Consumers should not be coerced into signing-up for any insurance add-ons offered to them when buying goods on credit. Even if insurance is a condition of the credit agreement, consumers still have the right to choose which insurer they go with – they do not have to go with any of those prescribed by the credit provider.
This is advice from Auto & General’s director Angelo Haggiyannes who says that consumers are often persuaded to sign for insurance products at the point-of-sale, and very often these products are costly and don’t actually meet their insurance requirements.
“Consumers are usually offered a range of insurance add-ons when financing goods like TVs, lounge suites, cellphones and expensive appliances through a credit provider. Sometimes, insurance might actually be a condition of the contract and often these products are totally unnecessary,” he says.
Consumers should not be forced to take out insurance with the credit provider’s nominated insurance company or agree on the spot to any of the add-ons offered to them. Instead, they should take the time to evaluate whether or not they really need the insurance products being offered, and if insurance is a condition of the credit agreement, they should shop around for the most appropriate deal at the best price.
Those who already have a comprehensive household insurance policy in place can even opt to add the new items to their existing policy and adjust the sum insured accordingly.
Haggiyannes believes that consumers are often baffled by the fine print in credit agreements, which means they are sometimes unaware of insurance and other hidden costs until they get their first statement.
“Under the National Credit Act, credit providers are actually obliged to tell you about all the costs involved in their credit agreements. So, ask for a full quotation disclosing the full cost of the credit you are applying for. This must include the nature and cost of any additional insurance. You must also insist that these be explained to you. If there is anything you don’t fully understand in the application, you have the right to consult with an attorney,” he insists.
He goes on to say that if insurance is a requirement of the deal and a consumer feels happy to stick with the credit provider’s prescribed insurer, they should first double check which company underwrites the product and whether or not it is an authorised financial services provider.
“Don’t be afraid to ask questions. You have the right to know that the product is underwritten by a registered financial services provider and be assured of receiving objective and impartial advice.
“If you don’t arrange the insurance yourself, you must request on written proof from the credit provider that the item is in fact insured before taking it home. You should also request a copy of the policy,” concludes Haggiyannes.