This insurance policy was put in place to protect people who were not able to work and therefore couldn’t afford to pay the monthly repayments they had on their finance.

Whilst the policy itself was not necessarily a bad product, many people were mis-sold it and this has led to numerous problems.

Payment Protection Insurance policies can be taken out alongside mortgages, credit cards, store cards or when obtaining credit on high value items such as vehicles.

With this policy there is an agreed sum of money that is paid out each month to fully cover the payment due on your finance. You would normally be covered if you:

  • Become unemployed, through no fault of your own become unemployed
  • Are involved in an accident that will prevent you from working
  • Suffer an illness that will prevent you from working

The insurance policy will typically cover your monthly finance repayments for 12 months. After that period you would have to cover the monthly payments yourself.

Please be aware that not all Payment Protection policies are the same so always ensure that you thoroughly check what policy you have. This protection can also sometimes be known as Loan Protection Insurance or Accident, Sickness and Unemployment (ASU) cover.

Problems with the cover arose from the way in which it was mis-sold. For example:

  • Customers were sold the insurance despite never actually being able to make a claim
  • They shouldn’t have been given the policy because they were retired, self-employed, unemployed or had an illness or injury that could have stopped them working
  • Some people were able to make Payment Protection claims due to the insurance being unsuitable for their needs

See if you can make a claim

There are several reasons why this insurance was being mis-sold. Below is a list of statements.

  • You didn't ask for Payment Protection Insurance but it was added anyway
  • The sales advisor informed you that Payment Protection Insurance was compulsory or that by not taking it, you would have less chance of obtaining finance
  • The sales advisor did not make you aware payment protection was optional or that you could purchase cheaper cover elsewhere
  • The policy exclusions were not pointed out to you
  • You were self-employed, retired or unemployed when you took out the cover
  • You had an existing medical problem or illness at the time of taking out the cover that could have kept you from working
  • You were older than the upper age limit, usually 65 years old or 70 years old when you took out the cover

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