Motor vehicle warranty contracts were not always insurance policies, the Ombudsman for Short-Term Insurance says.

In a statement, it said these contracts were purchased from dealers at the time of purchase of the motor vehicle, or when a manufacturer's warranty on the vehicle was due to expire.

"These products are marketed as being insurance policies administered by insurance administrators and have all the hallmarks of an insurance policy," the Ombudsman for Short-Term Insurance Brian Martin said.

Later on when a so-called claim was rejected by the so-called insurance administrator, consumers would then be advised to seek assistance from the Ombudsman.

"However, when the Ombudsman receives a complaint and investigates the matter it frequently transpires that the product sold to the consumer was not an insurance policy underwritten by a registered insurer, but is in fact nothing more than a contractual arrangement concluded between the consumer and the dealer concerned."

The consumer was thereafter left high and dry in relation to any recourse against the dealer as the dealer was not a registered insurer and consequently fell outside of the jurisdiction of the Ombudsman for Short-Term Insurance.

"When such complaints are in turn referred to the Motor Industry Ombudsman that Ombudsman declines to intervene on the basis that he deals with complaints relating to motor vehicles and not financial services products."

Martin said the matter had been referred to the Financial Services Board, as the regulator, for consideration, but in the meantime consumers were urged to exercise great caution in the purchase of such products and in particular to enquire, at the time of purchase, whether the product offered was an underwritten insurance policy.

If the product offered was nothing more than a contract with a dealer, consumers' attention was drawn to the fact that in the event of any dispute or complaint, they would be left with no recourse against the dealer other than through the legal process, which was extremely costly and time consuming to pursue.

"The dealer may also prove to be of dubious standing," Martin said.

He encouraged consumers to fully acquaint themselves with the nature of the benefits provided by such contracts and to carefully consider whether the product offered covered the consumers' needs.

"Ask questions regarding the product and in particular whether it is underwritten by a registered insurer."

If a product was held out as being an insurance policy, the consumer should make sure that it was underwritten by a registered short-term insurer.

"Consumers can check if an insurance company is registered by contacting the Financial Services Board," Martin added.