Beware salespeople offering you junk car insurance

Don’t get taken for a ride by shonky salesmen selling junk car insurance.

Car insurance rip-offs

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?

Gap insurance

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?

 

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    COMMENTS

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    MICK
    8th Dec 2017
    11:26am
    Junk insurance? What about 'health insurance'? More outs than a Swiss cheese.
    Most insurances are a lottery at best and being a long term customers mostly counts for nought when claims are made which cost the insurance company a motza. Then they challenge.
    Sadly insurance is a necessary evil but there are some to avoid.
    The Bronze Anzac
    8th Dec 2017
    12:33pm
    I classify Insurance Companies in my "Top Eight" Australian Thieves: Here is my list:
    Telcos
    Banks
    Insurance Companies (All types)
    Power Retailers
    Used Car Sales Yards & Persons
    Real Estate Agents
    Lawyers
    Politicians

    Can anyone add some more ?
    MICK
    8th Dec 2017
    2:04pm
    Where are governments in this list?
    roy
    8th Dec 2017
    2:54pm
    Good old MICK, ever reliable, MICK for PM.
    PlanB
    8th Dec 2017
    3:15pm
    Well I would put Politicians/Estate agents and car salesmen on TOP of the list for a start

    Yes I agree with you on the others, plus all the big shopping centres too, ie -- Coles Woollies etc
    Old Geezer
    8th Dec 2017
    6:54pm
    My 2 bobs worth. What I have found on lots of insurance is that there are only a few players in the market and the rest rebadge these players. So if you get a rebadged quote with say 30% off because you already have some sort of association with that provider check to see who is the under writer and then ask them for a quote. Every time I do this I seem to get an even cheaper quote.

    Let's take travel insurance exactly same policy.
    Rebadged no 1 $298 20% off
    Rebadged no 2 $231 20% off
    Rebadged no 3 $164 30% off
    Under writer $108 0% off

    Oh dear something very fishy happening there. Especially when the same policy is the one you get thrown in when you pay by credit card.
    Blossom
    8th Dec 2017
    7:11pm
    Plan B.
    The Shopping Centre owners make a pretty sum of money off the supermarkets and other businesses in rent etc. The charge according to floor space, a % of store takings and high fees for other usage including utilities. I invoices/statments showing charges when I was working. Some rents rise so steeply that businesses move to where there is lower cost leases or close completely. I know one well known hairdressing salon that moved from a huge Shopping Centre Complex for that reason. Unless he charged his customers absorbant prices he would have struggled to make ends meet.
    roy
    9th Dec 2017
    9:53am
    Blossom, or even exorbitant prices.
    jamesmn
    10th Dec 2017
    2:12pm
    what about this rubbish the insurance companies are flogging on TV all of the time for if you die. I know someone recently who lost their husband it was for $15.00 and the insurance company paid out $4.000 what a scam after years of paying you get $4.000 aust seniors should hang their head in shame.
    jamesmn
    11th Dec 2017
    8:50am
    I would be putting divorce lawyers at the top of the list