There are many finance products available to help you acquire the things you may need in everyday life; for example, a mortgage to purchase your home, a personal loan to buy a car, and a consumer lease that allows you to hire household goods.

However, there are strict laws governing finance products and not all finance products on the market are legal. If you are unsure about a finance product, contact Consumer Affairs Victoria on 1300 558 181.


Nicholas Anderson

Senior Solicitor, Consumer Action Law Centre

Credit-related insurance

Last updated

1 July 2021

Is credit-related insurance necessary?

Consumers cannot be required to take out insurance in connection with a credit contract unless the insurance is compulsory insurance, mortgage indemnity insurance and/or insurance over mortgaged property (s 143(1) NCC). Despite this, consumers are often required to, or inadvertently enter into, consumer credit, gap cover and mechanical breakdown insurance upon entering into a credit contract. 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 offence. 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

The Insurance Contracts Act 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. The Corporations Act also includes provisions that make an insurer liable for the conduct of its 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.

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Buy the chapter ‘Mortgages, consumer leases and other finance products’