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Making a Business Insurance Claim: Step by Step Guide

·13 min read

When something goes wrong in your business — a customer injury at your premises, flood damage to your stock, a professional mistake that costs a client money — the last thing you want is to discover you’ve made a misstep that jeopardises your insurance payout. The claims process starts the moment an incident occurs, and what you do in those first hours and days can make the difference between a smooth settlement and a drawn-out dispute.

This guide walks you through the entire claims journey: what to do immediately after an incident, how to document your claim properly, what to expect when dealing with loss adjusters, how long different types of claims typically take, what happens if your claim is denied, and how a claim affects your premiums going forward. It is general information only — every policy is different, and you should always read your Product Disclosure Statement (PDS) carefully.

The First 24 Hours: What to Do Immediately

The period immediately after an incident is critical. Your actions — and equally, what you don’t do — set the foundation for your claim.

Secure Safety and Prevent Further Loss

Before anything else, make sure everyone is safe. If someone has been injured, call 000. Administer first aid if you are trained to do so. Your legal duty of care to employees, customers, and anyone else on your premises overrides everything else.

Once people are safe, take reasonable steps to prevent further loss or damage. This is actually a condition of most insurance policies — insurers expect you to act as though you are uninsured and take sensible precautions. If a pipe has burst and water is still flowing, turn off the mains. If a window has been smashed, board it up. If your point-of-sale system has been compromised, disconnect it from the network. Keep receipts for any emergency repairs or temporary measures — these costs are generally recoverable under your claim, provided they are reasonable.

You are not expected to undertake major repairs before the insurer has assessed the damage. Temporary and emergency measures only. If in doubt, call your insurer’s 24-hour claims line and ask what they authorise.

Do Not Admit Liability

This is one of the most important rules in the claims process, and it is one that many business owners get wrong in the heat of the moment.

Do not admit fault. Do not say “sorry, that was our mistake.” Do not agree to pay for someone’s medical bills or property damage on the spot. Do not put anything in writing — including in emails, text messages, or social media — that could be interpreted as an admission of liability.

There are two reasons for this. First, liability is a legal determination, not an emotional one. What feels like your fault in the moment may not actually be your legal responsibility once the facts are examined. Second, most insurance policies contain a clause stating that you must not admit liability or make any offer of settlement without the insurer’s consent. Doing so can void your cover for that claim entirely.

This does not mean you should be cold or unhelpful. You can — and should — express concern for anyone who has been injured, offer reasonable assistance, and exchange contact details. Just don’t assign blame.

Notify Your Insurer

Check your PDS for the notification deadline. Depending on your policy type and insurer, this could be as short as 24 to 48 hours, or as long as 30 days. Do not assume you have plenty of time — some policies require “immediate” notification, and courts have interpreted that to mean within a business day.

When you call your insurer, have the following information ready:

Ask your insurer what documentation they require, what forms you need to complete, and whether they will send a loss adjuster or assessor. Take notes during this call — write down the date and time, the name of the person you spoke to, and any reference number they give you.

Key point: If you hold a claims-made policy — such as professional indemnity insurance — timing is especially critical. A claims-made policy only covers claims made during the policy period. If you become aware of circumstances that could give rise to a claim but don’t notify your insurer before the policy expires, you may lose cover entirely. We’ll discuss this in more detail later.

Documenting Your Claim

The quality of your documentation directly affects how quickly and smoothly your claim is processed. Insurers are not trying to catch you out, but they do need evidence to assess and validate your claim. The more thorough you are now, the fewer questions you’ll face later.

Photographs and Video

Take photos and video of everything. Start wide — capture the entire scene from multiple angles — then move in close to show specific damage. Include something for scale in close-up photos (a coin, a ruler, your hand). If the damage involves water, show the water line on walls. If it involves fire, show the extent of smoke damage in adjoining rooms. If it involves theft or vandalism, photograph points of entry, damaged locks, and empty shelves or spaces where items were taken.

Do not clean up or dispose of damaged items until your insurer has told you to. Take photos of damaged stock, equipment, or property in situ before moving anything. If you must move items to prevent further damage, photograph them where they are first.

Incident Reports

Write a detailed incident report as soon as possible, while events are fresh in your memory. Include:

If you have staff who witnessed the incident, ask them to write their own statements. These should be in their own words, signed and dated. Don’t coach them on what to say — just ask them to describe what they saw and heard.

Police Reports

For theft, burglary, vandalism, or any incident involving criminal activity, report it to the police immediately and obtain a report reference number. Your insurer will almost certainly require this. Some policies also require you to report lost or stolen items to police within a specific timeframe (often 24 hours).

For motor vehicle accidents involving your business vehicle, you may need to report to police if someone is injured, if there is significant property damage, or if the other driver fails to exchange details. Check your state or territory’s rules.

Receipts, Invoices, and Proof of Value

You will need to prove what you owned and what it was worth. Gather:

If you don’t have receipts for everything — and many small business owners don’t — don’t panic. Insurers understand this. Photos, bank statements, supplier records, and even statutory declarations can help substantiate your claim. But the more evidence you can provide, the smoother things will go.

The Claim Form

Once you’ve notified your insurer and gathered your initial documentation, you’ll receive a claim form. This is a legal document, and the way you complete it matters.

What You’ll Be Asked

Claim forms vary by insurer and policy type, but you can generally expect questions covering:

How to Answer Without Harming Your Claim

Answer honestly and accurately. Do not guess or speculate. If you don’t know something, say so — write “unknown” or “to be confirmed” rather than making assumptions. If a question doesn’t apply, write “not applicable.” Do not leave fields blank.

Stick to facts. Your claim form is not the place for speculation about who was at fault or for emotional commentary about how the incident has affected you. “Customer slipped on wet floor in reception area near entrance” is appropriate. “The cleaner must have left the floor wet and the customer wasn’t watching where they were going” is speculation that could work against you.

If you are asked about the cause of the incident and you genuinely don’t know, say so. “The cause of the water leak is not yet known — a plumber has been engaged to investigate” is a perfectly valid answer that also demonstrates you are taking reasonable steps.

Keep a copy of everything you submit, including the completed claim form and all supporting documents.

Dealing with Loss Adjusters and Investigators

After you submit your claim, your insurer may appoint a loss adjuster or investigator to assess it. This is standard practice, not a sign that your claim is being treated with suspicion.

Who They Work For

It’s important to understand that loss adjusters and investigators work for the insurer, not for you. Their role is to investigate the circumstances of the claim, assess the extent of the loss or damage, and report back to the insurer so it can make a decision. They are not your advocate.

This doesn’t mean they are adversarial. Most are professional and fair. But you should be aware that what you say to them goes back to the insurer and can influence the outcome of your claim.

What They’re Looking For

A loss adjuster will typically:

How to Prepare

Before the loss adjuster arrives:

During the visit, be cooperative and professional. Answer questions truthfully. If you don’t know something, say so — don’t guess. You have the right to take notes during the meeting, and you should.

If the adjuster asks for documents you don’t have readily available, take note of the request and provide them as soon as you can. Delays in providing requested information are one of the most common reasons claims take longer than expected.

How Long Will Your Claim Take?

Claim timelines vary significantly depending on the type of claim, its complexity, and how quickly you provide the required documentation. There are no fixed statutory timeframes, though the General Insurance Code of Practice requires insurers to handle claims fairly, transparently, and without unreasonable delay.

As a general guide — and this varies by provider — straightforward property damage claims with clear documentation might be resolved within two to four weeks. Public liability claims involving injury, especially where fault is disputed, can take months. Professional indemnity claims involving complex legal arguments can take even longer, sometimes stretching beyond a year.

The best thing you can do to speed things up is respond promptly to requests for information and documentation. Every time the insurer asks for something and you take two weeks to respond, that adds two weeks to your timeline.

What Happens When Your Claim Is Accepted

If your insurer accepts your claim, you’ll receive a settlement offer. The form this takes depends on your policy and the nature of the claim.

Cash Settlement vs. Repair or Replacement

For property damage claims, insurers typically have the option to either pay you a cash settlement, repair the damaged item, or replace it. The choice is usually theirs, not yours, though some policies give you input.

A cash settlement is calculated based on the value of the loss. Under most business insurance policies, settlement is on a “new for old” basis — meaning you get the cost of replacing the item with a new equivalent, not its depreciated value. However, check your policy wording. Some policies settle on an indemnity basis (depreciated value) unless you have specifically opted for replacement cover.

For public liability claims, the insurer will generally handle the third party’s claim directly — settling with the injured person, paying for their legal costs if required, and managing the entire process on your behalf.

Partial Claims and the Average Clause

This is one of the least understood aspects of business insurance, and it can result in a nasty surprise if you are underinsured.

Most business insurance policies contain an “average clause” or “co-insurance clause.” In simple terms: if you have insured your property for less than its full value, and you make a partial claim, the insurer may reduce your payout in proportion to the underinsurance.

Here’s how it works. Say your stock is worth $200,000, but you have only insured it for $100,000 — meaning you are underinsured by 50%. A fire destroys $40,000 worth of stock. Under the average clause, your payout might be reduced by the same proportion as your underinsurance — in this case, 50%. So instead of receiving $40,000, you might only receive $20,000.

This is why it’s critical to insure for full replacement value, not a rough guess. If you’re unsure what your assets are worth, consider getting a professional valuation. It costs money upfront, but it can save you far more in the event of a claim.

The average clause applies to partial losses. If you suffer a total loss — everything destroyed — you would receive the full sum insured, even if underinsured. But for partial claims, which are much more common, underinsurance can leave you significantly out of pocket.

What to Do If Your Claim Is Denied

A claim denial is not the end of the road. You have rights, and there are steps you can take.

Ask for Reasons in Writing

The first thing to do is ask your insurer to explain their decision in writing, with reference to the specific policy terms they are relying on. You are entitled to a clear explanation. Sometimes a denial is based on a misunderstanding or incomplete information that can be resolved with additional documentation.

Read the denial letter carefully. Compare it against your PDS. Does the insurer’s reasoning hold up? Are they relying on an exclusion that actually applies? Have they misinterpreted an event or timeline? If you believe they are wrong, write back and explain why, providing any additional evidence you have.

Internal Dispute Resolution

All Australian insurers are required to have an internal dispute resolution (IDR) process. If you are not satisfied with the claims decision, you can lodge a formal complaint through this process. The insurer must acknowledge your complaint within one business day and provide a final response — either a decision or a detailed explanation of why the matter is still under consideration — within 30 calendar days for most general insurance complaints.

Lodging an IDR complaint costs you nothing, and it ensures your dispute is reviewed by someone who was not involved in the original decision. The General Insurance Code of Practice requires insurers to handle these complaints fairly and transparently.

AFCA: The Australian Financial Complaints Authority

If you are not satisfied with the insurer’s IDR response — or if 30 days have passed without a response — you can take your complaint to the Australian Financial Complaints Authority (AFCA).

AFCA is an independent external dispute resolution scheme, free for consumers and small businesses. It can consider complaints about general insurance claims where the claim amount is up to a certain limit (as of 2026, this is $1.36 million for general insurance disputes, though limits are subject to change — check the AFCA website for current figures).

AFCA has the power to make binding determinations. If AFCA finds in your favour, the insurer must comply. You are not bound by AFCA’s decision — if you’re unhappy with the outcome, you can still pursue the matter through the courts, though you should seek legal advice before doing so.

The AFCA process typically takes three to six months, though simple cases can be resolved faster. You can lodge a complaint online through the AFCA website, and you don’t need a lawyer (though legal advice can be helpful for complex disputes).

Your Rights Under Australian Insurance Law

Two key frameworks protect your rights as an insurance policyholder in Australia.

The Insurance Contracts Act 1984

The Insurance Contracts Act is federal legislation that governs the relationship between insurers and policyholders. Among other things, it requires insurers to act with “utmost good faith” in their dealings with you. This is a high standard — it means the insurer must act fairly, transparently, and without seeking to take advantage of your circumstances.

The Act also provides some important protections. For example, section 54 prevents insurers from refusing a claim based on a breach of policy terms unless the breach actually caused or contributed to the loss. This means that minor or administrative breaches — such as failing to notify a change of address — cannot automatically be used to deny an unrelated claim.

The General Insurance Code of Practice

The Code is a voluntary industry code, but most Australian insurers subscribe to it, and compliance is monitored by an independent committee. The Code sets standards for claims handling, complaint resolution, and communication. Key obligations include:

If your insurer is not a Code subscriber, ask why not — and consider this when you are next shopping for cover.

Claims-Made vs. Occurrence-Based Policies: Why Timing Is Everything

Not all insurance policies work the same way when it comes to triggering cover. Understanding the difference between claims-made and occurrence-based policies is essential, especially if you are changing insurers or letting a policy lapse.

Occurrence-Based Policies

Public liability insurance and most property insurance policies are occurrence-based. This means the policy that responds to a claim is the one that was in force when the incident occurred, regardless of when the claim is actually made.

If a customer slipped and fell in your shop in March 2026 while you held a public liability policy, and they only decide to sue you in January 2027 — your 2026 policy still responds, even if you have changed insurers in the meantime. The trigger is the date of the incident, not the date of the claim.

Claims-Made Policies

Professional indemnity insurance is claims-made — and so are some management liability and cyber insurance policies. With claims-made cover, the policy that responds is the one in force when the claim is made against you (or when you notify the insurer of circumstances that could give rise to a claim).

This has enormous implications. If you did professional work for a client in 2025, but they don’t sue you for negligence until 2027, your 2027 policy responds — provided that you held continuous PI cover from the time you did the work through to the time the claim was made, and that you were not aware of the potential claim when you took out the 2027 policy.

This is why maintaining continuous professional indemnity cover is so important. If you let your PI policy lapse — even for a day — and a claim arises from work you did previously, you could find yourself without cover.

It also explains why notification is so urgent on claims-made policies. If you become aware of circumstances that could give rise to a claim (a disgruntled client making threats, for example), notifying your insurer before the policy expires locks in your cover, even if the actual claim doesn’t materialise until later.

If you are closing your business, retiring, or selling, talk to your broker about run-off cover. Run-off cover extends your PI protection for claims made after you stop trading, covering work done during the policy period. Without it, you could be personally exposed to claims that arise years after you’ve closed your doors.

How a Claim Affects Your Future Premiums

Making a claim will almost certainly affect your future premiums. How much depends on the type, size, and frequency of claims.

A single, small claim — a few thousand dollars — may result in a modest premium increase at renewal, or none at all, especially if you have been claim-free for many years. A large claim, or multiple claims in a short period, will have a more significant impact. Some insurers may decline to renew your policy altogether if your claims history suggests you are a high risk.

This doesn’t mean you should avoid making legitimate claims — that is what insurance is for. But it does mean you should think carefully before claiming for small amounts that you could afford to absorb yourself. The premium increase over several years might cost more than the claim payout, especially once excesses are factored in.

Your claims history follows you when you shop for new cover. When you apply for a policy, insurers will ask about your claims history — typically for the past three to five years. Be honest. Failing to disclose previous claims is a breach of your duty of disclosure and can void your cover.

Preventing Disputes Before They Happen

The best claim is one that is never disputed. While you can’t control every variable, you can stack the odds in your favour:

Frequently Asked Questions

Can I do my own repairs before the insurer inspects the damage?

You should only carry out emergency or temporary repairs to prevent further damage — such as boarding up a broken window, turning off a leaking pipe, or tarping a damaged roof. Permanent repairs should wait until the insurer has assessed the loss, unless the insurer gives you written authorisation to proceed. If you do make emergency repairs, document them with photos and keep the receipts.

What if I don’t have receipts for items I’m claiming?

This is common, and insurers understand it. You can use alternative evidence: bank or credit card statements showing the purchase, photos or videos of the items before the damage, supplier records, invoices from your accounting system, or even statutory declarations. The more evidence you can piece together, the better.

Does making a claim mean my premiums will definitely go up?

Not necessarily. A small, one-off claim after years of being claim-free may not affect your premiums at all, or the impact may be modest. However, large claims, multiple claims, or claims suggesting poor risk management are likely to result in higher premiums at renewal. It’s worth considering whether a small claim is worth the potential long-term cost.

How long do I have to lodge a claim?

It depends on your policy. Some require notification within 24 to 48 hours; others allow up to 30 days. Check your PDS. For claims-made policies like professional indemnity, you must notify the insurer before the policy expires — if you become aware of circumstances that could lead to a claim, it is urgent that you notify immediately.

What if I disagree with the loss adjuster’s assessment?

You have the right to question it. Ask the adjuster to explain how they arrived at their figure. Provide your own evidence — quotes from independent repairers or suppliers, receipts, valuations. If you still disagree, escalate through the insurer’s internal dispute resolution process. If that doesn’t resolve the issue, you can take the matter to AFCA.

Disclaimer: This article is general information only and does not constitute financial, legal, or insurance advice. Policy terms, conditions, exclusions, and limits apply to all insurance products. You should read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for any policy you are considering, and speak with a qualified insurance broker or adviser about your specific circumstances. Compare Business Insurance is an independent editorial site. We may earn a commission if you purchase insurance through links on this site — this does not influence our content or rankings.