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QBE refunds car insurance after ASIC review

QBE refunds car insurance after ASIC review

Insurance provider QBE has paid out $15.9 million in refunds to car insurance customers who were receiving little to no benefit from their policies, following a review from the Australian Securities & Investments Commission (ASIC).

According to a statement released by ASIC, the refund’s recipients were the more than 35,000 customers who bought QBE Guaranteed Asset Protection (GAP) and Consumer Credit Insurance (CCI) through car dealerships around Australia between 2011 and 2017.

ASIC found that QBE’s GAP insurance, which covers car owners for the difference between what they owe on the car loan and what the car is insured for if the car is written off, provided little benefit to these customers, as it was sold in cases where there was unlikely to be a gap between the insured value of the car and the loan balance (e.g. where the customer paid a large deposit), or duplicated existing cover held by consumers, or provided consumers with more insurance than they needed.

As part of a wider CCI crackdown, ASIC found that QBE’s Consumer Credit Insurance, which provides some cover to meet the consumer’s loan repayments if they die, suffer a traumatic illness (such as cancer), or become disabled or unemployed, was sold to young people who had no dependents and who were unlikely to need the cover.

According to ASIC deputy chair, Peter Kell, the QBE refund is a direct result of ASIC’s 2016 add-on insurance review, which uncovered the wide-spread sale of insurance with little or no value to consumers.

“Insurance must meet the needs of the consumer first and foremost. All add-on insurers should review the sale of policies and refund consumers who were sold policies they didn’t need.”

ASIC is understood to be currently working with other insurers to achieve similar outcomes where similar conduct occurred.

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Learn more about car loans

Can you get a chattel mortgage with bad credit?

Getting approval for a chattel mortgage with bad credit may be possible, given ‘chattel’ (usually a piece of equipment or car) is put up as security for the loan. That means if you fail to repay the loan, the creditor can recover the loaned amount by repossessing and selling the car or piece of equipment. This differs from unsecured car loans, where the asset is not tied to the loan and cannot be taken if you don’t meet the repayments. 

Does my insurance cover other cars I drive?

If you’re driving someone else’s car, say your friend’s, and you’re involved in an accident, whose insurance is responsible, yours or your friend’s? Does car insurance cover driving other people’s cars?

The short answer is yes. A few car insurance providers offer insurance cover for people to drive someone else’s car. It’s always better to double-check this before you get behind the wheel.

If you’re not covered, you can opt for non-owner car insurance which lets you drive someone else’s car and be protected against liability. However, you will not benefit from other coverage such as damage to the vehicle, replacement rental or medical expenses.

Getting comprehensive insurance driving other cars can be done with temporary insurance. It’s recommended that you do this if you plan to drive someone else’s car, even for a short duration. You can choose between policies that cover you for a fortnight, a month or even a pay-as-you-drive option with temporary insurance.

Alternatively, you can ask the car’s owner to check with their insurer if you can be added to the policy. This will ensure that you are covered fully with comprehensive car insurance driving other cars. Do note that adding you could increase the annual premium for the owner.

What is comprehensive insurance?

Comprehensive insurance protects you in the event you’re responsible for a car accident. Policies vary from provider to provider, but comprehensive insurance generally covers you for damage to your car and property, as well as the other parties’ cars and property. A comprehensive insurance policy may also protect you from theft, vandalism and natural disasters.

What is CTP insurance?

CTP insurance, also known as compulsory third-party insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your CTP insurance will be used to pay any compensation due to anyone who might be injured or killed. However, CTP insurance doesn’t cover you for vehicle damage or theft.