The Car Insurance Blog has warned vehicle owners against many of the dangers lurking in car insurance products – and the false promises from unscrupulous operators. We have also warned policyholders to be cautious of the fine print in car insurance policies!
It is however not only car insurance companies that we need to approach with caution – there are other hazards to approach with caution as well. Too many fraudsters are trying to exploit the car insurance industry with the purpose of making a quick buck!!
Car Insurance warranties and a warning from the Ombud!
The process of gaining mobility and protection requires more than the mere purchase of a vehicle and a car insurance policy. There are also other links in this chain – and one of these includes the car warranty.
It is these warranties that have attracted the attention of the Ombudsman for Short Term Insurance. Concern has been raised by the Ombudsman about the increasing number of false vehicle warranty contracts concluded between dealers and car buyers.
In a statement released on Wednesday, ombudman Brian Martin said it frequently transpires that vehicle warranty products sold to the consumer are not underwritten by a registered insurer and are nothing more than a contractual arrangement between the car owner and the dealership.
This contractual arrangement does provide sufficient protection to the unsuspecting new vehicle owner. In the event of a dispute, the Ombudsman does not have the jurisdiction to intervene and assist the vehicle owner – and the vehicle owner has to take the long and expensive road to of a legal process that will most likely end up in court!!
Licensed Insurers, the Ombudsman and Protection
We would like to urge all vehicle owners to gain an understanding of insurance and what is needed to protect themselves from the wrong operators.
Many warranties are marketed as insurance policies administered by “insurance administrators” and have all the hallmarks of an insurance policy. Later, when a “claim” is rejected by the so-called insurance administrator, consumers may be advised to turn to the ombudsman if they are unhappy with the administrator’s decision.
If the indicated dealer is however not a registered insurer, the issue falls outside the ombudsman’s jurisdiction. When these complaints are referred to the Motor Industry Ombudsman, this ombudsman also declines to intervene as he deals with matters relating to motor vehicles, and not financial services products.
The Ombudsman for Short-Term Insurance has recognized that the uninformed vehicle owner is placed in a nasty predicament and has referred this matter to the Financial Services Board. It is the duty of the FSB to clamp down on those providing financial advice and products which are not licensed by the FSB.
Advice to Vehicle Owners when Purchasing Car Warranties
• A car warranty is a financial product and should be sold by a licensed financial services provider.
• If this product is offered as an underwritten insurance policy, the vehicle owner will be protected under the financial legislation.
• A financial services provider will only be licensed if such provider has a sound financial status and the necessary professional liability insurance.
• The vehicle owner would be able to seek redress from the FSB and the Office of the Ombudsman.
• Ask questions regarding the product – and in particular whether it is underwritten by a registered insurer.
• Ask for the FSP number of the insurer and check whether this insurer is licensed with the FSB
• Always remember – if something appears to be too good to be true – it most often is!!
The Car Insurance Blog at carinsurance.arrivealive.co.za would like to urge vehicle owners to take their time and do their homework when purchasing a vehicle warranty or car insurance product. You will most likely take the time to ask around and do research about the vehicle you wish to purchase – do the same for your warranty and car insurance product!!