Protection from Payment Protection Insurance

In the current economic climate the idea of taking out payment protection insurance, i.e. insurance which covers credit agreement repayments should the borrower become sick, unemployed or have an accident which renders them unable to work, may seem like a sensible one.  However with the well publicised mis-selling of such policies over the last few years and with many insurers’ reacting to the financial downturn by hiking up their insurance premiums and amending the small print to their policies to reduce payouts, it may call for a more cautious approach when considering purchasing payment protection insurance.

With rising unemployment and ever increasing competition in the jobs market, payment protection insurance (PPI) is aimed at providing peace of mind to borrowers of substantial sums of money.  Although there are some deals available on the market that can offer true value for money, with monthly premiums being available for as little as £11, many of the providers’ have been mis-selling the product.

This practice has been very lucrative for financial institutions with the PPI market worth billions of pounds every year; however regulation is set to tighten in the coming year following an ongoing investigation from the Competition Commission into PPI.  As a result of this many of the unfair mis-selling practices which have caused the public furore should no longer exist. 

Despite this, there will be many people who were mis-sold PPI in the last few years who may be able to make a claim against the institution that sold them the product.

Have you been mis-sold PPI?

There are many ways in which financial institutions have mis-sold PPI. This was most common when the PPI was sold simultaneously when a credit card of loan agreement was entered into, and may even have occurred without you knowing.  Here are a few questions which if answered in the affirmative may suggest that PPI was mis-sold;

1) Was the PPI compulsory or was pressure placed upon yor purchase the PPI?

2) Was the premium for the PPI added to the main loan?

3) Were you sold a policy which was unsuitable for your needs and requirements, for example were you sold the policy whilst you were unemployed or had a pre-existing medical condition?

4) Did the PPI policy length differ from the length of the loan?

These questions are merely a starting point when investigating claims of this nature and obviously the question as to whether a policy has been mis-sold will depend on the individual case concerned and how that policy was sold.

If you are considering purchasing payment protection insurance it is always worth shopping around for a good deal and to find a policy that will suit your circumstances and requirements.  Likewise it is crucial to read the insurance policy in its entirety and to pay particular attention to the extent of cover offered and the exclusions so that should the worst happen, the insurance covers your payments.

If you already have payment protection insurance and feel that it may have been mis-sold or would like further information about this then please feel free to contact us. Even if you do not think you have a PPI policy we would urge you to consider any credit policies you do have to ensure that PPI has not been included without you knowing.

Nathan Ebenezer

Trainee Solicitor