Six car insurers, including CGU and Youi, have been ordered to lift their game after a string of customer complaints about automatic policy renewals.
The order by the corporate regulator comes after a review found insurers didn't always clearly inform new customers that policies would automatically renew unless they advised otherwise.
Some customers complained that they had already taken out a policy with a rival insurer by the time they discovered their old policy had been automatically renewed.
Others reported having their bank account overdrawn by unexpected direct debits, the Australian Securities and Investment Commission said on Thursday.
In most cases consumers were only informed about the practice in the product disclosure statement - which was sometimes not received until after the policy was issued - and the renewal notice.
ASIC deputy chair Peter Kell said it was important for insurers to tell customers about automatic renewals.
"Automatic renewal of insurance may be convenient for some consumers but it is important that this is an informed choice," he said.
"Other consumers may wish to take the opportunity to shop around when their insurance is due for renewal, to ensure they are obtaining the best value cover that meets their needs."
The six insurers at the centre of the complaints were AI (Suncorp Group), Auto & General Services, CGU Insurance (Insurance Australia Group Limited), The Hollard Insurance Company, Progressive Direct Insurance Company, and Youi.
ASIC says the six insurers had now agreed to clearly inform consumers about automatic renewals when they first purchase their car insurance.
They will also update their telephone sales scripts, along with clearer and more prominent messaging on their websites.
