Concerns are growing over the way that repair insurance – which covers damage to a car’s tyres, alloy wheels, bodywork and interior – is being sold, amid claims that some car dealers are pressuring consumers into buying the £400-plus policy.
The sale of insurance is regulated by the Financial Conduct Authority (FCA), which requires companies to design their products to offer fair value and clearly explain them to the customer before making a sale. However, reports suggest that the way repair insurance policies are sold by some dealers goes against these regulations.
One sales tactic that worries industry heads is to make the customer sit through a long sales process on the grounds that it is required by the FCA. In fact, FCA rules do not allow this.
Another is to add such policies to the vehicle’s selling price without first consulting the customer, who must then explain why they don’t want them. This is a clear breach of the FCA rules.
Mark Griffiths, director of Aequitas Automotive, a broker that sells a repair policy called Smart Care Cosmetic Insurance, believes it’s a serious issue.
He said: “Every day we help customers who have experienced these problems. Many are paying too much, and we hear that some don’t even know that the insurance has been included in their PCP [car finance] payments.
“In my view, brokers like us, who deal directly with insurers, can offer better products and ultimately better value.”
Tim Kelly, founder of Motor Claim Guru, a dispute settlement service, is highly critical of repair insurance.
“Many [of these] policies aren’t worth the paper they’re written on,” he said. “They can be expensive, they’re not sold properly, their terms and conditions risk breaking unfair- contract law and they don’t do what they promise.”