Is credit-related insurance necessary?
Consumers cannot be required to take out insurance in connection with a A contract relating to the giving of credit. unless the insurance is compulsory insurance, A restriction attached to ownership of property to secure the repayment of money borrowed. The mortgage stops the owner of the property selling it until they have paid off the debt. A promise to pay compensation to cover losses or expenses that may arise in the future if some stated event occurs. For example, if a business partnership ends and one partner continues to run the business, they generally agree to indemnify the others against any claims against the business in the future. Insurance contracts also indemnify the insured against stated risks. insurance and/or insurance over mortgaged property (s 143(1) NCC). Despite this, consumers are often required to, or inadvertently enter into, Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. A debt that does not have to be paid until some future time. Being allowed to pay later, in the future, for something you are getting now., gap cover and mechanical breakdown insurance upon entering into a credit An agreement that the law will enforce.. These are often bad value for the consumer, and a high commission is often payable.
For a general coverage of the law of insurance, see Chapter 10.4: Insurance.
Remedies for consumers who have wrongly taken out credit-related insurance
A credit provider who wrongly requires a consumer to take out credit-related insurance, or leads them to believe they must do so, commits an A criminal act prohibited by state or commonwealth criminal law. An offence is either a summary offence (minor) or an indictable offence (serious).. A credit provider can be required to refund the consumer the whole of the insurance premium (price of the insurance) (s 143(1), (4) NCC).
The same applies to credit providers that require a consumer to take out insurance with a particular insurer or unreasonably require that they take out insurance on certain terms (s 143(2), (4) NCC).
If you think you have got a bad deal on consumer credit insurance, consider demanding a refund through the Consumer Action Law Centre’s DemandARefund.com.
The Insurance Contracts A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. 1984 (Cth) and the Corporations Act 2001 (Cth) (‘Corporations Act’) provide further protection and remedies for consumers who have taken out policies of insurance. In particular, Part 7.6 of the Corporations Act requires insurers that have retail customers to be registered as financial services licensees, and includes provisions that make an insurer liable for the conduct of its A person who acts for someone else. They can make decisions, carry out tasks or make agreements for the other person. For example, if you ask someone to bid for you at an auction they will be acting as your agent. if the consumer relied on that conduct in good faith. Intermediaries who arrange insurance may often be agents of the insurer, not the insured, but a broker is usually the agent of the insured.