There is a category of insurance that you may be paying for and not even know that you are. Kind of makes it hard to file a claim. Oh, you say, I know about all insurance policies I hold. Do you? Do you know that Payment Protection Insurance, under a variety of names, is included in the vast majority of loan, mortgage, financing (car loans, major appliances, and etcetera), overdraft and line of credit contracts? If not, this is your chance to learn a bit about Payment or Credit Protection Insurance.
What these kinds of insurance products insure are payments on a debt. In theory, these policies are supposed to make your payments for you if you suffer a debilitating accident, a major illness, a catastrophic injury or become unemployed. So far so good. But it is neither that simple, nor that clear.
The first issue is that Payment Protection Insurance is almost never 100 percent. The general rule is that the insurer only agrees to make the payments for a year. If your injury or illness in permanent, you are still saddled with the remainder of the loan. That is right: your payment protection insurance will leave stuck at the point where you need it the most. And if you get fired rather than laid off, the insurer will probably deny your claim for so much as a single payment.
The problems with the way PPI coverage is sold start with the practice of allowing the policies to be sold by untrained agents; namely, loans and mortgage officers and agents, credit card purveyors and finance companies. These individuals, it was revealed when the regulatory agency charge with monitoring the United States insurance industry noticed that the rejection rate for claims for PPI benefits were being rejected at an alarming rate, were frequently guilty of intentionally misrepresenting PPI and CPI requirements and benefits.
A pattern was discovered in how the mis-selling takes place. To begin with, insurers pay out a commission to banks and finance companies and mortgage brokers and car financers when they sell a policy as part of a loan agreement.
It is not that there is anything inherently wrong with a lender wanting you to buy insurance on the debt. But there is definitely something wrong when the commission the lender makes on the sale of the insurance policy is greater than what the lender makes on the loan alone.
In this type of environment, the incentive to include the policy as if it were an administrative necessity can become the actual business model of a finance company. They literally make their profit selling an insurance product, not making loans.
In some instances banks, finance companies and other lenders were found to be adding PPI policies as an administrative cost. In these cases the borrower signs the policy as part of the many pages of documents proffered by the lender for the borrower to initial before receiving their check.
Other tactics are also widely employed in mis-selling PPI. One tactic that borders on criminal extortion is telling the consumer that the protection is mandatory when it is not. Another is including the policy without even informing the customer that they have it.
Want to find out more about making PPI claims? Then visit www.PPIClaimsUK.co.uk and find out how to start your mis sold PPI claim today.
