What insurance must be taken out?
Consumers do not have to take any insurance unless they have given a mortgage. If they have given a mortgage, the credit provider can require them to insure the mortgaged property.
If the credit provider or supplier has led the consumer to believe that he or she must take some other type of insurance, an offence has been committed and the offender can be required to refund the consumer the premium (price of the insurance). The consumer may also apply to a court to have the credit contractreopened as unjust and be relieved from paying the premium and some or all of the credit charges.
The consumer cannot be required to insure with a particular insurer.
The Insurance Contracts Act 1984 (Cth) and the Corporations Act 2001 (Cth) provide further protection and remedies for consumers who have taken out policies of insurance. In particular, part 7.6 of the Corporations Act requires insurers that have retail customer bases to be registered as financial services licensees, and includes provisions that render an insurer liable for the conduct of its agent, if the insured relied on that conduct in good faith. Intermediaries who arrange insurance may often be agents of the insurer, not the insured, but a broker is usually the agent of the insured.
Note: Information given here on insurance does not include information concerning the above Acts, and readers who are seeking remedies under a contract of insurance should seek legal advice.
For a general coverage of the law of insurance, see INSURANCE AND SUPERANNUATION.
What will it cost the consumer?
It is usually cheaper to find your own insurer. If the consumer lets the supplier or credit provider arrange the insurance, the consumer may be paying extra because the supplier or credit provider may receive a commission from the insurer. If this is the case, it will be stated in the credit contract, perhaps in the "fine print".