26 May 2025
More customers ripped off by Toyota Finance through sale of “Add-on” insurance Class Action launched to accompany unfair dealer loans class action
Australians who bought cars using Toyota Finance may have paid thousands extra for “junk” insurance which offered them no value and may have been added onto their loan without their knowledge or consent. Echo Law has alleged, in a matter before the Supreme Court of Victoria, that by selling a range of “add-on” insurance products Toyota Finance and insurer, Aioi Nissay Dowa Insurance Company Australia (ADICA), engaged in conduct that was unjust, unfair, misleading and unconscionable.
Echo Law has filed this class action on behalf of persons who, between 1 January 2010 and 5 October 2021, took out a car loan with Toyota Finance and were sold a Toyota branded add-on insurance policy.
“This class action is about holding Toyota Finance and ADICA to account for knowingly selling junk insurance to everyday Australians, even though these policies offered no value,” says Alex Blennerhassett, Principal Lawyer at Echo Law.
“Many consumers were ineligible to claim on their policy, despite paying thousands of dollars for them. In other cases, consumers were never told the insurance policies had been added to their car loan, or were told it was a requirement that they purchase the insurance. This conduct is another example of big corporations putting profits before people.”
Kingsley and Jessika Smith, who are participating in the class action, purchased a vehicle from a Toyota dealership in Windsor Gardens, South Australia in 2018. It was not until recently that they discovered Toyota extended warranty insurance, which cost $1,445, had been added to their car loan.
“We had no idea we had been sold this insurance. If it had been brought to our attention, we never would have signed the contract because I know extended warranties are useless,” says Mr Smith. “I thought we’d been treated fairly. Toyota is a well-known, trusted brand, we didn’t think they’d engage in this type of dodgy conduct.”
“We’re a working-class family, and like so many others, every dollar counts. It’s not okay that they’ve taken advantage of us, and so many other Australians, while lining their own pockets”.
The add on products the subject of the class action and which are alleged to be junk include:
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Toyota Payment Protection Insurance
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Toyota Finance Gap Insurance
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Toyota Extended Warranty Insurance
In September 2016, ASIC reviewed add-on insurance sold by car dealerships and determined that these types of insurance policies provide poor value to consumers. ASIC found that:
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Insurers paid four times more to car dealerships in commissions than they paid to consumers in claims;
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Consumers paid $1.6 billion in premiums and received only $144m in successful claims. In other words, for every dollar paid by consumers in premiums, only 9 cents was paid out in claims. This is significantly lower than regular motor vehicle insurance, which pays out 85 cents in claims for every dollar collected in premiums;
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Many policies provide negative value, where the average premium is higher than the average amount paid out for a successful claim. For example, the average premium for extended warranty insurance was $1,482, but the average claim was only $940.
Echo Law alleges that ASIC’s observations are true of the policies sold by Toyota Finance and ADICA.
The specific allegations made in the proceeding include that Toyota Finance and ADICA:
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engaged in misleading or deceptive conduct in contravention of the Corporations Act and/or the ASIC Act;
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engaged in unconscionable conduct in contravention of the ASIC Act;
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engaged in unfair conduct in contravention of the National Consumer Credit Protection Act 2009 (Cth);
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issued add-on insurance to persons who were under a causative mistaken belief.
This proceeding is separate to another class action which is being conducted by Echo Law against Toyota Finance, which was launched in February 2024 and relates to the payment of “Flex Commissions”. In the Flex Commissions proceeding, it is alleged that car dealerships engaged in conduct which was unfair, misleading and unconscionable by secretly inflating the interest rate on consumers’ car loans, which resulted in consumers paying very significant additional interest fees.
The Supreme Court has determined that both of the Toyota Finance class actions can be case managed together.
“We expect there to be a significant number of persons who are group members in both proceedings and are urging those who think they might have been sold junk insurance by Toyota Finance to check their loan documentation and register their interest in the class actions,” says Ms Blennerhassett.
The litigation is supported by Australian litigation funder, Litigation Lending Services (LLS).
Persons who entered into a car loan with Toyota Finance for a car and were sold a Toyota branded add-on insurance policy between 1 January 2010 and 5 October 2021, can learn more about the class action and register their interest in the proceeding at www.echolaw.com.au/toyota. Further information about the Flex Commissions proceeding is also available at the same address.
About Echo Law:
Echo Law is a plaintiff law firm, specialising in class actions against established interests. The firm was founded in 2022 by experienced legal professionals who have a proven track record of success in the industry, and who know what it takes to drive complex, large-scale cases to successful outcomes.
The cases Echo Law lawyers have led and worked on have been diverse and in many instances broken new ground. In total, those class actions have resulted in more than $850 million in successful resolutions. Echo Law is committed to fighting for the rights of individuals and groups who have been wronged by powerful corporations and institutions.
For further inquiries and to speak with Alex Blennerhassett and/ or case study Kingsley Smith please contact Rebecca Nicholson, 0409 216 053 or [email protected]
About Litigation Lending Services
LLS is a leading litigation funder with over 26 years of experience in the litigation funding industry. LLS empowers claimants to pursue meritorious cases, providing critical support to those who might otherwise lack access to the legal system.
For more information about LLS, please visit https://litigationlending.com.au or contact Susan Wynne, Litigation Lending Services ([email protected]).
Contact details:
Rebecca Nicholson, 0409 216 053 [email protected]
