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How Does Consumer Credit Insurance (CCI) Work?

How Does Consumer Credit Insurance (CCI) Work?

Consumer credit insurance (CCI) can cover you if something happens which stops you from being able to repay your debts. Read more here.

17th December 2019
Reading Time: 3 minutes

Consumer Credit Insurance (CCI) covers you in the event that you are not able to pay your credit or loan repayments. This is particularly relevant when there is an illness, accident, unemployment or death. However, you must be very careful with this clause when you apply for loans or credit cards. Read on to find out if consumer credit insurance is right for you

What to look out for

If you opt to get CCI, your premium is usually added to the total amount you’ll be borrowing. In most cases, it’s expensive and actually offers little value in return. Most policies only cover you for 3 months after losing a job.

Am I insured?

If you have already taken out a loan, you must go through your paperwork again thoroughly to check if you have taken out this policy or not. If you cannot determine from your paperwork, give your loan provider a call and get the answers you need from there. Always ask for a copy to be sent to you via email so you will always have this on record.

When to lodge a claim

When you have a significant change of circumstances you’ll need to lodge a claim for Consumer Credit Insurance (CCI). You need to have prepared all the documents in relation to this change, pay slips, termination letters, doctors certificates or anything else related.

Your lender may try to discourage you from making this claim, but don’t let them take advantage of you if you genuinely do apply.

Waiting for your assessment

The time taken for your claim to be approved can take some time, and sometimes you may find that you cannot make your repayments during this time. If this happens to you, you should advise your lender straight away. This should be done in writing, advising them of your changed circumstance and that you have already lodged the formal claim.

You can ask them to postpone all repayments until the outcome of the claim is received. You should also ask them to confirm everything back in writing as well. If they fail to do so, or unwilling, you should make a complaint to an ombudsman.

Your insurer is required to provide updates to your claim every 20 business days. So if you still do not hear any news back, you should definitely phone them and enquire directly. Your insurer also should be notifying your lender of the claim. This helps to ensure you don’t have overdue payments being enforced during the claim time.

What about urgent claims?

If you have become unemployed recently and urgently need the claim funds, you should advise your insurer of this. They are able to fast track the claim for you, and come to a quicker decision. They then should be paying you within 5 business days of you proving your financial urgency.

What about denied claims?

If your claim has been denied, but you genuinely believe it should have been, firstly lodge a complaint with their customer service department. If this fails, you can seek further advice from the ombudsman as well.

You can also discuss your options with an insurance lawyer if your claim was denied. They can review your case thoroughly, and advise if any legal action aid in getting the result you are after.

Conclusion

You should read your policy very carefully if you haven’t already. While consumer credit insurance may sound like a good idea at first, most of the time they are actually not as good as you may think. This will of course depend on your individual policy. It may be worth having a lawyer review it and advise the best course of action.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

Author
Taeisha Dou

Taeisha is a Legal intern at Lawpath. She is a Law student at Macquarie University, previously completing her Commerce degree. She has an interest in Commercial Law.