NSW Australia Post's Extra Cover - Scam?

[Samuel Martin]

I'd like to discuss whether this service offered by Australia Post may constitute a scam.

They offer a service called 'Extra Cover' which is insurance in all but name. They even state in their documentation that this service is not insurance, however, the service is basically this:

- A payment made to Australia Post
- The service returned for this payment is that Australia Post will pay a much larger sum back to the consumer if there is damage to a package handled by Australia Post, or the package is lost.

This service should be defined as insurance as that's what it is in all but name. I have no idea if there's any legislation in Australian Law that covers how services are named, or the insurance industry generally.

There's also another large problem with this service; this being that there's a clause in Australia Post's terms of service that states that Australia Post isn't liable to pay out on any extra cover (insurance) claim if they deem any item to not have been packaged correctly.

This means that Australia Post simply has to state for every extra cover claim made that the item wasn't adequately packaged and they never have to make a payment for any claim. Meaning that their service may be a scam and that there's actually no service being returned for the payments made to Australia Post

 

[Sophea]

Dear Samuel,

Australia Post is at liberty to offer "cover" on any terms or conditions that it sees fit. That includes providing for situations where cover will be excluded in order to make the service commercially viable. You as a consumer are at liberty to accept or reject that offer.

Obviously, insurers cannot engage in misleading or deceptive conduct, however, it doesn't appear that Australia Post has done this. Its terms and conditions specify that the consumer agrees that the agreement does not constitute a "contract of insurance" - this is likely for the purpose of avoiding application of provisions of the Contracts Insurance Acts, which it for one reason or another. Nowhere in the information for Extra Cover, does it call the product an "insurance".

This means that Australia Post simply has to state for every extra cover claim made that the item wasn't adequately packaged and they never have to make a payment for any claim. Meaning that their service may be a scam and that there's actually no service being returned for the payments made to Australia Post

As regards the above, a consumer who has correctly packaged an item would be able to provide evidence of sufficient packaging to dispute any refusal of cover on this basis and enforce their rights to cover. An exclusion in a policy does not render a service a scam. It's like saying that travel insurance is a scam because insurers can exclude claims involving pre-existing medical conditions and can refuse every claim by arguing that every claim for medical treatment somehow arise from a pre-existing condition.

It is up to each consumer to read the terms and conditions before entering into a contract to determine whether they wish to be bound by them. So if you don't think its worth purchasing it. Don't.

 

[Samuel Martin]

Here's why I'm annoyed and why I suspect that Australia Post may be offering a worthless service:

I thought the service was worth purchasing, so I did. However, it turns out that they simply throw this simple excuse around to get out of having to pay out on claims that are made. I have a suspicion that they aren't paying out on claims and that they simply collect money on service, but that it isn't a real service. I may have to look into it further.