When you buy a vehicle on finance, get a credit card or personal loan, the sales agent may try to sell ‘add on’ insurance.
Add-on insurance can be have different names and often covers different scenarios such as covering your repayments due to illness or injury, cover a breakdown, or tyre and rim damage. The Australian Securities and Investments Commission (ASIC) has long been concerned about the poor sales practices of these policies as they mainly offer low value for money.
Pressure sales environment at car dealers
Buying a car can be an overwhelming process. You can spend hours negotiating with salespeople making endless decisions and then there’s all the paperwork.
Salespeople make high commissions for selling these policies which incentivises them to not act in your best interests.
Types of insurance to watch out for
Consumer Credit Insurance (CCI)
Consumer Credit Insurance (CCI) has many different names. It covers you if you’re unable to make repayments due to illness, injury, unemployment or death. The insurance will either cover your repayments for a certain period or the entire debt with a lump sum amount.
Guaranteed asset protection (GAP) insurance
GAP insurance is also called ‘motor equity insurance’ or ‘shortfall insurance’. If you write off your car, it pays the lender if there’s a gap between what you owe and what you get from comprehensive car insurance.
Mechanical breakdown insurance or Extended Warranty
This is an extended warranty on top of the manufacturer’s or statutory warranty. It generally covers original components and fittings at the time of purchase against mechanical failure or defect.
Mechanical breakdown insurance cover doesn’t start until the new car warranty expires. If you buy a car that comes with a three-year new car warranty, you would be paying for a policy you won’t be able to claim on for at least three years
Add-on insurance refunds
Refunds due to unfair conduct
The Australian Securities and Investments Commission (ASIC) has found unfair sales conduct among insurers who offer add-on insurance and extended warranties through car dealers, banks or insurers. Insurers have agreed to refund over $130 million to customers who were sold these products unfairly.
Complain about add-on insurance
Claimo can help get a refund on a No Win No Fee basis^ and request a full refund on the premiums and interest charges. Refunds are often thousands of dealers due to how expensive the policies are.
If the insurer does not resolve the claim, Claimo will then refer you claim to the Australian Financial Complaints Authority (AFCA) for an independent decision.
Claimo charge 20% (plus GST) for any successful claim throughout the claims process. If we are not successful, you will not be charged. Contact us today!