Using Comparison Websites To Buy Insurance
21st July 2014
A review by the Financial Conduct Authority has unearthed concerns about the way that price comparison websites work. They’re concerned that the focus upon finding the cheapest insurance policy might result in consumers buying a policy which isn’t suitable for their needs.
The FCA believes that many comparison sites aren’t providing consumers with the information that they need to make an informed decision. Equally, their research has found that many consumers assume that comparison sites are checking the suitability of policy terms for their needs. This is generally not the case.
Consumers that are in Scottish trust deeds are particularly vulnerable to buying an insurance policy that is unsuitable for their needs. Some insurers include clauses in their policy terms about protected trust deeds (or personal insolvency in general). The policy may not cover you in the event that you make a claim and it becomes apparent that you’re in a trust deed.
We’re not aware of price comparison websites requesting information about whether applicants are currently personally insolvent. Therefore it’s quite possible that a consumer who is in a trust deed in Scotland would not think to query whether a particular insurer imposes clauses regarding personal insolvency or not.
A good insurance broker is more likely to look into policy suitability as well as price when researching for an appropriate insurance product for a client. If they sell you a policy that turns out to be unsuitable you might be able to seek compensation from them. Comparison websites simply aren’t providing this level of service.
Will an insurer really makes checks about whether you’re in a trust deed if you have to make a claim on your insurance policy? They certainly might do according to Hamish, a Trust-Deed.co.uk forum member who has professional insurance industry experience. In this forum thread he describes how insurers work to avoid paying out on claims and also offers some suggestions of places to go for insurance policy help.
If you’re buying an insurance policy during your trust deed remember that price isn’t the only factor. You really should ensure that your chosen insurer doesn’t have any policy exclusions related to personal insolvency or trust deeds.
If you use a comparison website make sure you ask the insurer directly about the policy terms in this respect before you purchase the policy. If you use an insurance broker make sure they’re aware of all of the facts before they find a policy for you. This will enable them to exclude insurers that impose such restrictions from their search.
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