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Thursday, June 13, 2024

Tips on How to Reclaim Consumer Credit Insurance

When you apply for a loan, such as a credit card, home loan, or a personal loan for a car, you may be offered consumer credit insurance. This insurance is designed to cover the risk of your losing your job, becoming seriously ill or disabled, or dying and being unable to make the payments. However, it often offers poor value and it’s not obligatory. So, these are the factors to be taken into consideration if you ever find yourself in the position of having purchased consumer credit insurance.

How CCI works

Consumer credit insurance or CCI can provide some level of cover in case you can’t meet the repayments because you become unemployed, injured, sick or die if your credit card gets stolen, or the products you bought using your loan are damaged, lost or stolen. Insurers receive a commission if you buy CCI so they may try to persuade you to buy it, but you do not have to. From 5 October 2021, insurers can tell you about CCI when you apply for a loan, but they have to wait until four days after your loan is approved. This gives you enough time to deliberate whether you need it or not.

How to Discover CCI

Unfortunately, it’s not rare that lenders discreetly, and deceitfully, include the CCI into the original loan documents without informing the client or getting their permission. In Australia, the law states that before you buy insurance, you must be given the product disclosure document to read carefully and understand fully. You should take time to do this as it will help you decide if the insurance is right for you by your own choice. However, many consumers never receive these documents so they’re unaware of all the details regarding the insurance they had paid for. If you’re among the lucky ones who have been given the Certificate of Insurance, the document should have an itemised listing of all the insurance products you have purchased and contain important information about your policy number, period of insurance and cost of premiums.  If the text of your policy proves to be unclear or confusing, contact your insurance provider and ask for clarification of all itemised information in detail. However, if they don’t provide an explanation, you have the right to cancel and reclaim CC insurance to get a full refund.

Consumer Credit Insurance

How to Claim it Back

You should act quickly and submit a claim as soon as possible after you’ve insured the event. If you delay, there might be a gap between the amount your policy pays and what you owe. Next, you should inform your insurer if you’re experiencing any financial difficulty. In case your payment is urgently needed, ask your insurer to expedite their assessment of your claim and to give you an advance payment within five working days from the moment you demonstrated your eligibility. Furthermore, ask your lender to postpone recovery action while your consumer credit insurance claim is being processed. Also, contact the provider’s internal dispute resolution department in case you believe your insurance was sold to you unfairly, if the salesperson did not wait four days after your credit was approved before they sold you (only after 5 October 2021), and if your insurer declines your claim. Over the last couple of years, there have been numerous class actions taking place which proved to be a good thing as it has highlighted the issues underlying CCI and other similar products that were sold incorrectly and often unknowingly. However, many consumers end up dragged into a circle of people who only get them an average cash-out which is often not even close to the amount they are owed. This also forbids them from making the claim directly as an individual and sometimes leaves them without the choice to opt in or out of the proceedings.

However, if you follow these steps closely and contact the right experts, you’ll be able to have the professionals take care of it in the most satisfactory way.

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