A car owner will be reimbursed for the money they paid for their equity protection insurance (EPI) policy after a dispute resolution found that their insurer engaged in unfair trading practices.
The plaintiff purchased a new car in or around April 2020 from a car dealer who also acted as an authorized representative of Eric Insurance. The purchase was financed with a seven-year loan arranged by the seller.
The dealer’s business manager, named RS, sold the policy on behalf of the insurance company and received commission from the sales.
The plaintiff repaid his loan on June 25 last year and canceled his policy a few days later.
The man said he did not know the loan included the policy because there was no discussion of gap insurance in the negotiations.
He said he only found out about the policy recently and canceled it because he didn’t apply for it and had a policy related to the value of the car. He wanted the insurance company to reimburse him for the money he paid.
The Australian Financial Complaints Authority (AFCA) said RS knew the owner had an existing policy and sold the cover even though it was unnecessary.
The insurer claimed that the EPI it offered provided additional benefits compared to the average insurance policy, and was beneficial to the claimant.
A friend of the plaintiff, who was also present during the transaction with a policy assistant, said that there was no mention of insurance in their discussions with the seller.
He said the couple had only had contact with RS on one occasion, when the business manager did “other sales” related to paint and paint protection.
According to Eric Inshuwalansi, the complainant was informed of his online sales process on April 14, 2020, which provided him with a product description (PDS) and a financial guide (FSG).
It said that when the man returned to the dealership six days later, he expressed interest in purchasing EPI and agreed to purchase the plan “after he finished and picked up his car,” which was on April 24, 2020. He was later sent documents and emails that confirmed his purchase.
AFCA accepted that the man had signed an agreement that increased the amount of his loan but said it was better to consider how the insurance sold.
“It is important to look beyond the fact that the plaintiff may have signed or received documents. It is important to consider how the policy was purchased,” AFCA said.
AFCA said Eric Insurance failed to explain why it allowed RS to sell the policy when it did not have the proper license. It said that AR was allowed to deal with the items listed in the FSG, which includes gap insurance, but not EPI.
The determination also noted numerous inconsistencies in the insurance account, including whether the claimant had agreed to purchase the policy.
“This has not been satisfactorily addressed by the insurer so far, although the claimant has mentioned it several times,” AFCA said.
Insurance providers in the AFCA made inconsistent claims on policy agreements and coverage dates.
AFCA found many of the insurer’s claims to be unsubstantiated, including the alleged meetings on April 14 between the claimant and RS and whether the individual used the insurer’s internet.
The ruling said the lack of evidence to support the insurance company’s claims seriously undermined its credibility and called its sales story “absurd, unsubstantiated and inconsistent”.
He said “well,” the plaintiff showed interest in the policy but never agreed to buy it and that the insurance company failed to follow the instructions to prevent improper sales methods from its agents.
“It also didn’t show his sales methods and his systems were strong enough to prevent illegal sales.”
The judgment required Eric Insurance to refund the full amount paid by the plaintiff, including full interest.
The insurer was forced to return the full amount of $ 1028.26, or less money provided that the money of the plaintiff had already sent the money that the insurer had sent to pay the unused compensation.
The owner of the car was awarded non-cash compensation of $500 for the delay caused by the insurance to send money to the lender even though the claimant had already paid his loan.
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