What Does It Actually Mean?
You may know someone who is “making a PPI claim”, or you may be making one yourself and tell someone else about it. But what does this statement really mean in plain English? What would you say in response to someone who asks you “Can you explain that to me, I don’t know anything about that?” You would have to think carefully before replying, because this seemingly concise sentence is in actual fact open to ambiguity and misinterpretation. Well, most people in the UK probably know that PPI stands for Payment Protection Insurance, although, just to confuse things further, in America the PPI is a measure of inflation, namely the Producer Prices Index.
PPI Claims in a Nutshell
But what exactly is Payment Protection Insurance and why would you make a claim on it? Well, PPI is an insurance policy sold along with a loan, to reassure the borrower that if he suffers a loss of income, for instance through illness, accident or loss of employment, then he or she will still be able to meet the repayments on the loan. This is a laudable motive on the face of it.
Except that most PPI policies would never be claimed on, as the majority of people do not suffer a loss of earnings during the course of the few years of their loan. Yet the cost of the PPI would still have been typically 15%-25% of the cost of the loan (which is unnecessarily high), making this type of insurance extremely profitable to the lender, for instance if only 2-3% of borrowers would actually try to claim loss of earnings.
Yet to pour oily sales patter on troubled waters, most PPI policies were mis-sold, in a number of different ways. The list of ways is too long to reproduce here, but they might have involved persuading the customer to sign up for the PPI in order to get the loan approved, or to pay up front for the PPI, or NOT to be told that they could shop around for the PPI cover, or to pay (and indeed to pay over the odds) for a PPI policy from which they could not actually benefit.
In the latter cases, for instance people who were self-employed or too young/old to qualify for the insurance, the idea of making a PPI Claim would, unknown to them, be academic. However, people who were seemingly eligible for the PPI were still very often mis-sold PPI policies in a number of other ways.
So, in short, a PPI claim is a claim to maintain repayments on a loan, through a separate, very over priced loss of earnings insurance policy, and for which the borrower may not be eligible to make a claim, and which, even if they are eligible, has very likely been mis-sold on at least one of the grounds possible, through use of high pressure sales techniques.
PPI Reclaims Explained
A PPI Re-Claim is much simpler than a PPI Claim, and much, much more likely to be successful. A PPI Re-Claim IS a legal process to establish the grounds how the PPI policy was mis-sold in the first place by the finance company’s sales person (who also sold the loan), and to get the lender to pay back the premiums paid by the borrower in respect of the PPI Policy. N.B. A PPI Re-Claim does NOT pay back the loan, only the insurance premiums for the policy taken out to cover the repayments in the event of the borrower experiencing loss of earnings.
It is possible to make a reclaim yourself but why bother when you can have your claim submitted free by and experienced and qualified solicitor? This saves you the time, energy and stress of having to deal with your lender yourself and also means they are much more likely to take your claim seriously and pay up sooner!
