Are You Covered The Way You Think You Are By Your Insurance Backed Guarantee?
Insurance Backed Guarantees (IBG’s) are now expected to be provided as a minimum requirement more so than ever before when carrying out major home improvements. In the current economic climate where we frequently hear of well-known and respected brands becoming insolvent overnight this is understandably concerning to those contemplating spending their hard-earned money on improving their property. An Insurance Backed Guarantee alleviates some of this concern and increases consumer confidence. It shouldn’t be surprising to hear then that an IBG is often a popular selling tool within the direct sales industry when it comes to building trust with a customer. But just how much do you know about an IBG and how do you know if you’re being provided with one that will support you should the worst happen?
Through experience I am aware that most homeowners would accept that simply being told that their purchase or investment is protected by an IBG is adequate enough information. I am rarely asked who the provides the IBG and I have never been asked who underwrites it or whether they are authorised and regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA). The only question I am frequently asked is what happens if the company I represent ceases to trade? Seeing as voluntarily offering this information to the customer, whether asked or not, stands to instil increased confidence means that I am more than happy to bring this subject up as an important element of my sales pitch. An open booked approach to sales is always the right way to conduct business. If a customer wants to buy from me it’s usually because they trust me, and that trust deserves not only my professionalism but also my honesty in return.
An open booked approach to sales is always the right way to conduct business.
Undercover Salesman
In principle an IBG mirrors that of an installers or company’s own guarantee. It ensures that should the installer or company cease to trade or become unable to honour the terms of the original guarantee that they will step in and provide the same level of continued protection.
An IBG, regardless of the provider, is backed by an insurance company. The insurance industry is very heavily regulated, and with good reason as they are there to protect you. If an IBG provider isn’t authorised and regulated by the FCA or PRA then you may not have the level of cover and protection that you thought you had.
IBG providers who are authorised and regulated by the FCA or PRA will have been carefully screened and audited by them and will furthermore be required to provide ongoing training and support to the company selling them to advise on how best to explain its benefits and limitations in a clear and concise manner to a prospective customer. As terms and conditions vary from one insurance company to another it is always advisable to ask any questions that you may have before agreeing to place your order.
An IBG from a provider who isn’t authorised and regulated by the FCA or PRA is not uncommon and doesn’t necessarily mean that the company is untrustworthy, it just means that you won’t have the backing and financial security that the FCA and PRA offers. In a nutshell, choosing a company who offers an IBG from an FCA or PRA certified provider means that some of your homework has been done for you.
And this is where it becomes difficult for newer or smaller companies. In order to provide an IBG from an FCA or PRA approved provider the company would first have to prove a sustained level of customer satisfaction, provide ongoing evidence of quality installations by qualified tradespeople, and are also often required to show evidence of their fiscal activity. All these requirements naturally assume that the company is actively trading as they can’t be fulfilled by any other means.
This level of evidence required, on top of a premium that some smaller companies may not be able to afford in their infancy goes someway to highlight how that gap in the market is filled by IBG providers who aren’t FCA or PRA approved.
In the absence of an FCA or PRA approved IBG the only sure way to be certain of what you’re getting is to read independent reviews of the company you are proposing to use. I am a firm believer that the sign of a good company is not necessarily how few mistakes they make, but just how quick they are at returning to that customer to correct those mistakes. It is common to read a few poor reviews of an otherwise good company; but it would be expected that these poor reviews are heavily outweighed by good ones. As consumers, myself included, we are all too eager to leave negative reviews in order to vent our frustration and dissatisfaction whenever we’re not happy with something, though it’s often more difficult to justify the time to sit down and write a good review unless prompted to do so.
To summarise, though they offer a greater level of confidence, an FCA or PRA approved IBG is only one element of a much larger picture. It is always advisable to fact find as much information as possible about any company that you propose to use in order to make an educated and informed decision based on the evidence in front of you. It would be wrong to simply discount against using a company who doesn’t offer an FCA or PRA approved IBG but given the knowledge you now have at least you can ask the question confidently if it isn’t explained to you voluntarily during the sales process.
