If you’re searching for insurance or other financial products, you might see a few providers list their Defaqto rating. This star-based rating system is pretty easy to understand, but can you trust it, and should it influence your decision-making?
Here, we look into what Defaqto is, how it works, what its stars mean, and whether it’s legit.
Let’s dive in.
What is Defaqto?
Defaqto is an independent, UK-based financial information company.
Shopping for financial products, whether it’s car insurance, travel cover, current accounts, or credit cards, can be daunting and overwhelming. There are so many options out there that it can be tough to figure out which one has the best features and benefits.
To help you choose, Defaqto’s team of analysts investigate and assess financial products, and assign them a star from one to five, with five being the best. With this information, you can make better informed financial decisions.
What is a Defaqto rating?
A Defaqto rating is a star rating from one to five. As part of this rating, Defaqto looks at as many of the features and benefits of a particular financial product as it can.
According to Defaqto, its star ratings are “based on facts, not opinions”. This means that Defaqto doesn’t take price or customer service reviews into account. It only focuses on the product.
While this can help you identify the most comprehensive option, there are pitfalls. You could find a product with a great Defaqto rating, only to learn that it’s out of your price range, for example, or that it gets lots of poor reviews for customer service.
How does Defaqto decide on its ratings?
The Defaqto team is made up of 60 experts who collectively spend hundreds of hours every day analysing product features from over 43,000 financial products. They do this to keep their database of over 4 million features accurate and up-to-date.
Defaqto bases its ratings on different features depending on the product. It bases its car insurance analysis on 48 features, for example, its home insurance reviews on between 30 and 100 features, and its credit card assessments on 33 features.
Products that receive a four or five-star rating have to meet what Defaqto calls “core criteria” to be considered. If they don’t meet this criteria, they’ll automatically get a lower rating.
You can see all of Defaqto’s ratings on its website.
Can you base your car insurance on Defaqto?
Defaqto has reviewed dozens of car insurance providers, and if you’re looking for a high-level assessment, it’s a good place to start. Defaqto isn’t without its shortcomings though, and it probably shouldn’t be the only factor you consider. We’ll explore this more in a minute.
What does Defaqto mean in travel insurance?
Like its other ratings, Defaqto’s travel insurance assessments rate products on a scale from one to five.
Be conscious of why you’re taking out travel insurance when you look at a Defaqto rating. Defaqto often gives a higher rating to insurance with the most thorough coverage, which might include high-risk sports and adventure activities. If you’re planning on walking the streets of Venice, however, you won’t need this coverage anyway, and a three-star product might be more than enough.
What does the Defaqto rating mean?
Let’s look into what the five different stars ratings mean from worst to best:
- 1 star: A low-quality offering with low cover, features and benefits
- 2 stars: A below average-quality offering with below average cover, features and benefits
- 3 stars: An average-quality offering with average cover, features and benefits
- 4 stars: A good-quality offering with good cover, features and benefits
- 5 stars: One of the highest-quality offerings in the market with comprehensive cover, features and benefits
Bear in mind that a one-star rating doesn’t necessarily mean that you shouldn’t consider a particular product. It just means that it doesn’t have very comprehensive features. But if you’re looking for a simple, basic product, it might be totally fine.
Is Defaqto legit?
Defaqto has been operating for over 25 years, and its team has provided ratings for over 14,000 financial products. They analyse new products every day, and update existing products every year on 1 February, so you can be sure that the review you’re reading is recent and relevant.
What’s more, since Defaqto isn’t aligned with any of the banks, insurance companies, or other financial institutions it reviews, its ratings are unbiased and trustworthy.
What are the pros and cons of using Defaqto to make a decision?
Defaqto is a reliable assessment tool to use if you’re picking a financial product, but it’s not without its drawbacks. Let’s take a look at its pros and cons.
Here are some of the advantages:
- Its reviews are easy to understand: Defaqto doesn’t beat around the bush. Its simple, star-based rating system is easy to follow, and provides a handy snapshot overview of how comprehensive a particular product is.
- It’s credible and trustworthy: Defaqto has an excellent and reliable track record of providing in-depth analysis you can trust. If you’re looking for exceptional features and benefits in a particular product, and Defaqto has given it a five-star rating, you know that you can’t go wrong in terms of these metrics.
- It helps you to create meaningful comparisons: Can’t decide among a few products? Defaqto’s metrics and ratings will give you an easy side-by-side comparison.
There are some downsides, however. Here are some of the cons:
- Price is excluded: Price is obviously an extremely important factor for most people. But since Defaqto considers it a subjective feature (what’s expensive for one person might be affordable for another), it’s excluded from the final evaluation. This means that, if you’re looking for a four or five-star product, you’ll still have to look into specific options in more detail to see if they’re within your budget.
- Defaqto doesn’t consider customer service reviews: Customer service reviews are also subjective—one customer could have an excellent experience with a provider, while another customer’s experience could be quite the opposite. If you’re interested in a product, take a look at their Trustpilot reviews to see what customers think. Like Defaqto, a five-star Trustpilot review is the best you can get.
- It doesn’t take your unique needs into account. Only you really know why you’re looking for a new bank to hold a current account, or why you need travel insurance. Maybe you don’t need a fancy product with all the bells and whistles—a three, two, or one-star product might suit you fine.
Defaqto ratings provide a useful and reliable high-level review of different financial products. They rate these products on a scale from one star to five stars, with one star being a low-quality product, and five stars being a comprehensive and high-quality product.
While it is a handy rating system to monitor, it shouldn’t be the only one you consider. Price, consumer service, and your particular needs are also important factors. Weigh all of them up before you make your final decision.