ASIC has announced that Elders Insurance has repaid 9,307 customers approximately $5.3 million as part of a program to rectify underpayments on motor vehicle insurance claims for a period before September 2010.

In September 2010, Elders advised ASIC that it had inadvertently underpaid customers when paying total loss claims for market value insured motor vehicles by not including the cost of stamp duty on the purchase of a replacement vehicle of the same value where the insured vehicle was a total loss. Elders was alerted to the underpayments through resolution of a matter by the Financial Ombudsman Service in August 2010.

Up until September 2010, Elders’ motor vehicle insurance policy covered the cost of stamp duty on the purchase of a replacement vehicle of the same value where the insured vehicle was a total loss. Stamp duty varies from state to state but on average is about 3% of the purchase price.

In consultation with ASIC, Elders implemented a review and a rectification program to pay the outstanding amounts, including interest, to eligible customers.

Elders is still working to contact around 350 former customers for whom they have no current contact details.