In August, QBE Insurance was forced to refund more than 35,000 add-on insurance customers up to $15.9 million that they paid for insurance bought through car dealerships where the insurance provided little or no benefit.
The Australian Securities and Investments Commission (ASIC) has been cracking down on dodgy car insurance for more than 12 months, and if you have bought a new car recently, it could be worthwhile checking the paperwork, as you could be in line for a refund.
Consumer Action’s DemandARefund.com has helped people right across Australia demand over $600,000 in refunds from car yards and insurers.
“Anyone who has bought a car in recent years should check their paperwork – you could get your money back,” says Susan Quinn, Senior Policy Officer at the Consumer Action Law Centre (CALC).
“This car yard sham has been exposed. Insurers and warranty companies have been in cahoots with car dealers for too long and finally people are fighting back and winning. Car yards, insurers and warranty companies have let this behaviour go on for a long time and now they’re facing the consequences.”
Which insurance policies are junk?
If your car is a write-off, gap insurance can pay the balance if the benefit from your comprehensive car insurance is less than what you owe on your car loan.
Tyre and rim insurance
This covers the repair or replacement of your tyres – for example, if they are punctured or you have a blow-out or have driven over nails.
Extended warranty or mechanical breakdown insurance
This can cover you in case you have a breakdown or your car needs repairs.
These insurance policies have lots of restrictions. For example:
- Tyre and rim insurance may not cover you for vandalism or if you take your car off-road.
- The maximum benefit under gap insurance may be less than your shortfall.
- Mechanical breakdown or warranty insurance providers can rely on their discretion to reject a claim. For example, they may not cover you for a fault that already existed before you took out the cover (even if you did not know about it). It can also exclude common problems such as issues with your battery, exhaust or brakes.
- Wear and tear and regular maintenance isn’t covered for tyre and rim or breakdown insurance.
According to the Consumer Action Law Centre, insurance products and warranties sold at car yards are often poor value. The salesperson is more focused on their commission than getting the right insurance for you. Research your own options.
Manufacturer’s warranties, consumer guarantees under the Australian Consumer Law or your comprehensive car insurance may already cover you for most things that could go wrong with your car.
Did you buy your car insurance from the car yard? Have you successfully claimed a refund? Was it a difficult process?