Earlier this year the Ombudsman for Short Term Insurance released a special media release of caution. It became apparent that many insurance policies were sold by people not registered as financial advisors – to consumers who did not know what they were buying! These consumers are often misinformed and under the impression that they are obliged to take out the insurance policy…
The Ombudsman for Short-Term Insurance cautioned consumers not to be pressurised into purchasing an insurance product at point of sale, as often these products do not meet consumers’ needs and are sometimes more costly than anticipated. Buying a car insurance product or warranty product when buying a car could prove costly as the quoted premium is probably more expensive that one from your broker or direct insurer.
Many of these insurance products are offered to consumers when they purchase goods on credit. Consumers should consider whether they really need the product offered and check who underwrites the product and administers its application.
“Do not purchase something that you do not fully understand”, says Brian Martin, The Ombudsman for Short-Term Insurance. Consumers should always enquire whether the person offering these products is a licensed financial services provider and is able to provide objective and impartial advice. In addition a copy of the policy document or the schedule which sets out the benefits offered should be given to the consumer”.
It is also important to remember that in terms of the National Credit Act, no credit provider may force you to take out insurance through their nominated insurance company. If in doubt, consumers should not sign anything before seeking professional advice from either an insurance broker or attorney.
The Ombudsman for Short-Term Insurance says that if it is a requirement of the finance agreement that the goods must be insured and if you have not arranged the insurance yourself, consumers should insist on written proof that the goods have been insured before removing them from the store or dealership. Rather be prepared by completing an insurance quote for goods that you want to purchase, before the purchase. Especially when buying a car.
Consumers can check with the Financial Services Board to establish whether the insurance provider is registered with them, by calling 012 428 8000 or by visiting their website at www.fsb.co.za
The Ombudsman for Short-Term Insurance can be reached on 0860 726 890, email email@example.com or visit their website at www.osti.co.za