Paul Sanchez
Junk insurance is an umbrella term for a range of insurance policies that banks and insurance companies add to credit cards and loans. These policies are often sold under false pretences, with high-pressure sales tactics, and without the customer's consent or knowledge. They are called junk insurance because they are essentially useless to the policyholder, providing little or no real coverage. If you have taken out a loan or purchased a car on finance, you may have paid junk insurance. To find out, you can check your loan or credit card documentation for terms like Consumer Credit Insurance, CCI, or LMI. If you are unsure, companies like Claimo and Remediator can help investigate and request a refund on your behalf.
| Characteristics | Values |
|---|---|
| Official Term | Add-on Insurance |
| Synonyms | Junk Insurance, Mis-sold Insurance |
| Types | Consumer Credit Insurance (CCI), Guaranteed Asset Protection (GAP), Mechanical Breakdown Insurance, Tyre and Rim Insurance, Mortgage Protection Insurance, Extended Warranty Insurance |
| Sold by | Motor Vehicle Dealers, Finance Companies, Banks |
| Sold with | Credit Cards, Loans (Car, Personal, Home), Store Cards |
| Cost | $2000+ per year |
| Worthless for Consumers | Ineligible to Make a Claim, Double-ups of Insurance Held Elsewhere, Automatically Covered under Consumer Law |
| Mis-selling Methods | Without Proper Consent or Understanding, Dodgy Sales Tactics, High-Pressure Sales |
| Refund Eligibility Check | Remediator, Claimo |
| Refund Claims Deadline | February 2025 |
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What You'll Learn
- Junk insurance is often sold alongside credit cards or loans
- It is sometimes marketed as an add-on or extra
- You may have paid for junk insurance if you've purchased a car
- Junk insurance policies are often worthless and ineligible for claims
- You can request a free eligibility check to see if you've paid junk insurance
Junk insurance is often sold alongside credit cards or loans
In Australia, it is estimated that about one in four Australians may have paid for junk insurance on loans and credit cards. This type of insurance is often sold using unfair sales practices and high-pressure tactics, and many consumers may not even be aware that they have purchased it.
Common types of junk insurance sold with credit cards or loans include Consumer Credit Insurance (CCI), Guaranteed Asset Protection (GAP), mechanical breakdown insurance, and tyre and rim insurance policies. These policies are sometimes added without the consumer's proper consent or understanding, and they may be unable to make a claim even if they knew they had the insurance.
If you suspect you may have been sold junk insurance, you can check your loan or credit card documentation. Look for terms like "Consumer Credit Insurance", "CCI", or "LMI" in your statements. You can also contact companies like Claimo or Remediator, which specialise in helping consumers identify and claim refunds for junk insurance.
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It is sometimes marketed as an add-on or extra
Junk insurance is sometimes marketed as an add-on or extra when purchasing a car, taking out a loan, or signing up for a credit card. It is often sold under the guise of providing additional protection for the consumer. For example, when purchasing a car, you may be offered extended warranty insurance, which covers the repair or replacement of parts in the event of defects. However, this type of insurance is often unnecessary and may provide little to no real coverage. In some cases, it may even be completely worthless, as many of these policies come with numerous exclusions and may not cover pre-owned vehicles.
Similarly, when taking out a loan, you may be offered unemployment cover or guaranteed asset protection (GAP) insurance. While these policies may seem appealing, they often come with high premiums, exceeding $2000 per year in some cases, and may provide limited benefits. For instance, unemployment cover may not pay out if you are unemployed or working casually, and GAP insurance may not cover the full amount of debt in the event of a total loss.
Junk insurance is also commonly sold alongside credit cards, often without the proper consent or understanding of the consumer. Credit card insurance can be extremely expensive, with interest charges further increasing the cost. In many cases, consumers may be unaware that they have even purchased this insurance, as it may be added on without their knowledge or understanding of what it entails.
It is important to carefully review any loan or credit card documentation to identify if you have been charged for junk insurance. If you believe you have been a victim of junk insurance, you may be entitled to a refund. Several companies, such as Claimo and Remediator, specialize in helping consumers identify and claim refunds for these types of policies.
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You may have paid for junk insurance if you've purchased a car
Junk insurance is an umbrella term used to describe a range of insurance policies that banks and insurance companies sometimes add to credit cards and loans. It is also known as add-on insurance. You may have paid for junk insurance if you've purchased a car, especially if you bought the car on finance. Motor vehicle dealers, finance companies, and banks often add insurance or warranties onto loans, costing you thousands of dollars. You may pay premiums for cover that you do not understand and do not need. In some cases, you might be sold cover without even knowing that you bought it.
Common forms of junk insurance sold alongside car purchases include consumer credit insurance (CCI), guaranteed asset protection (GAP), mechanical breakdown insurance, and tyre and rim insurance policies. GAP insurance, for example, is designed to cover the difference between the insurance payout if your car is written off and the balance still owed on your car loan. However, it is almost completely worthless on second-hand vehicles because it contains so many exclusions. Australia's Consumer Law already contains protections for your rights when it comes to the quality of parts, so buying extended warranties is not necessary.
If you are unsure whether you have paid for junk insurance, you can check your old credit card or loan statements, as regular insurance payments are usually added to the loan or credit card account. You can request your old statements from any financial institution and look for insurance policies that were added to your loan or credit card without your knowledge. If you identify a policy, you can contact the financial institution and request a refund. Alternatively, you can use a service like Remediator or Claimo, which will check your eligibility for a refund for free and then help you secure your refund.
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Junk insurance policies are often worthless and ineligible for claims
One of the main issues with junk insurance is that it is often sold using unfair sales practices and high-pressure tactics. Consumers may be signed up for these policies without their proper consent or understanding. They may not be aware of the cover, what it includes or excludes, or even that they are paying for it at all. As a result, many people end up paying for duplicate coverage or insurance that is automatically covered under consumer law.
For example, when purchasing a car, consumers may be sold extended warranty insurance, which promises to repair or replace parts in the event of defects. However, this type of insurance is often worthless for second-hand vehicles due to numerous exclusions. In Australia, consumer law already provides protections for the quality of parts, making extended warranties unnecessary. Similarly, unemployment cover in a Consumer Credit Insurance (CCI) policy is likely to be useless if the policyholder is unemployed or working casually.
The consequences of junk insurance can be significant. According to Claimo, an Australian company specializing in junk insurance refunds, consumers are often sold policies they are ineligible to claim on. The sales process can be misleading, with salespeople adding CCI onto loans or credit cards without explaining what it is or obtaining proper consent. As a result, billions of dollars in refunds have gone unclaimed, and consumers have been left paying for unnecessary coverage.
To avoid falling victim to junk insurance, it is essential to carefully review loan and credit card documentation and be vigilant about understanding the terms and conditions of any insurance policy. If you believe you have been sold junk insurance, you can contact companies like Claimo or Remediator, which specialize in helping consumers secure refunds for these types of policies.
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You can request a free eligibility check to see if you've paid junk insurance
Junk insurance is an umbrella term for a range of insurance policies that banks and insurance companies sometimes add to credit cards and loans. It is also known as "add-on insurance" and is often entirely worthless to the policyholder. It is not cheap, with some policies costing over $2000 a year, and it is often sold using unfair sales practices and high-pressure tactics.
Another company that offers a similar service is Claimo, Australia's #1 consumer credit insurance refund experts. They will check your refund eligibility for free and manage the whole process for you. They will also request your documentation from your bank if you no longer have your documents.
To find out if you've paid junk insurance, you can also request your old statements from any financial institution and look for evidence of junk insurance. Look for terms like "Consumer Credit Insurance", "CCI", or "LMI". In home loans, it may also be called "Mortgage Protection Insurance".
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Frequently asked questions
Junk insurance is an umbrella term for a range of insurance policies that banks and insurance companies add to credit cards and loans. It is also known as "add-on insurance" and is often completely worthless to the consumer.
If you have purchased a car on finance, taken out a credit card or loan, or bought a warranty product, there is a good chance you have been sold junk insurance. You can check your loan or credit card documentation for terms such as "Consumer Credit Insurance", "CCI", or "LMI".
You can contact companies such as Claimo or Remediator, which are experts in securing refunds for hidden insurances. They will check your documentation for free and manage the whole refund process for you.
Common examples of junk insurance include Consumer Credit Insurance (CCI), Guaranteed Asset Protection (GAP), mechanical breakdown insurance, and tyre and rim insurance policies.
