Payment Protection Insurance, Are You Covered ?
PPI or Payment Protection Insurance is protection designed to assist a borrower repay a loan in the event of sickness, injury, job loss or death
. This is a stop-gap plan that should help a person, when dire situations occur, to meet a particular monetary obligation. Most PPI policies are created for a period not to go beyond a calendar year with the presumption that the borrower's position will improve within that time frame.
This type of coverage also benefits the lender by eliminating the legal actions necessary when a borrower defaults on a loan. This protection is usually drawn up at the same time the loan contact is created and is payable with the loan payments. Payment Protection Insurance can assist the purchaser to feel at ease when acquiring a loan because it offers financial security for the loan should the unexpected occur.
Recently, however, this type of insurance has earned a bad reputation with more and more clients registering complaints. Whether through ignorance, neglect or deceit, many such policies have been mis-sold. The financing company, in most cases offers the coverage in conjunction with the loan. However, the financing company sometimes leaves the borrower with the impression that PPI is a requirement for securing the loan.
Some loan companies mis-sold PPI because they are not fully trained in this type of insurance and may leave out pertinent information when completing the application which in turn voids the contract and results in the denial of claims. Other lenders make false assumptions and false promises regarding the attributes of the coverage. The borrowers may never be told that they have a choice whether or not to accept this insurance and that they have a right to shop around for what they feel is the best and most economical coverage.
Borrowers, who feel that they have been hoodwinked, have the right to a hearing in court. The courts have sided with the clients in many cases believing that they were either unaware of what the insurance actually provides, coerced into purchasing the coverage or led to believe that the policy was required in order to secure the loan. Also, in some cases, the purchaser doesn't even know he has this coverage because he gets caught up in the details and ramifications of the loan contract and the vast amount of paperwork required. Further, some borrowers are so relieved to receive the loan that they don't pay attention to what they are actually signing.
In fairness, it should be stated that sometimes the fault does lie with the borrower. Some borrowers will submit untruthful or incomplete information at the time the insurance is written or submit claims based on erroneous information. At such time as the truth is revealed, these PPI claims are denied.
Claims may be denied for a variety of reasons. The insuring company may learn that the borrower is unemployed, self employed or working part-time, any of which would result in a claim denial. There may have been a required waiting period prior to the acceptance of a claim. The health situation of the client may not have been confirmed or properly addressed.
This type of coverage as all insurances can be very helpful and very trying. Anyone signing a contract should be aware of what is included in it. The lender's representative should be forthcoming with all pertinent information and the buyer should always beware.
by: Timothy Capper
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