Flood victims beware of insurance claim cowboys

Warning issued by Qld State Government

Unfortunately, when disaster hits there is a bad element that rears its ugly head as they take advantage of victims. If you are affected by flood damage, please beware of the cowboys. This warning has been released by the QLD State Government. Please be careful.

Flood-affected Queenslanders are being warned to be aware of ‘claims farmers’ who often crop up in the wake of disasters to offer assistance with their insurance claim.

Attorney-General and Minister for Justice Shannon Fentiman said these firms are sometimes also known as ‘claims management services’ and will act as a go-between for a person or business and their insurance company, offering to do the leg work on their insurance claim for a fee.

“We want Queenslanders to be protected, understand the risks and not fall victim to agreements they signed during what is a stressful time,” Minister Fentiman said.

“Many of these claims farmers entice customers to use their services by offering a free inspection, promising your claim will go to the front of the queue or promising a guaranteed cash settlement.

“Sadly, we have also heard of cases where Queenslanders have been given the impression the person is from government or acting on a law firm’s behalf.”

The Attorney-General said it’s important for Queenslanders to know that they don’t need to use a third party to assist with an insurance claim and they can deal directly with their insurer.

“If you are thinking about signing up to a claims management service, it’s so important you understand the risks,” she said.

“And importantly, you should not sign anything which prevents you from dealing directly with your insurer, broker, financial adviser or your own lawyer.”

There are a number of possible risks when dealing with a claims farmer, including: 

• The firm will usually seek a cash settlement as the resolution. This could mean: 

• you will lose the option for your insurer to arrange the repairs which can sometimes be a complicated process. Insurers also offer guarantees – sometimes for life – on the work they do.
• You may be left out of pocket in situations where the repair costs are uncertain.
• You may have to pay the firm directly if your insurance company does not pay the claim.
• The firm may unreasonably inflate your claim to increase their own fee. This means: 
• some firms may drag the claim out for a long time arguing for an unrealistic amount.
• The arrangement between a person and a claims management service/claim farmer is a civil contract. This means: 

• If you have any problems with the firm, you will need to engage a lawyer and possibly got to court to resolve it.
• The following agencies will be unable to assist: the Australian Securities and Investments Commission (ASIC), the Australian Competition and Consumer Commissioner, the Office of Fair Trading, Australian Financial Complaints Authority.

The Attorney-General said any Queenslander concerned about the conduct of a claims management service or claims farmer should conduct the Australian Securities and Investment Commission (ASIC).

“You do not need to worry if you don’t have your insurance documents.  If you can’t remember who your insurer is, you can contact the Insurance Council of Australia and they will help you find your insurer,” she said.

Insurance regulation falls within the Commonwealth Government’s responsibilities and the laws are administered by ASIC.

To contact Australian Securities and Investment Commission phone 1300 300 630.

To contact the Insurance Council of Australia phone 1800 734 621.

Source: Attorney-General and Minister for Justice, Minister for Women and Minister for the Prevention of Domestic and Family Violence The Honourable Shannon Fentiman