In the name of selling something beneficial to the consumers, the loan lending companies in UK have been into selling excessively priced Payment Protection Insurance (PPI) policies to the their loan or credit card customer. These insurance policies are associated with the loan and claim to cover the cost of the loan in times of uncertain situations like unemployment, sickness or accident. Although the concept of the policy is good only one out of 5 customers end up needing an insurance of this kind since the only people liable for the PPI are the ones who might not need the PPI in the first place.

PPI policies are not for those who are unemployed, self-employed, retired or having a pre-existing health condition and yet these loan lending companies sell the policies to all their customers without gaining or providing right information about/to the customers. These policies when bought individually from companies outside of these lending companies tend to come well within one-third of the cost of the current charges on the policy. Since most of these policies are sold alongside the loan the interests of the insurance premiums add up on to the loan interests and add up to an unnecessarily heavily charged amount each year. Also, if the term of the policy is just for a year while your loan is for five years, the policy benefits will only apply to that particular year and the rest of the term of the loan would require the necessary payments along with regular insurance premium payments as well.

The sale of these policies in the UK was collectively banned in May 2009 but still there are about 20 million policies active with consumers and they may not be even aware of why and how they are being charged unreasonably with respect to the policy. PPI can be reclaimed and you may earn yourself thousands in return in the form of compensation and all the charges that were incurred by you on your PPI. However, PPI Reclaim would mean the cancellation of your PPI policy from your loan and you must ensure that the insurance policy is of no potential use to you, only then should you proceed with your PPI reclaim.

99% of the cases filed under this particular section are for the miss-selling of the policies that have a high frequency amongst the customers of these PPI policies. Most often the customers are not completely informed about these policies at the time of sale or many a times in the name of what is called a ‘single premium policy’ the PPI is included by default and the customer is supposed to ‘opt-out’ of it instead of ‘opt-in’. You must also make sure that it’s been no more than six years since you have bought the PPI for a successful PPI reclaim. Until January 2010 you would not be eligible for a PPI reclaim if you have already used the insurance policy but in rare cases you might as well be liable to a PPI reclaim. Get yourself well informed by claim handling firms or lawyers for the same.

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Yossarian Smythe

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