Junk insurance refunds: How a Sydney woman got a $24,000 junk insurance refund she didn’t know about

Patricia, from Sydney, received a $24,000 cash settlement through an accident insurance refund she didn’t know she was entitled to.

According to a finding by the Royal Banking Commission in 2019, financial institutions were ordered to allocate $10 billion to reimburse people who had taken out junk insurance.

WATCH THE VIDEO ABOVE: Millions of Australians owe a $1.6 billion share over legacy insurance.

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Junk insurance refers to insurance coverage that is either unnecessary or worthless.

Patricia was unaware that she had paid for insurance that she didn’t need until a text message alerted her.

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“I saw on the news a few months ago that people are entitled to these refunds,” she told 7NEWS.com.au.

“So I made an inquiry through Claimo and found out I paid for insurance that I shouldn’t have.”

Patricia explained that she made a request through Claimo, a service that helps consumers find and process refunds by starting an investigation on their behalf.

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Five weeks later, Claimo told Patricia that she would receive a $24,000 refund.

“I didn’t even know I was eligible, and it’s quite a lot of money I’m getting back, so it’s very exciting,” she said.

Millions of Australians are still entitled to a share of $1.6 billion in insurance claims for under-insurance. Recognition: Tony fainted/Getty Images

Patricia saves paying off a home loan deposit.

The Australian Securities and Investments Commission says remedies for “no service malpractice or non-compliant advice charges” as well as “junk insurance” cashback payments are still available for millions of Australians.

A 2019 Royal Commission report on wrongdoing in the banking, pensions and financial services industries revealed millions of people had been tricked into buying junk insurance.

New ASIC data released in September 2022 estimates that an additional $1.6 billion remains to be paid to an estimated 2.7 million consumers for legacy insurance and non-compliant advice resolutions.

“Our guidance places the responsibility on the industry to proceed with fair and timely remedies – to repay the money they owe to injured consumers,” said Karen Chester, vice chair of ASIC.

“Previously, ASIC had to oversee large-scale remediations to ensure affected consumers were treated fairly and received the compensation to which they were entitled.”

Claimo CEO Nathan Mortlock said the most common reason people have bought junk insurance is because they were told it was necessary.

“In the ’90s and 2000s, they were told a lot that they had to get this insurance to get the home loan back, and we know that actually isn’t the case,” he said.

As they claim

Australians are urged to keep an eye on correspondence from their bank, superfund or other financial institution for further information on ongoing recovery programs.

Those who are unsure of any charges are urged to contact the financial institution that charged them to find out if they have been incorrectly charged.

There is a special call to action for those customers who have had policies with Freedom Insurance. Anyone who was with the insurance company between 2010 and 2018 is urged to come forward to see if they are eligible for a refund.

Visit the ASIC website for more details on refunds here.

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