No doubt you have heard the word ‘Defaqto’ before and maybe wondered what it actually means? Hopefully, this will help explain in brief for you:
What is Defaqto?
Defaqto is an independent financial research company that specialises in analysing financial products and rating such products for consumers. Every year they research hundreds of different products on the market to help consumers determine how good a product is.
Defaqto uses criteria to determine ‘Star Ratings’ based on their own views of which features are likely to be important in helping the consumer decide which products they need.
The star rating which is used is a simple process, the higher the Star Rating, the more comprehensive a product will be. Products rated 1 Star are a basic product, with a low level of features and benefits, while 5 Star products provide the highest level of cover with a comprehensive range of features and benefits, and must meet additional minimum criteria in certain areas to achieve a 5-star rating.
The best way to look at this would be to compare this to booking a holiday; if you were to go to a 1 star rated hotel, for instance, this hotel would be very basic, a no frills hotel where as a 5-star hotel will be a luxury hotel with many facilities. In Insurance terms, this would generally work in the same way and the higher the star rating the better the product is.
How important is Defaqto in insurance terms?
Once you have found a premium and product check the Defaqto rating, if it is low then be aware that you are buying a basic product and it may therefore not fit your demands and needs. This may be the reason why this particular premium is lower than the others.
If you go through an insurance broker, your broker will check all of these things for you and will point out differences in premiums and policy terms and conditions for you taking away any uncertainty that you may be having.
Defaqto doesn’t only cover insurance, however; it can cover banking, credit cards, current accounts and investments.