What are your insurance rights?

Thursday, October 09, 2008

Insurance and your rights!

Your rights are different depending on the type of insurance you buy:

• Investment-type insurance - for example, most types of life insurance (but not term insurance, see below). As well as providing protection, these policies have an investment element. For example, the policy builds up a cash-in value which you can take as a lump sum, or your regular payments are invested in a fund which is used to pay for protection. The rules protecting you when you buy this type of insurance are the same as for investments.
  
  
• Term insurance - this is life insurance which only pays out if you die during the term (insured period). There is no investment element to term insurance. The Insurance Companies Act 1982 and an ABI code of practice protect you when you buy.
  
  
• General insurance - for example, motor insurance, household insurance, holiday insurance, credit insurance, mortgage payment protection insurance. Anyone can set themselves up as a general insurance adviser without any licence or special training. But most advisers have joined a voluntary system of regulation operated by the General Insurance Standards Council (GISC). GISC members agree to abide by a code of practice.

Whichever type of insurance you buy, the FSA ensures that insurance companies are sound and prudently run.

If you want to make a complaint, most insurers have formal procedures and belong to an independent complaints scheme.

If an insurer goes out of business, you are protected by a compensation scheme.

Why do I need insurance?

Insurance and your rights