Junk Insurance: What Is It and How to Claim a Refund? | In 2018, The Banking Royal Commission declared that the four largest banks in Australia have been defrauding customers by selling worthless and unnecessary insurance products commonly referred to as “junk insurance”, often using forceful tactics and unfair sales practices. In case you have taken out a credit car loan or purchased a car on finance, you may have unknowingly paid for junk insurance you don’t need or understand as well. If you want to learn more about ways you could claim a refund and dive deeper into junk insurance, take a look at the guide below:
What is junk insurance?
Junk insurance is a form of add-on insurance that is typically sold along with loans and credit cards. These products are known as “junk” because they are commonly sold without the informed and explicit consent of the consumer, often offering little to no real value. These types of insurance can cover items that are non-essential to most consumers, or even represent duplicates of insurances many consumers already hold.
The most commonly sold examples of junk insurance include Guaranteed Asset Protection (GAP), Consumer Credit Insurance (CCI), Extended Warranty (EW), Mechanical Breakdown Insurance (MBI), Tyre and Rim Insurance (TRI), and Scratch & Dent Insurance (SDI).
Know whether you are eligible for a refund
As consumers were unwittingly sold junk insurance, one of the biggest problems might be the fact that many consumers aren’t certain whether they currently have or have previously had the insurance in question. To see whether you have been sold junk insurance, it’s recommended to find your loan, credit card, or other insurance documentation and go through the policy details.
In case you can’t find the relevant documentation, you might be able to send requests to your banks and financial institutions to see whether you have been charged for any form of add-on insurance. In case your requests aren’t successful, you could also go to the ombudsman (AFCA) for assistance or hire a company that will help you search for any eligible insurance.
Consult a claims expert
Making a claim against a financial institution can be an intimidating, stressful, and time-consuming process you shouldn’t go through alone. If you’ve determined you are eligible for a refund, it’s recommended to consult a junk insurance expert who will help you get your money back for unnecessary add-on insurance.
Apart from collecting the necessary information from banks and financial institutions and dealing with the complicated paperwork, such professionals will also manage the entire claims process on your behalf, providing you with regular updates along the way. When you work with the best junk insurance experts, the process will only take around 12 weeks to complete, and won’t require additional fees and charges if your claim isn’t successful.
Consider joining a class action
When requesting a refund, another option is to join a class action lawsuit. Ever since the discovery of junk insurance, class actions were undertaken against large corporations such as Allianz and CBA, which consumers can join if they so choose. But although convenient, class actions have their downsides as well.
Not only do class actions generally take months, if not years to complete, but the refund policyholders receive is generally significantly lower than what they would get by going direct, often with no possibility of additional complaints. Another disadvantage of class actions is that some consumers might not receive a refund at all, in case they weren’t contacted by the firm that undertook the lawsuit or weren’t aware they were part of the class action in the first place.
Evidently, not all hope is lost for those who have unknowingly been sold different forms of add-on insurance. As long as you are eligible and have an experienced claims professional by your side, you can look forward to fair compensation in the near future.