Car insurance buyers 'don't do enough research'

Australian consumers are failing to do enough research when they come to compare car insurance and other important financial products, it has been suggested.

Money commentator Annette Sampson, writing in the Sydney Morning Herald, noted that the widespread disputes with insurers following the Queensland floods have served to highlight the "tricky wording" and "obscure clauses" being used by insurance companies to the detriment of consumers.

"But the floods have also highlighted, again, the unpalatable fact that many consumers spend more time researching a new TV or car purchase than important financial contracts," she added.

Ms Sampson commented that a major problem with Australia's current regulatory system in the insurance sector is the principle of disclosure whereby companies must present a mass of information that sets out the details of a policy.

She argued that within these complex legal documents, which are promoted by sales-driven organisations, there is no guarantee that people understand the specifics – and the exemptions – in what they are being sold.

The writer therefore recommended consulting the Financial Ombudsman Service if consumers feel they have been "dudded" on a policy, such as where an insurer has failed to clearly inform of any exclusion that relates to flood damage.

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