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Unfortunately uninsured

Alex bought a car from a dealer in 2016. He purchased the car on finance from a finance company. When Alex signed up for the loan, he was offered (and he accepted) an add-on of a credit repayment insurance policy, which would cover his loan repayments if he was unable to repay the loan due to injury or illness.

In 2017 Alex took out a top-up loan to purchase another vehicle. A month later, Alex was injured and unable to work or make repayments on his loan. Alex contacted the lender and requested that they claim on his credit repayment insurance policy. Alex was then told that his insurance policy had not been renewed when he had taken out the top-up loan, and that there was no cover protecting his loan repayments.

Alex complained to FSCL.



Alex said he was never told that he had to reapply for his credit repayment insurance policy when he topped-up his loan. Alex had assumed that the insurance would automatically renew. He believed that the lender’s failure to inform him had resulted in him being left without cover, and that the lender should wipe the debt that would have been covered, had the credit repayment insurance policy been in place.

The lender believed that it had offered Alex the opportunity to continue his credit repayment insurance policy when he took out the top-up loan. It was standard practice for the lender to check in with the car dealer to ensure insurance had been offered, and the car dealer who organised the top-up loan would have been incentivised to offer the insurance, as the dealer gets a commission for any insurance policy they sell. The lender refused to cover the repayment costs on Alex’s loan.



We reviewed the evidence and found that it was more likely than not that Alex had been offered the opportunity to renew his credit repayment insurance policy when he obtained the top-up loan. We found that the lender had contacted the car dealer to check whether Alex would need insurance on his loan. We also found that when Alex had obtained his top-up, he received a $500 refund for the insurance premiums that he had paid in respect of his previous loan. This evidence indicated that it was more likely than not that Alex had been offered, but had chosen not to accept, the credit repayment insurance policy on his top-up loan.



We decided that Alex’s complaint should not be upheld and the complaint was discontinued.


Insights for consumers

It is important for consumers to read and understand their contracts. Just because something was in a previous contract does not mean it will automatically be a part of a new contract. When making large purchases or taking on large loans, a consumer should try to make sure they know whether they are insured, and to understand how their policy operates.