How to claim money back on junk insurance: Banks could refund payments after royal commission

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Australians may be able to claim their share of a $10 billion pool in an issue that could affect 6.5 million people across the country.

Millions of Australians may have been ripped off by insurance junk, with a $10 billion reimbursement pool on offer to help reimburse them.

Junk insurance or consumer credit insurance is additional insurance for loans and credit cards.

The consumer is told this is a way to protect their refunds, but the reality is that they are unlikely to benefit, claim or need coverage.

A report by business watchdog ASIC suggested that $3.5 billion in refunds could be due to more than 3.6 million consumers.

The banking royal commission led banks to set aside $10 billion in unwanted insurance refunds.

Australian start-up Claimo is helping people get their money back, having already secured $10 million in refunds for 3,000 people.

Chief executive Nathan Mortlock told 7 News that unwanted insurance affects millions of Australians.

“We think around 6.5 million Australian adults could be affected,” Mr Mortlock said.

He said Yahoo users should be aware of the insurance they currently pay.

“Some insurance just comes with the loan or the card and we don’t question that. People think these insurances are compulsory and they are not,” he said.

“We want every Australian to check their personal, home, car and credit card statements.

“It could be worth a lot of money, and in a time of skyrocketing day-to-day costs, those unwanted insurance reimbursements could prove to be a financial lifeline for some families.”

A Brisbane woman told Seven she was ‘scammed’ by her bank via insurance junk.

At 21, Lucy Rolley took out a $26,000 loan from her bank to buy her first car.

The bank told her she would need to take out “additional insurance” to secure the loan, although she did not tell her what the insurance was actually for.

“I was told that if I didn’t take out additional insurance, I couldn’t get my loan,” she said.

Being young at the time, Ms Rolley thought she was making a responsible decision, but she got a bad shock years later when she looked at the numbers.

“They sold me my car for $26,000 and I ended up paying just under $60,000 for my car,” she said.

“That’s when I realized I was overloaded.”

Claimo helped Ms. Rolley recover $18,000, with the company’s average claim being $3,700.

But he got big payouts, with a $70,000 refund and a $90,000 claim currently pending.

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