Insurance policies that provide minimal to no coverage and protection are detrimental to those under them. Such policies fall under the umbrella term “junk insurance“. Navigating these insurances and refunds for them can be daunting. Worry not because this guide covers everything you should know about the process.
What is Junk Insurance?
This insurance is a type of policy you may have been sold when buying a new car or taking out a mortgage. The consumer does not need it, but they are sold it anyway. The consumer doesn’t need this type of insurance because the risk isn’t high enough to warrant such coverage, but junk insurance can still be sold as part of their purchase.
For instance, if you’re taking out a mortgage for $200k and your bank sells you insurance, it would be considered Junk because it’s not needed by consumers who have already paid off their cars or home loans. There’s no additional risk associated with those purchases at this point.
Junk vs Typical Insurance
Junk insurance protects you from losing money when you purchase a product. JI is not regulated by the government but sold by people who may or may not be licensed to sell insurance products. This type of insurance tends to be very expensive and often has high premiums.
JI can be categorised as non-standard or personal lines that insurers do not usually offer. These policies are typically purchased for high-risk activities such as personal watercraft, motorcycles, ATVs and snowmobiles.
How did this Insurance lead to a Scandal?
- The insurance companies needed to be more transparent about the risks that they were taking on.
- They needed to provide adequate information to consumers and, therefore, could not fully understand the risks in their portfolios.
- They could not predict what would happen or control it if it did occur (or indeed, even if it was known about before).
Insurance and Refund
A refund is a payment made by your insurance provider based on the claim you’ve submitted. It may be issued in full or as partial payments, depending on how much of your claim was approved and how much you paid out of pocket for repairs.
Junk insurances are similar to traditional car insurance policies, except for covering damages caused by negligent behaviour rather than accidents. In other words: if someone breaks into your car and steals it, any damages will be covered under their standard policy. If someone knocks over a lamp post while riding past on their bike and cracks open the side mirror, that damage would not be covered because they’re at fault for breaking the law! In most cases, there is no refund if the policy is affordable.
Types of Insurance that are considered Junk
The following types of insurance are considered junk:
- Credit Life Insurance – This provides coverage to your beneficiaries if you become disabled. It does not cover death or dismemberment.
- Credit Disability Insurance – This pays a monthly benefit if you cannot work due to a sickness or injury, but it doesn’t cover death or dismemberment.
- Automobile Liability Coverage – Over your state’s required minimum liability limit and Umbrella Liability Coverage over $1 million (this amount can vary by state)
The consequences for buying these types of insurance may vary depending on the type you purchase, but generally speaking:
How to choose a company for JI Refunds
They must have a good reputation when you’re looking for a company to do your JI refunds. A company with a track record of providing timely and accurate refunds is likely to continue doing so in the future. It’s also important to consider how much money you will pay when requesting your refund. If the cost of getting your money back is too high, it may be worth doing without until you find something better or cheaper. Look at their customer service team, track record, and reputation.
