What is payment protection insurance (PPI)?

Some of the most common questions in respect of PPI (payment protection insurance) are as follows: What is PPI? How do you know whether it was a mis-sold policy, and what constitutes it? PPI is an insurance policy sold alongside loans/credit agreements in order to cover the consumer's repayments, should they fall ill or be made redundant and not be able to make the repayments. It has become extremely apparent in recent news that these policies were mis-sold to millions and customers can now claim that money back. Mis-selling comes in various examples and can be quite easily determined.

A simple, straightforward example of a mis-sold PPI policy is where the lender informed the customer that the insurance was compulsory. For example, they made have told the consumer that in order to process and qualify for the loan/credit agreement they must agree to a PPI policy. Another example is by the lender simply presenting the loan contract inclusive of PPI to the customer for a signature, without even explaining what it is and that it is optional or that it could be purchased elsewhere (most likely cheaper).

There are also many cases whereby the customer was sold the PPI policy when they didn't actually qualify for it. The reason for this is that there are certain categories in which a customer simply cannot claim on their PPI policy. This could be if they are disabled, a student or self-employed. Many consumers discover this when they need to use their PPI policy (they may have been made redundant or long-term sick) and their claim is rejected on the basis of their employment status or health/disability. All something that should have been discussed before PPI was agreed to.

One of the most common and successful claims is for PPI policies sold to the self-employed, not only those who work for themselves but also those who work through a limited company that they themselves own or control.

There are instances where the lender sells a PPI policy that is shorter than the underlying loan, which to the consumer can seem a much cheaper option, until they learn that in order to cover them for the full term of the loan they must purchase additional insurance.

Due to this mis-selling of policies customers are now eligible for a refund on any money they have paid for the insurance. If you feel you apply to any of the above please get in touch with one of our claims management team or fill in the online form at ppi-claims.org