Australia is a country with an amazing reputation of being stable, fair, and lawful, but now 100% of the time. Today in “what’s new in Australia” we have class actions all around.
Right now, there are several class actions against CBA, Westpack, Allianz, and MTA, all big insurance groups that have been selling so-called junk insurance. After Swann Insurance flopped in court and policyholders go awarded $138 million for junk insurance, it’s important to know what exactly is junk insurance and whether you can get your money back.
What is junk insurance?
It describes different insurance policies included in credit cards and loans by banks and insurance companies. The main “feature” of junk insurance is that it’s useless. Many users pay thousands of dollars over the years and get no benefits at all. Another name for junk insurance is “mis-sold”, meaning one of many things. In some cases, the insurance agency signed you up for add-on insurance without your knowledge or understanding.
In some cases, they use pushy sales tactics, unfair sales practices, and a high-pressure environment to sell people add-on insurance. And in some cases, even if users knew they had these extra policies, they are unable to claim them, making them pure junk.
Most common examples of junk insurance
It comes in many forms and faces, but most users fall for consumer credit insurance or CCI. These policies get sold along with credit cards, car, home, or personal loans and provide cover if you’re not able to meet your monthly loan payments. The catch is that these policies were sold to people who can’t get a claim for some reason or those who are very unlikely to need cover.
Another type of junk insurance present today is guaranteed asset protection or GAP. Here’s how this one works: if you have $15,000 owing on your car loan and get into an accident, your car will get written off, but your comprehensive insurance will only pay out about $12,000. What then? In that case, you can rely on GAP insurance that will cover that difference. The trick is that GAP insurance only applies for people who have comprehensive insurance and you should not have been sold GAP if you don’t.
Extender warranty insurance AKA mechanical breakdown insurance is another type of common junk insurance that involves consumers paying a fee to compensate the warranty provider agreeing to fix or repair goods in case of a failure. This insurance has many exclusions and is worthless for used vehicles.
Are you a victim of junk insurance fraud?
Many people have paid for junk insurance without ever knowing. If you’re not sure how to refund junk insurance, make sure to hire an agency specializing in junk insurance refunds and seek your answers there. They will help you get your old statements and check your interests to see whether you are eligible for a refund. When you get your statements, you’ll have a lot of data to go through or you can hire experts. Pros will always know where to look and what to keep an eye on in your statements and ensure you get the money you’re owed if you’re owed anything.
Did you ever work with any of the following insurers?
According to the Royal Commission, Swann Insurance engaged in misconduct by designing and selling junk insurance. Even Swann accepted the blame and made a statement that tells about their failed meeting of community standards. Today, Swann doesn’t sell any of the scam products and has repaid thousands of customers.
Besides Swann Insurance, other companies have refunded and will be forced to refund their users in the future. For instance, ASIC investigated the sale of add-on insurance through car dealers. Since they started their mission, they called on many insurers to fix the distribution of insurance products. Companies to keep an eye on our Aioi Nissay Dowa Insurance Company (handles Toyota insurance), NM Insurance (deal in motorcycle insurance), Eric Insurance, LFI, MTA Insurance, Allianz Insurance, etc.
The Banking Royal Commission with the financial regulator, ASIC, investigated credit insurance, GAP, extended warranty insurance, etc., and found that many consumers were cheated into paying for coverage that has little to no value. Besides that, they also discovered that insurance companies and banks had been using unfair tactics to push people into buying insurance. We are seeing great results already, even with the investigation still being active.
Law firms have also gathered unsatisfied people and started class actions against banks and insurance companies that sold junk insurance. A class action is a “type of lawsuit that involves one person making a claim against a party on behalf of a larger group”. In the past, class actions were not satisfactory. According to previous junk insurance class actions, consumers only received 9 cents on the dollar paid in insurance premiums, meaning that for every $1000 they paid to these fraudulent companies, users would receive about $90 in compensation. Luckily, today we know more about junk insurance and class action proceedings, so consumers can look forward to receiving better refunds by using a claims management service instead of doing the class action.
Being a victim of insurance fraud is not a great feeling, but one thing makes it a little bit easier to handle—some companies can help you get your money back. If you get informed about your rights and find the right claims management service, it’s possible to settle things right.