PPI Claims

Payment Protection Insurance, or PPI, is designed to protect your credit and loans if you are unable to work for certain reasons.

This form of insurance will make payments on your lines of credit that you have covered with the insurance, so you do not risk losing the items you purchased with the credit, and you do not hurt your credit rating because of illness or job loss.

The insurance won’t pay off your debt any faster; it just covers the minimum payment required to keep your account in good standing.

The coverage will only cover payments for a certain length of time, so you need to make sure you are completely clear about the policy coverage and how it works.

Why Does PPI Matter?

Most banking products have PPI built-in, and the premium is worked into the terms of your loan or credit card repayment.

The insurance is not required, but in the past, many large banks in the United Kingdom mis-sold the insurance to customers, leading them to believe the insurance was required in order to get the loan or credit card.

Customers who got the insurance coverage would quickly discover the coverage expired before the term of the loan, thereby not offering any real coverage, should a borrower become unemployed, sick, or otherwise unable to work.

PPI Claim

The coverage was often overpriced, adding an extra sum to the loan amount, dramatically impacting the payment amount.

PPI can be a good thing, when it is used correctly, and you are aware of it. When you know how much it costs to add it to your banking product, and the cost of making a claim, etc.

It can help you provide an extra layer of financial protection. Having the option makes many people feel comfortable, but knowing it is not required is also a good thing for people who do not need it.

You don’t need it if you have a reliable source of income and are not dependent on your job to meet your financial obligations.

In properly sold products, PPI will cost about 10% of your total loan amount, and can be added to auto loans, personal loans, and mortgages.

Mortgage rates will be lower, because the loan amounts are so much higher. Credit card PPI coverage will cost about 70p per £100 outstanding each month. If you usually pay off all your credit card balance each month and take out PPI, you may be paying for coverage that you do not need.

If the premium is worked into the cost of the loan, rather than being paid for upfront, then you will be paying interest on the premium in addition to the interest on the principle loan amount.

PPI Calculator

Do you have a mortgage, another type of loan, or credit card issued prior to 2006? 2006 is the year the investigation began, and newer banking products issued may include PPI, but include it only if you ask for it, and are aware of it and its costs.

Even if you do not think your banking products do not have PPI included in them, it is always a good idea to check. Since many of the policies were sold to customers without their knowledge, many victims of the scam were not aware.

Banks involved in mis-selling PPI are:

  • Lloyds TSB
  • Halifax
  • Bank of Scotland
  • Black Horse Finance
  • HSBC
  • Alliance & Leicester
  • Abbey
  • Nationwide Building Society
  • Royal Bank of Scotland
  • Barclays and all of its brands including the Barclaycard
  • NatWest
  • Mint
  • Direct Line
  • Churchill
  • Lombard

As a result of the mis-sold policies, banks are required to pay back consumers. Many of them have set back large sums of money in order to make the payments.

In order to have a PPI claim, you must prove you were mis-sold. Any of the following issues indicate you were mis-sold:

  • You were not asked if you wanted or needed the policy. PPI participation is entirely optional.
  • You were not told self-employed individuals did not qualify for the insurance plan. If you are self-employed, you may run into periods of time when you do not have work, or enough work to meet your payment obligations, so the bank will not accept you as a policyholder.
  • You were not able to make a claim on your policy because it was “expired.” PPI is legally required to run for the duration for the loan term, so you can use it whenever you need it until the loan is paid off in full.
  •  You were not informed the policy is optional. If you were told you had to participate because it is required, you were missold.
  • The policy length does not match the term of your loan. The PPI must remain in effect until the loan is fully paid off.
  • You were not asked about pre-existing medical conditions.

To see if you have a claim under any of these conditions, all you have to do is check your PPI policy’s terms and conditions. Your PPI policy terms and conditions should be included with the banking product itself.

When it comes to credit cards, your PPI is based on the amount of money you have currently borrowed every month and in mis-sold PPI claims it may be something entirely different.

If you find out you do have a claim, and you are successful in your PPI Reclaim – you can use the money as you wish. It can go toward the amount you borrowed to help pay down your loan or credit cards faster. Otherwise, it can go into a savings account for whenever you want it or need it.

If you have PPI insurance through a newer policy; then you were likely not mis-sold. You always have the option to cancel the policy whenever you feel you don’t want/need or cannot afford it.

If your policy required you to pay for the premium up front, talk to your lender about the possibility of a refund for the remainder of the policy. It is also possible for your insurance premium to increase, so you will need to make sure you are clear with your lender about under what circumstances this can occur.