From 15th January 2005, dealers who are not registered with the Financial Services Authority or as an agent of an approved insurer, will be prevented from selling insurance related products like mechanical breakdown warranties.
After this date, registered dealers will not only have to comply with strict guidelines, which include a right to cancel after 14 days, but inform consumers of the terms and conditions and any exclusions within the policy.
This is where the public will benefit most says Duncan McClure Fisher of Warranty Direct. “Every week, we receive SOS calls from car buyers who’ve been sold a policy that is quite simply not worth the paper it is written on. No sensible person would buy a warranty that only provides cover up to a £500 limit when the excess is £200 if they knew about it.
“Yet, unless they have had the opportunity to go through the legal speak print, this is the kind of policy that you could end up with.”
McClure Fisher believes that the need for dealers to be more transparent will lead to a shake-up of the market, and eventually, the end of the worthless warranty.
Dealers handle approximately 5m used cars sales every year, each being sold with at least a 3-month warranty. But how can you check that you’ve got worthwhile cover?
In order to check that you’re getting worthwhile cover, Warranty Direct recommends you quiz the dealer on the following:
• Are you covered against failure of WORN parts?
• Is there a 14-day money back guarantee?
• What is the claims limit?
• Where can you take the car to be serviced and repaired?
• Is there a consequential loss exclusion?
• Does it have a policy excess?
• How long before you can make a claim?
• What parts are covered?
Alternatively, you can log onto www.warrantyguide.co.uk/scorecard.html and see how high the warranty being offered scores.