NRMA Insurance has defended its launch of a $10-a-month Third-Party Fire and Theft Car Insurance offer, dismissing concerns over the dangers of decreased cover.

As reported last week, the IAG-owned brand launched the promotion on Sunday, and it will run until August 7. It applies to a 12-month policy (annual premium $120) and is available to current policyholders who want to take out new cover as well as new customers.

It has sparked worries from some consumer advocates, who fear customers may be lured by the price and overlook potential gaps in coverage.

“We are keen to see more affordable insurance coverage for essential insurance products,” Consumer Action Law Centre Insurance Policy Officer Tom Abourizk told insuranceNEWS.com.au.

“While NRMA’s deal may offer a saving for some, any advertisements should make it clear how much consumers can expect to pay once the two-month promotion deal is finished.

“The actual coverage provided is also critical - insurance is only good value if it actually provides the coverage that consumers expect.”

For customers who have taken up the offer, he urges NRMA Insurance to provide reminders in 12 months “so they can compare the cost of renewing their premium without the discount against other insurers”.

He also urged consumers to shop around before switching.

“People should definitely still be comparing insurers on price and coverage, particularly when other insurers are offering rebates on premiums due to the decreased use of cars as a result of coronavirus restrictions.”

A broker from Victoria is also concerned, calling the promotional offer “cringe-worthy”.

“We all know the dangers of decreased cover and clients buying insurance direct,” the broker said on social media. “To support people through COVID and now a recession, it would be more sensible to lower current rates and care for your current clients.”

However, an NRMA spokesman defended the move.

“We’ve introduced the $10 Third-Party, Fire & Theft offer as an option to help motorists who are facing financial difficulties due to the impacts of COVID-19, particularly for people who are facing the prospect of having to cancel their car insurance in order to make ends meet,” the spokesman said.

“We believe having some protection is better than no insurance at all and hope this offer helps to ensure our customers’ cars remain protected.

“Our customer teams always speak with our customers about their circumstances to ensure we’re offering the product that meets their needs.”

The offer is available only in NSW, the ACT and Queensland.

IAG has no plans as of now to launch a similar offer in Victoria, where it also sells third-party fire and theft cover via partner RACV. The insurer has a distribution relationship and underwriting joint venture with RACV, owning 70% of it.