When an individual applies for a personal loan or a homeowner loan, the more sensible borrowers, who are concerned about their financial security, usually take out some type of Payment Protection Insurance (PPI), which is designed to cover the cost of the monthly loan repayments for one or two years in the event of the borrower losing their income through accident, sickness or redundancy.

This is intended to bring peace of mind to the borrower, who may sleep well at night in the safe and secure knowledge that if they should be unfortunate enough to lose their job their loan repayments will be covered…….or will they?

We have reported on several occasions in the past about the problems with PPI policies, with particular reference to the fact that they often do not seem to pay out when the cover is needed the most and it would seem that as unemployment in the UK is increasing at a significant rate, there are more and more redundancy claims on PPI policies being rejected by banks and insurance companies, either due to loop holes in the policy wordings, or due to the fact that the policy was mis sold when it was first taken out.

Senior industry figures say that these problems with loan insurance policies now means that somewhere in the region of one in six claims for unemployment or redundancy are now being rejected by the insurance company, thereby leaving individuals and their families to try and struggle on and maintain their loan repayments, despite not having sufficient income, leading to the inevitable result of getting into arrears on their loan, ruining their credit rating and in some cases, possibly even facing repossession of their home.

Due to the large number of claims being received at the moment, insurance companies have been accused of “dishonouring” policies and looking for any excuse in order to avoid having to pay out a claim.

Source: DirLoo