurance and legal advice on the dispute. |
| The business is no longer viable after the loss | Insurance may repair an asset without restoring a solvent trading business. | Adding or rolling debt can worsen the position. | Speak to the accountant, financial counsellor and a registered restructuring practitioner before taking more credit. |
This is a planning matrix, not a prediction or lender policy. Actual rights and priorities depend on the policy, facility and security documents.
A single discipline carries across every row above and every option in the previous section: name the exit, in writing, before the facility is drawn. The failure pattern on short-term property finance is almost never the interest rate. It is an exit that slipped, which is the same trap described in our note on what happens when a short-term facility's exit is short-paid.
What does a lender look for on a claim-gap file?
Credit teams assessing a claim-gap file are answering two questions: how certain is the money that repays the facility, and what happens if that money is late or short. An organised file therefore proves both the expected claim path and the backup exit.
The documents that carry weight. The insurer's acknowledgement of the claim and any written acceptance. The policy schedule and the sum insured. The scope of works, or the assessor's or adjuster's report. The letter appointing the loss assessor. Any record of a fast-track request or an advance payment, including a refusal. Your existing financier's written position on the proceeds. And the security and title position on the damaged asset, including the registration position on financed plant. Where the Code applies to your policy, the request for reports under paragraph 82 and the request for the insurer's own estimate of its likely decision timeframe under paragraph 68 are the two documents that most reliably turn a story into a file.
What actually speeds a file up. A claim that is accepted rather than pending. A named and dated settlement figure rather than a range. Clean title on the security property. Documented pre-event trading, so the interruption can be measured against something. And a borrower who can say what the money is for at the level of a line item rather than a total.
From our broking files, general and without figures
- The files that fund cleanly are the ones where the claim is accepted and the number is agreed. "The insurer has been great so far" is not an acceptance, and a credit assessor can tell the difference in about a minute.
- The most common avoidable mistake is budgeting off the GST-inclusive repair quote and asking for a facility sized to it. The gap surfaces late, usually once the facility is already drawn.
- The second most common is treating acceptance as payment. The two are separate events and the distance between them is the thing being funded.
- The third is nobody asking the existing financier what happens to the proceeds until the settlement is imminent. The answer changes the whole structure, and by then the structure is set.
- Where the claim is contested rather than slow, the honest answer is usually that this is not yet a finance conversation. Saying so early costs a deal and saves a client.
- The businesses that come out of this best separated the two clocks in the first week: the recovery clock, which they can influence, and the claim clock, which mostly they cannot.
General observations from broking practice, not a prediction about any file, and not a statement of lender policy. No client details, amounts or timeframes are given because outcomes on these files vary widely with the policy, the security and the insurer.
The protections layer, stated honestly. ASIC's guidance on disputes about commercial loans is blunt: the law provides the lowest level of protection to commercial loans, including loans to small businesses. AFCA, the Australian Financial Complaints Authority, can resolve complaints from small businesses about commercial lending, and ASIC records that AFCA's rules define a small business as a primary producer or other business with fewer than 100 employees, but AFCA only has jurisdiction over firms that are members, so membership is worth confirming before you sign rather than after. Read any director's guarantee terms properly, and do not read them for the first time under a deadline you created by waiting, because a guarantee being called is its own problem with its own guide. On financed vehicles and plant, cover requirements are often part of the file themselves, and our note on insurance requirements on asset finance covers what lenders insist on.
What can you do if your insurer is unreasonably slow?
Complain in writing to the insurer first, escalate to AFCA if it is not resolved within 30 calendar days, and know that interest can be payable on an amount the insurer was unreasonably withholding. That whole path costs nothing and does not require a lender, which is exactly why it belongs inside a finance guide: a business that can shorten the wait does not need to lengthen its balance sheet.
Complain internally first. ASIC's Regulatory Guide 271 sets the maximum internal dispute resolution timeframe for a standard complaint: a financial firm must provide an IDR response no later than 30 calendar days after receiving the complaint. Note that these are calendar days and not business days, which makes it the tightest clock anywhere in this guide. Put the complaint in writing, say what outcome you want, and keep the correspondence. Where the Code covers your policy and no decision has been made within 4 months, the insurer must tell you in writing about its complaints process, which is a prompt rather than a remedy but a useful one.
Escalate if it is not resolved. The Australian Financial Complaints Authority is the external dispute resolution scheme, it is free to complainants, and it takes small business complaints within its published eligibility rules. It is a separate track from any finance conversation and it does not require one. There is also a review right most people never use: where a property claim arising from a declared catastrophe was finalised within 1 month of the event, the Code gives you 12 months from finalisation to ask for a review if you think the assessment of loss was not complete or accurate, even if you signed a release.
Loss caused by the handling is a separate question from loss caused by the event. If the delay itself has cost your business money, that is not usually something the policy pays for, and it is dealt with through the complaints path rather than through the claim. AFCA can consider whether a claim was handled fairly and reasonably promptly and, where it was not, can look at remedies for the loss that poor handling caused. Compensation limits and how they apply are set by AFCA's rules, are indexed and change over time, so check the current position on AFCA's own pages rather than relying on a figure quoted anywhere else, including here.
Interest can be payable on an unreasonably delayed claim. Section 57 of the Insurance Contracts Act 1984 provides that where an insurer is liable to pay an amount under a contract of insurance, interest is payable on that amount from the day as from which it was unreasonable for the insurer to have withheld payment, at a rate prescribed by, or worked out in a manner prescribed by, the regulations. This guide deliberately states no rate, because the calculation is fact-specific and the entitlement is a legal question, not a broking one. Sitting behind all of it is the oldest obligation in this area: section 13 of the same Act implies into every contract of insurance a provision requiring each party to act towards the other, in respect of any matter arising under or in relation to it, with the utmost good faith. That duty runs both ways, which is worth knowing before you write anything to your insurer, and it does not depend on the Code either.
One warning before you escalate past AFCA. The Code says expressly that the standards in its claims part do not apply to your claim if you have commenced any proceedings against the insurer about it in any court or tribunal, or under any other dispute handling process, other than through AFCA. On a commercial policy those standards were most likely not applying anyway, but on a policy where they do, litigation switches them off. Whether to commence proceedings is a legal question with costs consequences and it belongs with a solicitor or one of the free legal services below. And if your bank has separately moved on your facility while the claim runs, that is a different trigger with a different playbook, covered in our guide to a recalled facility or withdrawn overdraft.
What should you put in writing to your insurer?
Send one email that asks for all ten things at once, because each answer either shortens the wait or sizes the gap, and asking for them separately over eight weeks is how a file drifts. Everything below maps to something the Code requires where it applies to your policy, or to something your own policy wording may already provide for where it does not.
Ten things to ask your insurer, in writing, in one message
- What is the exact current status? Please state whether the claim is lodged, under assessment, accepted in principle, partly accepted, accepted, quantified, authorised for payment or paid, and what that label means on this file.
- What is accepted and what remains open? Identify the accepted or undisputed components, the disputed components and every condition still outstanding.
- What amount is quantified? Provide the calculation, scope of works, settlement figure, deductions, holdbacks and any amount already advanced.
- What information do you still need? Give one consolidated list, who must provide each item, and the expected process after it is supplied.
- Who has been engaged? Confirm the assessor, adjuster, engineer, forensic accountant or other external expert, their engagement date and the report due date.
- Will you pay an advance or interim amount? Confirm whether the claim will be fast-tracked and whether any urgent-need, interim or progress payment is available, plus what evidence is required.
- What still prevents payment? State each release condition, the expected payment or internal authorisation date, and who owns the next action.
- Who will receive the money? Confirm whether payment goes to the business, an existing financier, a repairer or another account, and whether it will be released in stages.
- Please provide the reports and calculation. Provide copies of material reports, expert opinions and settlement calculations relied on, subject to the policy and applicable rules.
- What is the written timetable and complaint path? Give the next milestone, propose an alternative timetable if needed, and confirm that this email is treated as a complaint where a promised date or reasonable handling standard has been missed.
Some requests correspond to Code obligations only where the policy is Retail Insurance. Others are practical requests needed to understand the cash gap. Keep every reply, because the same documents are read by a complaint decision-maker, accountant, solicitor and lender.
Two things make this work better. Put a claim reference and a date on it, and ask for the answers in writing rather than by phone, because a phone call that goes well leaves you with nothing to show anyone afterwards. And send it early, before you have decided you need finance, because a refusal to advance is one of the most useful documents you can hand a lender and it takes weeks to obtain if you start asking late.
What help is available that is not a loan?
Check the disaster assistance, the tax relief and the free counselling before you price anything as debt, because all three change the size of the gap you are trying to fund. This section teaches one rule: check what is available before you price what is borrowable.
If the loss came from a declared disaster, Commonwealth and state assistance can be available to affected businesses, and business.gov.au is the single place to check what is open. It is typically delivered as low-interest or concessional loans and recovery grants rather than commercial credit, and it is administered by state agencies, commonly state rural and industry development authorities. Amounts, eligibility and open and close dates are jurisdiction-specific and change with each event, so this guide states none of them: check the current listings for your state and your event.
Separately, and routinely missed while an owner is busy pricing credit, the ATO's natural disaster support can include deferring payments and pausing correspondence for people and businesses in areas affected by major disasters, and it runs an Emergency Support Infoline on 1800 806 218. Support of that kind costs nothing and changes the size of the hole you are trying to fund. Primary producers should also look at the rural financial counselling services funded for their sector, and most states and territories have a small business commissioner or advocate whose office is free to contact. If your business is a primary production enterprise, our agribusiness finance guide covers the sector-specific routes in more detail.
What a finance broker can and cannot do about a claim
Switchboard Finance is a finance broker. It is not an insurance broker, not a claims preparer and not a claims advocate. It does not lodge, run, negotiate or dispute insurance claims, and nothing on this page is advice about how to do any of those things.
That boundary is not a disclaimer, it is the honest shape of the work. Loss assessors, loss adjusters, claims preparers, insurance brokers and insurance lawyers are separate professions with their own duties and their own regulation, and the free services in the next section exist for exactly this. What a finance conversation can do is size and structure funding around a claim. What it cannot do is make the claim pay, pay faster, or pay more.
Which leads to the thing this page will say plainly because the lane invites the opposite. Borrowing does not improve a claim outcome. Taking on debt does not strengthen your position with an insurer, does not accelerate an assessment, and is never a substitute for pursuing the claim itself through the channels above. Anyone who suggests otherwise is selling you something. If you take one thing from this guide, take the sequence: ask the insurer, use the complaint path if you need it, check the assistance that is not credit, and only then work out whether a facility is warranted and how it exits. Talk to a broker at the point where the question is genuinely about money and timing, and not before.
Who should you call before you borrow?
Call a free financial counsellor, your accountant and your insurer's complaints team before you call any lender. The advice layer here costs nothing, none of these services sells finance, none of them forecloses anything, and calling them first makes every later conversation faster and cheaper.
Where to get help
The Small Business Debt Helpline on 1800 413 828 (sbdh.org.au) gives free, independent and confidential financial counselling to small business owners. Your insurer's internal complaints team is the first stop on any claim conduct issue, and AFCA is the external scheme after that. For the claim itself, the Financial Rights Legal Centre and Legal Aid in your state are the places to ask about claim conduct, none of which is finance.
Call your accountant today, because the GST and tax treatment described above changes the number you are actually trying to fund, and because unpaid superannuation and withholding can reach directors personally. The ATO Emergency Support Infoline on 1800 806 218 handles lodgement and payment relief after a disaster. And where the business cannot pay its debts as they fall due, a registered restructuring practitioner or liquidator belongs in the conversation before any new borrowing, not after it fails.
The sequence matters more than the list. A financial counsellor or accountant who confirms this is a genuine timing gap makes the finance conversation straightforward. One who says the business was already under pressure before the loss has just saved you from adding a certain debt to an uncertain recovery, which is the subject of the second scenario below. If you want the wider map of what business finance does and does not solve at each stage, the business owners finance hub is the place to start once the immediate week is under control.
Scenario: what a fundable timing gap looks like
What made the sequence fundable was not the phrase accepted in principle. The accepted amount, payee, payment path, existing security, net cash and backup exit were all known before drawdown. That is the narrow pattern in which finance against a claim deserves to be considered. If reinstatement becomes a substantial construction project, the staged-drawdown mechanics are closer to development finance than to a short facility, and the eventual landing point is usually a commercial property loan over the rebuilt asset.
Scenario: when borrowing was not the answer
The two scenarios are the same loss read from different files. One business had an acceptance and a date; the other had a process and a shortfall. The discipline this page argues for is refusing to treat the second like the first, however available the finance is. For a business already unable to pay its debts as they fall due, directors have duties around incurring new debt that make this more than a commercial judgement, which is another reason the free calls in the previous section come first. The point of the counter-scenario is not that a private lender was the wrong choice. It is that no product is the right one until the claim position is known.
An insured loss with the payout months away is three different problems wearing the same week. Start with what your insurer owes you, and be precise about it: the Code's claim clock reaches Retail Insurance, and most commercial property and business interruption cover is not retail, but the licensee duty to handle and settle claims efficiently, honestly and fairly does not depend on that scope. Know that the assessor at your site works for the insurer. Know that acceptance and payment are separate events, because the Code sets a deadline for the decision and none for the money. Ask for an advance for urgent financial need before you ask for a lender, and put all ten questions in one written message. Expect the settlement to land below the repair quote, because of the GST credit your business recovers itself, cost escalation, and any shortfall in the sum insured. Find out who gets the money first, because on a mortgaged building or financed plant it may not be you. Then, and only then, match a facility to the gap, with the claim named as the exit, and only where that claim is accepted rather than contested. Ask the insurer first, take the free advice before the paid money, and never treat a contested claim as a fundable exit.
Key takeaway: identify the exact claim stage, document the accepted amount, payee and payment path, calculate net recovery funds, and borrow only against a measured gap with a backup exit.Frequently Asked Questions
For most commercial policies there is no Code deadline at all. The General Insurance Code of Practice's claim timeframes apply to Retail Insurance, and commercial property and business interruption cover is Wholesale Insurance. Where the Code does apply, the insurer must tell you what information it needs within 10 business days and decide within 4 months, extending to 12 months in the circumstances paragraph 78 lists. Even then that 4 months is a longstop rather than a schedule: AFCA's published approach treats the Code timeframes as standard timeframes that are not conclusive on whether a claim was handled fairly, and says a simple claim that is plainly covered should generally not take four months to accept. What does not depend on any of that is the licensee obligation to provide the financial services covered by its licence efficiently, honestly and fairly.
Only if your policy is one of the seven Retail Insurance types the Code lists, which are motor vehicle, home building, home contents, sickness and accident, consumer credit, travel, and personal and domestic property. A small business motor vehicle policy can be Retail Insurance. A commercial property policy, a business pack and business interruption cover generally are not, which makes them Wholesale Insurance, and the Code says expressly that part 8, Making a claim, does not apply to Wholesale Insurance. Two thresholds get confused here. The Code's own Small Business definition is under 100 employees if the business manufactures goods and under 20 otherwise, while AFCA's rules use a flat under 100 employees for complaint eligibility. The Code also does not cover workers compensation, marine, medical indemnity, motor vehicle injury or domestic builders insurance at all.
Accepted is not the same as quantified, authorised for payment or paid. Accepted in principle may leave scope, amount or conditions unresolved; quantified means the accepted amount has been calculated or agreed; a payment-path confirmation identifies the intended payee, release conditions and expected date. The Code's claim timeframes run to the accept-or-deny decision and do not set a separate fixed period for paying an accepted claim. Ask the insurer to state the exact status, accepted amount, payee, every remaining condition and expected payment date in writing.
Yes, and it is the first thing to try. Where the Code covers your policy and the event that caused the claim also left you in urgent financial need of the benefits you are entitled to, the insurer will fast-track the assessment and decision, or pay an advance amount to ease that need, or both, with any advance paid within 5 business days after you demonstrate the need. Three qualifications matter: it is an advance against your claim rather than an extra payment, you have to demonstrate the need rather than assert it, and that paragraph sits in the part of the Code that does not apply to Wholesale Insurance. Ask in writing anyway, because your own policy wording may provide for interim or progress payments regardless, and a refusal is itself useful evidence.
Under the Australian Code, both terms describe a party the insurer contracts. The General Insurance Code of Practice treats loss assessor and loss adjuster as a single defined term meaning a company or person the insurer contracts to examine the circumstances of your claim, assess the damage, determine whether the policy covers it, assist in obtaining a quote and help settle the claim, and it lists them alongside investigators as service suppliers. ASIC's guidance says the same thing from the licensing side, describing a loss assessor as able to provide claims handling services on behalf of the insurer. The widely repeated line that a loss adjuster acts for the insurer while a loss assessor acts for you is a United Kingdom convention and it is not what the Australian Code's defined term describes. You can separately engage your own representative to help prepare and present a claim, but that is a different arrangement, you pay for it, and choosing one is a question for an insurance broker or a solicitor rather than a finance broker.
Business interruption is usually slower because lost gross profit and increased costs of working must be reconstructed from financial evidence rather than photographed at the site. Prepare monthly profit and loss and sales reports, BAS and tax records, bank and payroll records, budgets, evidence of trends and seasonality, lost orders, saved expenses, extra recovery costs and the reinstatement timeline. Ask when the forensic accountant or other external expert was engaged and when the report is due. The policy wording and accountant determine the final calculation.
The cover stops even though the disruption has not. The indemnity period is the length of time a business interruption policy will respond for after an insured event, measured from when the loss occurs, and once it expires the trading shortfall on the far side of it is uninsured. That is the single most important number in a recovery plan and most owners only meet it after a loss. Whether the period on your policy is appropriate, and whether it can be extended, is a question for an insurance broker rather than a finance broker. What it changes for funding is straightforward: work out when the period ends and when trading realistically returns to normal, and treat the difference as a gap nothing in the policy will pay for.
Get the report the decision was based on, then deal with the evidence rather than the argument. Where the Code applies, the insurer must give you copies of any service suppliers' or external experts' reports it relied on within 10 business days of your asking, and a denial must come in writing with the aspects not accepted and the reasons. As a general matter of Australian insurance law an insured proves the loss falls within what the policy covers, and an insurer that relies on an exclusion carries the burden on that exclusion, but how that plays out on your facts is a legal question and belongs with a solicitor or a free legal service rather than a broker. Practically: get your own trade or engineering report, put the disagreement in writing as a complaint, and keep the damaged material and the photographs.
It depends entirely on what you sign, which is why this is the moment to get advice rather than to move fast. A payment of an undisputed amount is a different thing from a release or a full and final settlement, and the risk is accepting a document that closes the whole claim when you only meant to accept the part nobody was arguing about. Before you accept anything, ask in writing whether the payment is offered in full and final settlement or as payment of the undisputed portion, say in writing that you accept it on the second basis if that is your intention, and read any release or discharge before signing it. A solicitor or a free legal service can review the wording, usually quickly. This is a legal question, not a broking one.
A cash settlement usually lands below the repair quote for three reasons: the GST input tax credit your business recovers itself, cost escalation between the loss and the rebuild, and a sum insured that sits below what recovery actually costs. On the first, where your business is registered and has notified the insurer of its entitlement to a full input tax credit on the premium, the ATO's guidance records that the insurer can, under the policy terms, adjust settlement amounts to reflect the credit you will recover yourself, so the cash figure can be calculated on a different basis from your GST-inclusive quote. On the third, an average provision can reduce the settlement in proportion rather than simply cap it. The gap between those two numbers is usually what a business is actually trying to fund, and the GST question belongs with your accountant.
Ask your insurer in writing before you carry out anything beyond making the site safe, because your policy's own claims conditions govern this and permanent repairs done before the loss has been assessed can complicate the claim. Making the premises safe and preventing further damage is a different thing from reinstating, and most policies deal with the two separately. Photograph everything before you touch it, keep every invoice and every piece of damaged property until the insurer tells you in writing that you can dispose of it, and record who told you what and when. You can also ask your insurer whether the policy covers a particular loss before you actually claim, and the Code says the insurer will not discourage you from making a claim when it answers.
Often, but the result depends on the policy, facility and security documents. Insurance proceeds may be paid to an existing financier, applied to debt or released in stages against works, and financed equipment can raise similar PPSR issues. A new payment direction or assignment does not automatically override earlier security or payment rights. Before arranging new finance, obtain written confirmation of the payee, staged-release conditions, required consents, priority position and what is needed to release or refinance the existing security.
The building is generally the landlord's asset and their insurer's problem, while your fit-out, stock, plant and lost trading sit with your own policy. That split is the first thing to establish in writing, because a tenant waiting on the landlord's building claim can lose months before discovering that the parts affecting their own cashflow were always theirs to claim. Your rent obligation while the premises are unusable is a separate question again, and it is governed by your lease and by the retail or commercial lease legislation in your state rather than by insurance law, so it belongs with a solicitor or your state's small business commissioner. Ask your landlord in writing for their insurer's claim reference and the expected reinstatement timetable, because your own recovery plan depends on it and you have no control over it.
Potentially, through business-purpose finance secured by assets the business already holds, with a documented insurance payment forming part of the exit. The claim should not be treated as the sole exit until acceptance, the quantified or undisputed amount, the payee and payment path are in writing. A lender may also seek a direction to pay or an assignment of proceeds where legally effective, but existing security, policy conditions, insurer notice and priority must be resolved first. A disputed or unquantified claim is not a reliable repayment date.
Work through four things in order before you price any of it as debt: the advance for urgent financial need from your insurer, any interim or progress payments your policy already provides for, the tax deferrals and disaster support that are not credit, and only then finance sized to what is left. Wages and superannuation are the obligations with the least flexibility and the highest consequence, because unpaid superannuation and PAYG withholding can expose directors personally through the director penalty regime, so they are the reason to move on the first three quickly rather than last. If the trading interruption rather than the physical damage is the problem, working capital finance or invoice finance where your debtor ledger is still running fits better than anything secured against the damaged asset. If the business cannot pay its debts as they fall due, that is a conversation for a financial counsellor or a registered practitioner before any new borrowing.
Put a complaint to the insurer in writing first, because that path costs nothing and does not require a lender. ASIC's guidance sets the maximum internal dispute resolution timeframe for a standard complaint at no later than 30 calendar days after the complaint is received, and those are calendar days rather than business days. If it is not resolved, escalate to the Australian Financial Complaints Authority, which is free to complainants. Before that, ask the insurer whether an external expert has been engaged and when the report is due, because on a delayed commercial claim that report is usually the reason. And under the Insurance Contracts Act, interest can be payable on an amount the insurer was unreasonably withholding, at a rate the regulations prescribe.
Three mechanisms extend a claim beyond the Code's 4 month decision timeframe, and only one of them is the catastrophe limb people expect. Paragraph 78 extends the decision to 12 months where the claim arises from an Extraordinary Catastrophe as the Code defines it, where fraud is suspected, where you do not respond to reasonable requests, where the insurer has difficulty communicating with you, or where you requested a delay. Paragraph 83 separately allows the insurer to agree a reasonable alternative timetable with you where the usual timeframes are not practical, for example because the claim is complex. And paragraph 74 gives an external expert 12 weeks from engagement to report, which on a large commercial loss is frequently the real bottleneck. Ask which of the three is operating on your file, in writing.
Loss caused by the insurer's handling of the claim is a different question from loss caused by the insured event, and it is dealt with through the complaints path rather than the claim. AFCA can consider whether a claim was handled fairly and reasonably promptly and, where it was not, can look at remedies for the loss that poor handling caused, which is not the same as the policy paying more. Separately, under the Insurance Contracts Act, interest can be payable on an amount the insurer was unreasonably withholding, at a rate the regulations prescribe. Compensation limits and how they apply are set by AFCA's rules, are indexed and change, so check the current position on AFCA's own pages rather than relying on any figure quoted elsewhere, including here.
The shortfall between the cover in place and the actual cost of recovery is the policyholder's, and the Insurance Council calls that difference the insurance protection gap. Where the policy contains an average or co-insurance provision the position can be worse than a simple cap, because the settlement can be reduced in proportion to the extent of the underinsurance. The Insurance Contracts Act limits when such a provision can operate: an insurer may not rely on it unless, before the contract was entered into, it clearly informed the insured in writing of the provision's nature and effect. Note that the Act's proportional relief for a sum insured at or above a set share of value is expressed for residential building and contents, so a commercial policyholder generally has the notice requirement and not that floor. Check what assistance is available before pricing the shortfall as debt.
You lose the Code's claim handling standards on that claim. The Code says expressly that the standards in its claims part do not apply to your claim if you have commenced any proceedings against the insurer about it in any court or tribunal, or under any other dispute handling process, other than through the Australian Financial Complaints Authority. On a commercial policy those standards were most likely not applying anyway, since that part of the Code is scoped to Retail Insurance, but on a policy where they do apply this is a real consequence of the choice. Whether to commence proceedings is a legal question with costs consequences, and it belongs with a solicitor or a free legal service rather than with a finance broker.
First establish where the money actually went and how much is available after any advance, excess, lender payment, staged holdback, GST or tax treatment and temporary-finance payout. Then use the documented net recovery funds to repay or reduce temporary debt, release or refinance security, pay approved recovery costs and restore working capital. If the payout is late, short, staged, redirected or the claim becomes disputed again, tell the lender before maturity and switch to the documented backup exit rather than assuming the original repayment plan still works.
What sources support this guide?
This guide is built on primary sources: the General Insurance Code of Practice including its part 16 definitions, the Insurance Council's own consumer material, AFCA's published approach to general insurance claims handling and its consumer material on cash settlements, ASIC's guidance on claims handling as a financial service and on internal dispute resolution, the Insurance Contracts Act and the Personal Property Securities Act as enacted, the ATO's guidance for insurers on cash settlements, its director penalty regime page and its natural disaster support pages, the PPSR's own priority guidance, the Australian Banking Association's cash settlement material, and the Commonwealth's business assistance and free counselling services. Each was read for this guide on 6 or 7 August 2026, and every fact is shown with its source beside it and its qualifier adjacent. Where a source is scoped to a particular kind of policy, this guide says so rather than borrowing its authority.
| Source | What it supports | As at |
|---|---|---|
| General Insurance Code of Practice 2020, as updated October 2023 (paras 10, 12, part 8, part 16 definitions) | The Retail and Wholesale Insurance definitions and the scope limit; the Small Business thresholds; the excluded product classes; the 10 business day information request and timeframe estimate; the advance for urgent financial need; the loss assessor and loss adjuster definition and notification; progress updates and routine enquiries; the 12 week external expert report; report requests; the 4 month and 12 month decision limbs and the paragraph 78 circumstances; the alternative timetable; what a denial must contain; the catastrophe review right; the absence of any payment timeframe after acceptance; and the loss of the claims standards on commencing proceedings | Oct 2023 text, read Aug 2026; a redrafted Code was in consultation to 21 July 2026 |
| AFCA, The AFCA Approach to general insurance claims handling | That the Code timeframes are standard timeframes and are not, of themselves, conclusive about whether a claim was handled fairly or reasonably promptly, and that a simple claim that is plainly covered should generally not take 4 months to accept | July 2025 approach, read Aug 2026 |
| ASIC Information Sheet 253, and Corporations Act 2001 s912A(1)(a) | That claims handling and settling is a financial service, that a loss assessor can provide claims handling services on behalf of the insurer, and the licensee duty to provide the financial services covered by the licence efficiently, honestly and fairly | Jun 2025 guidance, Act read Aug 2026 |
| ASIC Regulatory Guide 271 | The maximum internal dispute resolution response timeframe of no later than 30 calendar days for a standard complaint | Aug 2026 |
| Insurance Contracts Act 1984 (C2004A02944), ss 13, 44 and 57 | The duty of the utmost good faith; the written-notice condition on relying on an average provision and the residential scope of the proportional relief; interest on unreasonably withheld claim payments at a rate the regulations prescribe | Compilation in force from 1 Mar 2024, read Aug 2026 |
| Personal Property Securities Act 2009, s 8 | That the Act's insurance exclusion does not extend to a transfer of a right to an insurance payment as indemnity or compensation for loss of or damage to collateral or its proceeds | Aug 2026 |
| ATO, purchase of insurance policy and cash settlement to the insured (QC16293) | That where the insured has notified a full input tax credit entitlement on the premium, the insurer can adjust settlement amounts under the policy terms to reflect that entitlement, and why net recovery funds need accountant input | Page last updated May 2017, read Aug 2026 |
| ATO, director penalty regime | Why unpaid PAYG withholding and super guarantee charge can create personal director exposure and require early professional advice | Checked 7 Aug 2026 |
| Personal Property Securities Register, priority guidance | Why existing perfected security and priority must be resolved before assuming a new assignment or payment direction controls proceeds | Checked 7 Aug 2026 |
| AFCA, understanding cash settlements | Cash-settlement risks, that the insurer's obligations usually end once an offer is accepted, and the complaint route | Checked 7 Aug 2026 |
| Insurance Council of Australia: cash settlement fact sheet and protection gap page | Cost escalation on materials and labour; the instruction to speak with your lender where there is a mortgage; the right to have a cash settlement reviewed; and the protection gap definition. Both are consumer-facing, and the fact sheet is a home building instrument | Fact sheet Dec 2025; protection gap page Apr 2025 |
| Australian Banking Association, treatment of cash settlements | How a bank may apply or progressively release insurance proceeds on a mortgaged property, and what it weighs in deciding. Written for home lending | 2022 fact sheet, read Aug 2026 |
| ASIC on commercial loan disputes and the National Credit Code; ATO natural disaster support; business.gov.au; Small Business Debt Helpline | That commercial loans carry the lowest level of legal protection and that business-purpose credit sits outside the National Credit Code; AFCA's small business definition of fewer than 100 employees and its member-only jurisdiction; disaster payment deferrals; state-administered concessional loans and recovery grants; and the free counselling service and its number | Aug 2026, except the ATO overview page last updated Apr 2026 and the business.gov.au page May 2026 |
Two things in this guide are stated without a citation because they are not regulatory propositions. The general position on who proves what between an insured and an insurer is settled law but is a legal question that turns on your policy wording and your facts, so it is stated in outline and routed to a solicitor rather than sourced here. The description of an indemnity period is definitional rather than regulatory, and cover design is expressly a matter for an insurance broker. Regulatory positions elsewhere are summarised, not reproduced in full, and none of this is legal, tax or financial advice. The Code is under redraft and its paragraph numbering may change. Assistance programs open and close with each declared event. Your own policy wording, your lease, your facility terms and your GST position govern your situation in ways a general guide cannot see. Confirm the detail on the current government and industry pages, and with your accountant, a financial counsellor, an insurance professional or a solicitor, before you act.
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