No one can deny that the last couple of years were very stressful and uncertain. Naturally, people tried to make contingencies for any problems they may encounter down the road by investing in different policy products. However, this renewed interest in insurance didn’t come without some very unethical exploits.
For instance, if we take Australia as an example of a developed country, we will see that in the previous 7-year period major insurance companies located in the Land Down Under have sold over 5.6 million of the add-on insurance policies that hold no real value for the policies’ owners. Until now, only 600,000 of these policies have been successfully refunded.
The rest still lies open on the table. So, let us quickly break down what is this so-called junk insurance and are you eligible for a refund if you’ve been a victim of the unethical practice on the behalf of the insurance company.
The definition of junk insurance
We have already touched upon this topic in the introduction but let us elaborate it a bit further since it will be relevant for all things we are going to consider further down below. So, junk insurance is the term that broadly describes a form of malpractice in which the insurance company sells its clients add-ons or policies without their explicit consent or insurance products effectively useless to the end-user. In most cases, though, this add-on insurance is sold alongside the loans and credit cards or represents a duplicate of the policies already held by some other person.
Of course, all the instances we have mentioned above are considered illegal since they don’t represent the will or the best interest of the insured person. So, if you have wondered can I get my junk insurance refund, the short answer is yes since the agreement was made without your consent. Keep in mind, though, that such cases are very complex and sometimes end up in class action, so it’s highly advised to ask for professional help before taking any formal legal action.
The most common examples of junk insurance
Now that we’ve got a good idea about the nature of the so-called junk insurance, let us take a look at some of the most common examples of this unethical practice that should help you understand have do you own some of the ‘mis-sold’ insurance policies.
Consumer Credit Insurance (CCI)
This is, by far, one of the most common examples of junk insurance practice, since this specific policy is linked to other popular products like home loans, car loans, personal loans, and even simple credit cards. Essentially, this specific policy should provide you with coverage if you are unable to meet the minimum monthly payment due to some unforeseen circumstance like sickness, injury, or unemployment.
All this is perfectly fine, except for the fact that this add-on is often made a part of the agreement even without the approval of the customer. In this case, pressure selling and unfair prices could also be seen as causes for a full refund.
Extended Warranty Insurance (EWI)
This form of policy is usually present in the world of the automotive industry. In most cases, the consumer needs to pay a fee in return for repairing or replacing some of the components of the insured goods when they are broken or worn down enough to warrant repair. Once again, although this practice is not in itself considered a breach of any conduct, we have to point out that, due to an endless number of exclusion clauses, these policies are almost entirely worthless in the case of second-hand vehicles.
So, if the insurance company has sold you EWI while knowing that you may never be able to make any reasonable claim, this practice can be classified as junk insurance and deem a refund.
Guaranteed Asset Protection (GAP Insurance)
We will stay in the automotive world for just a bit longer. Let’s say you have purchased your car for $20,000 and you are now paying out the loan. And, let’s say, your vehicle got totaled and the insurance agency is ready to pay only $15,000 which is the current market price of the vehicle. The GAP insurance, incidentally, serves to bridge this gap and allow you to cover the full price of the vehicle.
However, this insurance works only if you have already purchased comprehensive insurance. Without this policy, GAP insurance has no sensible purpose whatsoever so you are eligible for the refund of the full price you have initially paid.
We hope this short breakdown gave you a general idea about what junk insurance actually is and what are some of the most common cases in which you can encounter this unethical practice. As a consumer, you have a right to be properly informed about the products you are buying and not be subscribed to services you have no intention and simply won’t be able to use in any capacity. Although covered with fine print, the insurance policies are no different. Be sure to check if you have been a victim of the mal-sale and file a complaint on any suspicious behavior as soon as possible.