What To Do When the Insurer Disputes Your Claim In NSW

Published: 20 August 2026

Receiving a letter from an insurer saying they are disputing liability can feel like a door has been slammed in your face. It is one of the most stressful moments in any injury claim. But a liability dispute is not the end of your claim – it is the beginning of a formal process, and there are steps you can take to challenge that decision.

This article explains what a liability dispute actually means, how the process works across different types of injury claims in NSW, and why getting advice early can make a significant difference to your situation.

Jump to:

• My Workers Compensation Claim was Disputed or Rejected
• My Car Accident Compensation (CTP) Claim was Disputed or Rejected
• My Public Liability Compensation Claim was Disputed or Rejected
• My Medical Negligence Compensation Claim was Disputed or Rejected

What Does “Disputing Liability” Actually Mean?

When an insurer disputes liability, they are refusing to accept legal responsibility for your injury or illness. In practical terms, this often means they will stop or refuse to pay benefits – such as weekly income payments or medical expenses – until the dispute is resolved.

A liability dispute can arise for a number of reasons. The insurer might argue that your injury did not happen the way you described, that your workplace or the at-fault party was not legally responsible, that your injury was not caused by the incident you reported, or that you do not qualify as a “worker” under the relevant legislation. In workers compensation claims, insurers are also required to notify you in writing when they dispute your claim – this is known as a Section 78 notice.

Whatever the reason, a dispute is not a final verdict. It is a decision you can challenge.

Workers Compensation: What Happens When the Insurer Disputes Your Claim?

In NSW, workers compensation insurers generally have 21 days from receiving a claim for weekly payments to determine whether to accept or dispute liability, although the precise claims process can vary. Insurers are also generally required to start provisional payments within 7 days of being notified of an injury, unless they have a reasonable excuse not to do so. The rules changed significantly from 1 July 2026, particularly for primary psychological injuries. For primary psychological injuries caused by relevant conduct, a different framework now applies: insurers generally have 42 days to determine liability, and workers are entitled to interim weekly payments while the claim is assessed during that period.

If the insurer decides to dispute liability, the dispute does not go straight to court. There is a structured pathway designed to resolve most disputes well before that point.

Step 1 – Internal review. Depending on the type of workers compensation dispute, you may be able to ask the insurer to review its decision internally. For certain primary psychological injury claims, an internal review is mandatory before the matter can proceed to the appropriate external jurisdiction.

Step 2 – The Independent Review Office (IRO). The IRO is an independent government office that oversees the workers compensation system and assists injured workers with complaints about insurers. The IRO also administers the Independent Legal Assistance and Review Service (ILARS), which may fund legal assistance for eligible workers challenging an insurer’s decision. ILARS funding is subject to eligibility and funding criteria and is not automatically available in every case.

Step 3 – External dispute resolution. Many workers compensation disputes can be determined by the Personal Injury Commission (PIC), an independent statutory tribunal. The PIC deals with a wide range of disputes about workers compensation entitlements and liability.

There is also a new pathway for certain primary psychological injury claims notified from 1 July 2026. Where a claim involves allegations of relevant conduct, such as bullying, sexual harassment, racial harassment or excessive work demands, the Industrial Relations Commission (IRC) has a specific role in determining whether that relevant conduct occurred. Other aspects of the workers compensation claim may then be dealt with through the appropriate workers compensation dispute process, including the Personal Injury Commission (PIC).

These are not the only circumstances in which a psychological injury may be compensable. The new NSW rules recognise a range of other relevant events that can cause a primary psychological injury, including violence or threats of violence, serious criminal conduct, witnessing a traumatic incident, the death of a person in a worker’s care and vicarious trauma. 

As workers compensation lawyers in Newcastle and the Central Coast, we act on a No Win, No Fee basis and can advise you at any point in this process. You can also visit SIRA for more information.

A Note Workers Compensation Changes in July 2026

It is also worth noting that the workers compensation landscape in NSW changed significantly from 1 July 2026, following the Workers Compensation Legislation Amendment Act 2025 and the Workers Compensation Legislation Amendment (Reform and Modernisation) Act 2026. The reforms changed the way some injuries are assessed, how certain claims are managed, the entitlements available to injured workers and how some disputes are determined. In particular, new rules apply to primary psychological injuries notified from 1 July 2026, including new requirements concerning relevant events and relevant conduct. Some further reforms are scheduled to commence from 1 October 2026. If you are dealing with a dispute now, getting advice based on the current rules is more important than ever.

CTP (Car Accident) Claims: When the Insurer Disputes Liability

Compulsory Third Party (CTP) insurance – sometimes called a Green Slip – covers people injured in motor vehicle accidents in NSW. One important feature of the current scheme is that statutory benefits (weekly income payments and medical expenses) are available to all injured people for the first 52 weeks regardless of fault. This means even if the insurer is disputing who was responsible for the accident, you may still be entitled to initial benefits during that period.

A liability dispute becomes more significant when it affects your access to benefits beyond 52 weeks or your ability to make a common law damages claim for more serious injuries. The rules depend on factors including who was at fault, whether the injury is classified as a threshold or non-threshold injury, and the extent of any permanent impairment. The requirements for a damages claim are more complex than simply establishing that another driver was at fault, so it is important to obtain advice about your particular circumstances.

If the insurer disputes liability, the amount of your benefits or another aspect of your CTP claim, there are formal review and dispute-resolution pathways. In many cases, the first step is an internal review by the insurer. Strict time limits can apply to requesting that review, and depending on the issue, the matter may then proceed to the Personal Injury Commission for independent determination. The State Insurance Regulatory Authority (SIRA) oversees the CTP scheme and provides information and assistance about the dispute process.

If your accident involved an uninsured or unidentified vehicle – such as a hit-and-run – you can still make a claim through the Nominal Defendant scheme, which is administered by SIRA and managed like a standard CTP claim.

If you have been injured in a motor vehicle accident and the insurer is pushing back on your claim, speaking with our Car accident lawyers in Newcastle or the Central Coast as soon as possible gives you the best chance of protecting your entitlements.

Public Liability Claims: When the Person or Business Responsible Disputes Fault

In a public liability claim – for example, if you were injured in a slip and fall at a shopping centre, a dog attack, or an accident at a cafe – “disputing liability” usually means the responsible party’s insurer is arguing that their client did not owe you a duty of care, did not breach that duty, or that the breach did not cause your injury.

Unlike workers compensation, there is no formal government tribunal that handles public liability disputes before court. However, the vast majority of these claims are resolved through negotiation between your lawyer and the other party’s insurer without the need for court proceedings. Having strong evidence from the outset – photographs, incident reports, witness contact details, and medical records – is critical to how well placed you are in those negotiations.

One important principle to understand is contributory negligence: if you were partly at fault for your own injury, it does not automatically rule out a claim. It generally reduces the amount of compensation rather than eliminating it entirely. So even if the insurer points to something you did, that is not necessarily the end of the matter.

Public liability claims in NSW are generally governed by the Civil Liability Act 2002 (NSW), together with the applicable limitation provisions. For many personal injury actions, the limitation period is generally three years from when the cause of action becomes discoverable, subject to a 12-year long-stop period running from the relevant act or omission. However, limitation law is complex and exceptions or special rules can apply in particular circumstances. Because evidence degrades quickly – CCTV footage is often overwritten within days or weeks, and witnesses’ memories fade – it pays to take action as early as possible regardless of where you are within the legal time limits.

Our public liability lawyers have extensive experience handling these disputes, including a landmark case decided by the High Court of Australia in 2012 that remains a leading precedent in shopping centre liability matters today.

Medical Negligence: When a Health Provider Disputes Responsibility

Medical negligence claims are among the most heavily contested personal injury matters. Health providers and their professional indemnity insurers often dispute liability on the basis that the treatment met the standard expected of a reasonably competent practitioner, even where things did not go to plan. A poor outcome is not, by itself, negligence – medicine and treatment involves inherent risk, and this is recognised in NSW law.

If a medical negligence claim cannot be resolved through negotiation or mediation, it may ultimately proceed to court. Unlike workers compensation claims, there is no dedicated NSW tribunal that generally determines whether a doctor, hospital or other health provider was negligent. Court proceedings involving medical professional negligence may be dealt with in the District Court or Supreme Court, depending on the circumstances of the claim. The courts can also refer matters to mediation, and many disputes are resolved without the need for a trial.

What makes these claims complex is that they almost always require independent medical expert evidence to demonstrate that the treating practitioner fell below an acceptable standard of care and that this caused your harm. This is why medical negligence claims typically take longer to resolve than other personal injury matters, and why early legal advice is so important – the earlier an experienced lawyer can begin gathering records and identifying appropriate experts, the stronger your position will be.

Medical negligence claims are also subject to limitation periods, but the applicable rules can depend on the circumstances of the claim. A three-year post-discoverability period and a 12-year long-stop period can apply to relevant personal injury actions, but exceptions and special rules may apply, including in claims involving children or particular types of injury. Because limitation issues can be complicated, anyone considering a medical negligence claim should obtain legal advice as soon as possible rather than relying on a general limitation period.

If you believe you or a family member has been harmed by substandard medical care, our medical negligence lawyers in Newcastle, Sydney or the Central Coast can help you understand whether you have a claim and what the process involves.

Why Acting Early Matters So Much

Regardless of the type of claim, it is highly recommended to seek legal advice as soon as possible after an insurer disputes liability, even if the legal time limit has not yet expired.

• Evidence disappears quickly. CCTV footage can be overwritten and witness memories can fade.
• Interim or statutory benefits in workers compensation and CTP claims may be affected while a dispute remains unresolved, depending on the nature of the claim and the applicable rules. Acting quickly can help protect your entitlements and ensure disputes are dealt with within the relevant timeframes.
• Insurers have experienced claims teams and lawyers managing these disputes from day one. You deserve the same level of support.
• Many disputes are resolved through negotiation or conciliation – but reaching a good outcome in those processes depends on being properly prepared.

How Whitelaw McDonald Can Help

At Whitelaw McDonald Lawyers, we have been helping injured people across Newcastle, the Central Coast, Sydney, and Coffs Harbour navigate exactly these situations for over 40 years. We act on a No Win, No Fee basis across all our compensation and personal injury work, and every new client is welcome to a free, no-obligation first conversation about their situation.

If an insurer has disputed your claim, or you are concerned that they might, contact our team to discuss your options. Compensation entitlements depend on individual circumstances, and the sooner we understand yours, the sooner we can help.

Get Free Advice

At Whitelaw McDonald, we believe everyone deserves to know where they stand. Have a quick confidential, no-obligation chat with our legal team at no cost.

There is no payment or commitment needed to speak with our experts.

Name^* Phone Number^* Email^* How did you hear about us? None selectedGoogleSocial MediaTV AdMy UnionSaw SignageReferred by Friends or FamilyReferred by a Social Worker/Doctor/PhysioReferred by another LawyerOther Message Please leave this field empty.