What is Consumer Credit Insurance?

Consumer Credit Insurance is insurance that covers payments due on a credit contract while you (the borrower) are unable to work due to illness or accident. It may also pay out the contract in the event of your death.

Should I take out Consumer Credit Insurance when I get a loan?

This is a personal decision. You should "shop around" and read different policies to decide whether Consumer Credit Insurance is appropriate in your situation.

Before agreeing to take out Consumer Credit Insurance consider:

• Is the insurance good value in your situation?
• Are you likely to need the insurance cover?

Remember: You do not have to take out Consumer Credit Insurance

Do I have Consumer Credit Insurance for my loan?

If you are unsure whether you have a current Consumer Credit Insurance policy for your loan, you should contact the lender and request those details. Consumer Credit Insurance is also usually listed on your loan contract.

Once you know you have a Consumer Credit Insurance policy, it is recommended that you write to the insurer and request a copy of the policy document for your records.

Step 2: Obtain a claim form from the Insurer
As soon as possible request a claim form from the insurer.

Step 3: Fill in the claim form
When completing the claim form be very careful to address the claim within the wording of the policy document. For example, if the policy states that you must be "totally disabled for work" you:

1. State that you are totally disabled for work on the claim form; and
   Ensure that any medical certificate lists your illness and states that you are totally disabled for work.
2. You should lodge the claim as soon as possible after your illness or accident occurs or as soon as you realise that you will not be able to pay your loan as a result of your illness/accident

Step 4: Lodge the claim
Send the completed claim form with all necessary evidence (for example, doctor's certificates) to the insurer. Keep a copy of the completed claim form and attachments for your records.

Step 5: Contact the lender
If you are not able to meet your loan payments while you wait to hear the outcome of your insurance claim, you should notify the lender. You should inform the lender in writing that you are unable to meet you loan payments and that you have lodged a claim on your consumer credit insurance policy. The letter should include a request that the lender postpone all enforcement action pending the outcome of the insurance claim. You should keep a dated copy of the letter and any response you receive. If the lender tells you (over the phone or in person) that they will not take enforcement action until the insurer makes a decision in relation to the claim you should confirm this in writing. If the lender does not agree, see below.

Step 6: Follow up the claim
In approximately 2 weeks, ring the insurer to ensure that they have received the claim and when they expect to make a decision. Check whether they need further information.

Common problems when making a claim

The most common problems are:

• The lender is threatening repossession and/or court action over the debt while the you are waiting on the outcome of the claim. If this occurs you should seek legal advice immediately. See Getting help below. Check that you have done step 5 above. See also Fact Sheet: Can't Pay Your Loan? and Fact Sheet: Hardship Variations on Consumer Loans for further information on your options.
• The insurer delays making a decision on the claim. As a guide an unreasonable delay is over 2 months.
• The insurer making requests for further information and documentation. If the requests for further information/documentation are unreasonable then you should make a complaint.

In both 2) and 3) above, you should complain to the Insurance Enquiries and Complaints Service ("IEC") for general insurance or the Financial Industry Complaints Scheme ("FICS") for life insurance products. See Getting Help below for contact details. If you are unsure what type of insurance policy you have you should get legal advice. See GETTING HELP.

What if the Insurer refuses my claim?

You should immediately:

• Ask the Insurer to reconsider the decision. If you have further information that will assist your case, you should also send the Insurer that information.
• Make a complaint to IEC or FICS. You must lodge a complaint with IEC within 3 months of the final decision on your claim by the Insurer. There is no similar requirement for FICS but it is in your best interest to lodge your claim as promptly as possible.
• If you have any queries you should get legal advice.