Understanding Problems Getting Insurance
Understanding Problems Getting Insurance
Getting insurance is essential for protecting yourself, your home, or your vehicle, but many people in the UK face difficulties when applying for cover. Understanding why insurers might refuse or limit your application can help you know your rights and what steps to take next.
Common Reasons for Refusal or Limited Cover
Insurers often base their decisions on risk. Some of the most common reasons you might be refused insurance or offered a policy with restrictions include:
Previous Claims: If you’ve made several claims in the past, insurers may see you as a higher risk.
Criminal Convictions: Certain convictions, especially those related to fraud or driving offences, can make it harder to get cover.
Credit History: A poor credit score can affect your eligibility, particularly for home and car insurance.
Medical Conditions: For health or life insurance, pre-existing medical conditions may lead to higher premiums, exclusions, or refusal.
Property Location: Homes in flood-prone or high-crime areas may be harder to insure or may come with higher premiums and exclusions.
Occupation: Some jobs are considered riskier than others, which can impact your ability to get certain types of insurance.
Types of Insurance Where Problems Often Occur
Problems can arise with almost any type of insurance, but they are especially common in:
Car Insurance: High-risk drivers, such as young or inexperienced motorists, or those with points on their licence, may face higher costs or refusals.
Home Insurance: Properties with a history of subsidence, flooding, or those in high-crime areas often encounter difficulties.
Health and Life Insurance: Pre-existing medical conditions, age, or lifestyle factors like smoking can result in higher premiums or exclusions.
Travel Insurance: Ongoing health issues or planned activities considered risky (such as extreme sports) may limit your options.
If you’re experiencing broader issues with your policy after purchase, you may want to read more about problems with insurance policies.
How Insurers Assess Risk and Eligibility
Insurers use a process called “underwriting” to decide whether to offer you a policy and on what terms. This involves collecting information about you, your property, or your health, depending on the type of cover. They use this information to assess:
The likelihood of you making a claim
The potential cost of any claim
How your circumstances compare to their typical customer
Based on this, they might:
Offer you standard cover
Offer cover with higher premiums or special conditions
Exclude certain risks from your policy
Refuse to insure you altogether
Your Rights Under UK Law
UK law offers some important protections when you apply for insurance:
The Equality Act 2010 makes it unlawful for insurers to discriminate against you on the basis of certain protected characteristics, such as disability, age, gender, or race, unless they can justify this with reliable statistical evidence.
The Consumer Insurance (Disclosure and Representations) Act 2012 requires you to answer insurers’ questions honestly and carefully, but you do not have to volunteer information they haven’t asked for.
Transparency: Insurers must clearly explain why they have refused cover or imposed special terms if you ask them.
Right to Complain: If you feel you have been treated unfairly, you have the right to complain to the insurer. If you’re not satisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.
Understanding your rights and the reasons behind insurance decisions can help you challenge unfair treatment and find suitable cover. If you’re facing difficulties, keep records of all communications and consider seeking further advice to ensure you’re treated fairly.
Why Insurers May Refuse or Limit Cover
When you apply for insurance, insurers assess the level of risk involved before deciding whether to offer you cover and on what terms. There are several reasons why your application might be refused, or you may be offered a policy with certain restrictions or higher premiums.
Health conditions and medical history
If you have a pre-existing health condition or a history of serious illness, insurers may see you as a higher risk. For example, someone who has had cancer or heart disease might find it harder to get life or health insurance, or may face higher costs. Insurers use information from your medical records and may ask you specific questions about your health when you apply. Under the Equality Act 2010, insurers can only refuse cover or increase premiums based on health conditions if they can show it is reasonable and based on reliable evidence.
Previous claims and risky behaviours
If you have made several claims in the past, especially for similar issues, insurers may be concerned that you are more likely to claim again. This can lead to higher premiums or refusal of cover. Risky behaviours – such as dangerous hobbies (like skydiving), a history of driving offences, or substance misuse – can also affect your eligibility. Insurers are allowed to consider these factors as part of their risk assessment.
Financial history and employment status
Your financial background can play a role, particularly for types of insurance like income protection or critical illness cover. For example, a poor credit history or recent bankruptcy might make some insurers wary. Your job can also affect your application. Some occupations are considered higher risk than others, such as working at heights or with hazardous materials. Insurers may ask about your job title and duties, and different types of employment (such as being self-employed, on a zero-hours contract, or agency work) can influence the decision.
Differences between insurers
It’s important to remember that not all insurers use the same criteria. Some may be more flexible about certain health conditions or types of employment, while others have stricter rules. This means you might be refused by one insurer but accepted by another. Shopping around and comparing policies can help you find cover that suits your needs.
If you feel you have been treated unfairly, or if you’re unsure why you were refused cover, you have the right to ask for an explanation. Insurers must be transparent about their decision-making, and you can challenge a refusal if you believe it is discriminatory or not based on relevant evidence.
Understanding these factors can help you prepare your application and improve your chances of getting the insurance you need. If you need more information about how your employment status might affect your options, see our overview of types of employment in the UK.
Your Rights When Applying for Insurance in the UK
Your Rights When Applying for Insurance in the UK
When you apply for insurance in the UK, you are protected by laws designed to ensure fair treatment. Understanding your rights can help you recognise when an insurer’s decision may be unfair or even unlawful, and what steps you can take if you encounter problems.
Protection Against Unlawful Discrimination
Insurers are not allowed to discriminate against you unlawfully when you apply for cover. This means they cannot treat you unfairly based on characteristics such as your age, gender, disability, race, religion, or sexual orientation, except in very limited circumstances where it is justified by relevant evidence and permitted by law. The Equality Act 2010 sets out clear rules on how insurers must treat applicants and what counts as unlawful discrimination. For example, an insurer generally cannot refuse you cover or charge you more simply because you have a disability, unless they can show there is reliable data justifying this decision.
You can find more about how the Equality Act applies to insurance in the article Insurance & the Equality Act: Why we need to get it right.
Right to Clear Reasons for Refusal or Unfavourable Terms
If an insurer refuses to offer you insurance, or only offers you cover with higher premiums or restrictions, you have the right to ask for a clear explanation. Insurers must be transparent about their decisions and should provide you with the main reasons for refusing your application or offering less favourable terms. This helps ensure that decisions are made fairly and allows you to check if the reasons given are lawful and based on accurate information.
For example, if you are refused motor insurance because of a previous claim, the insurer should explain this clearly. If you are offered a policy with exclusions due to a medical condition, you can ask the insurer to explain the specific risk factors they have considered.
Challenging Unfair or Incorrect Decisions
If you believe an insurer’s decision is unfair, incorrect, or discriminatory, you have the right to challenge it. Start by contacting the insurer and asking for a review of your application. If you are not satisfied with their response, you can make a formal complaint through their complaints process.
If the issue is not resolved, you may be able to take your complaint to the Financial Ombudsman Service, which offers a free, independent way to resolve disputes between consumers and financial firms.
It is also important to know that the insurance industry is regulated under the Financial Services and Markets Act 2000. This law sets out the standards insurers must follow when providing financial services, including insurance. If you feel you have been treated unfairly, referencing this legislation can help support your case.
Practical Steps if You Face Problems
Ask for Written Reasons: If your application is refused or you are offered poor terms, request a written explanation.
Check for Errors: Make sure the information the insurer used is correct. Mistakes in your application or their records can sometimes lead to unfair decisions.
Challenge Discrimination: If you believe you have been discriminated against, refer to the Equality Act 2010 and ask the insurer to justify their decision.
Make a Complaint: Use the insurer’s complaints process if you are not satisfied. If needed, escalate to the Financial Ombudsman Service.
Understanding your rights gives you the confidence to challenge decisions and seek the insurance cover you need. For more details on the laws that protect you, see the Financial Services and Markets Act 2000 and further guidance on the Equality Act 2010.
Common Problems Faced When Getting Insurance
Common Problems Faced When Getting Insurance
Getting insurance can sometimes be more complicated than expected. Many people in the UK encounter difficulties when trying to arrange cover, whether for their home, car, health, or other needs. Understanding the common problems and your rights can help you deal with these challenges more effectively.
Being Refused Insurance Cover Outright
One of the most frustrating issues is being refused insurance altogether. Insurers have the right to decide who they will cover, but their decisions must comply with UK laws, including the Equality Act 2010, which prevents discrimination based on protected characteristics like age, disability, or race.
Common reasons for refusal include:
Previous claims or a history of losses.
Medical conditions or disabilities.
Living in an area considered high risk (for example, areas prone to flooding or high crime).
Poor credit history.
If you are refused cover, the insurer should give you a clear reason. If you believe the refusal is unfair or discriminatory, you have the right to complain and may be able to challenge the decision.
Offered Insurance With High Premiums or Exclusions
Sometimes, insurers will offer you cover but only at a much higher price or with certain conditions attached. For example, they might exclude specific illnesses from a health policy or require you to pay a higher excess.
Insurers use risk assessments to set premiums and terms. They must treat you fairly under the Financial Conduct Authority’s (FCA) rules, which require clear, fair, and not misleading information. If you feel the price is excessive or the exclusions are unreasonable, you have the right to ask for a breakdown of how your premium was calculated. It’s also a good idea to shop around, as different insurers have different approaches to risk.
Difficulty Finding Insurers Willing to Cover Specific Risks
Some people struggle to find any insurer willing to cover their particular needs. This is common for:
Properties in flood-prone areas.
Drivers with multiple motoring convictions.
People with certain medical conditions.
While insurers are not required to provide cover for every risk, there are some schemes in the UK designed to help. For example, the Flood Re scheme helps people in high flood risk areas get affordable home insurance. If you’re struggling to find cover, speaking to a specialist broker can help you access insurers who deal with unusual or higher-risk cases.
Confusing or Unfair Terms and Conditions
Insurance policies can be complicated, with long documents full of terms and conditions. Sometimes, these terms may seem unfair or hard to understand. UK law, including the Consumer Rights Act 2015, requires that contract terms be clear and transparent. The FCA also expects insurers to make sure customers understand the key features and exclusions of a policy before they buy.
If you find the terms confusing, don’t hesitate to ask the insurer for clarification. If you believe a term is unfair or hidden in the small print, you can challenge it. Unfair terms may not be legally binding, and you can make a complaint if you feel you’ve been misled.
Practical Advice
Always compare policies and providers before buying insurance.
Ask questions about anything you don’t understand.
Keep records of all communications with insurers.
If you’re refused cover or offered poor terms, ask for the reasons in writing.
Remember, you have the right to complain to the insurer and, if necessary, escalate your complaint to the Financial Ombudsman Service.
Understanding these common problems and your rights can help you make informed decisions and find the insurance cover that’s right for you.
Refusal of Insurance Cover
Refusal of Insurance Cover
If your application for insurance is refused, it can feel both frustrating and confusing. Understanding why insurers might turn you down, how they should communicate their decision, and what you can do if you think the refusal is unfair can help you take the right next steps.
What to Expect if Your Application Is Refused
Insurers in the UK are allowed to refuse cover for a range of reasons. Common reasons for refusal include:
Your medical history or pre-existing conditions (for health or life insurance)
Previous claims or a history of high-risk behaviour
Incomplete or inaccurate information on your application
The insurer’s own risk assessment policies
A refusal does not always mean you cannot get insurance elsewhere, but it’s important to understand the reasons behind the decision.
How Insurers Must Communicate Refusals
When an insurer refuses your application, they should inform you clearly and promptly. While insurers are not always legally required to give a detailed explanation, many will provide at least a basic reason for their decision. If you are unsure why you have been refused, you are entitled to ask the insurer for more information.
Under the Consumer Insurance (Disclosure and Representations) Act 2012, you have a duty to take reasonable care not to make a misrepresentation when providing information for your insurance application. If an insurer believes you have not met this duty, they must explain how your information led to their decision.
Steps You Can Take if Refusal Seems Unfair
If you believe your application has been refused unfairly, there are several actions you can take:
Request a Clear Explanation: Ask the insurer for a detailed reason for the refusal. This can help you understand if the decision was based on incorrect or incomplete information.
Check Your Application: Review the information you provided. Mistakes or missing details can sometimes result in a refusal. If you spot an error, you may be able to correct it and reapply.
Understand Your Rights: Familiarise yourself with your rights and responsibilities under UK law, especially the Consumer Insurance (Disclosure and Representations) Act 2012. This act outlines what information you must provide and helps protect you from unfair treatment.
Challenge the Decision: If you still feel the refusal is unjustified, you can make a formal complaint to the insurer. If you remain dissatisfied, you may be able to escalate your complaint to the Financial Ombudsman Service, which is free and independent.
Seek Alternative Cover: Not all insurers use the same criteria. It’s worth shopping around or using a broker who specialises in helping people with complex insurance needs.
Practical Example
For example, if you are refused car insurance due to a previous claim, but you believe the insurer has misunderstood your claims history, you can ask for clarification and provide supporting evidence. If the insurer upholds their decision and you believe it’s still unfair, you can follow their complaints process and, if necessary, contact the Financial Ombudsman Service.
Further Support
Understanding the legal framework can make a big difference when dealing with insurance refusals. For more detailed guidance, see the Consumer Insurance (Disclosure and Representations) Act 2012, which explains your rights and obligations when applying for insurance in the UK.
If you need more help, explore related topics on challenging insurance decisions or finding suitable cover for your needs.
High Premiums and Unfavourable Terms
High Premiums and Unfavourable Terms
Many people find themselves facing high insurance premiums or being offered policies with strict limitations. This can be frustrating, especially if you feel the terms are unfair or make it difficult to get the cover you need. Understanding why this happens, how to assess your options, and what you can do about it can help you make informed decisions.
Why Are Some Applicants Charged More or Offered Limited Coverage?
Insurers set premiums and policy terms based on the level of risk they believe you represent. They use information such as your age, health, occupation, claims history, and lifestyle to decide how much to charge or whether to impose exclusions. For example, someone with a history of medical conditions may be offered health insurance with a higher premium or with certain illnesses excluded from cover.
Under the Equality Act 2010, it is unlawful for insurers to discriminate against you based on protected characteristics like gender, race, or disability, unless they can justify it with reliable statistical data. For instance, while insurers can take health conditions into account when setting terms, they must do so fairly and transparently.
Sometimes, insurers may also limit coverage by excluding certain risks, setting lower payout limits, or adding higher excesses (the amount you pay towards a claim). These decisions must be based on relevant and accurate information. If you think an insurer’s decision is unfair or based on incorrect details, you have the right to challenge it.
How to Compare Offers and Understand Terms
Before accepting an insurance policy, it’s important to shop around and carefully compare what different insurers are offering. Look beyond just the price – pay close attention to the policy’s terms and conditions, including what is covered, any exclusions, and the level of excess.
Take time to read the policy documents and ask the insurer to explain anything you don’t understand. Insurers are required by the Financial Conduct Authority (FCA) to provide clear and accessible information so you can make an informed choice. If the language is confusing or you’re unsure about what’s included, don’t hesitate to ask for clarification.
It’s also worth checking if the policy meets your specific needs. For example, if you need travel insurance that covers pre-existing medical conditions, make sure these are included and not excluded in the small print.
When to Seek Alternative Insurers or Advice
If you’re unhappy with the premiums or terms you’ve been offered, you don’t have to accept them. Different insurers have different ways of assessing risk, so it’s often possible to find a better deal elsewhere. Consider using a specialist broker or comparison service, especially if you have unique circumstances such as a medical condition or a non-standard property.
If you believe you’ve been treated unfairly, you can ask the insurer to review their decision. If you’re still not satisfied, you can make a complaint to the Financial Ombudsman Service, which can look into whether the insurer has acted fairly and within the law.
Finally, if you’re struggling to find any cover, or you’re unsure about your rights, it may help to seek independent advice. There are organisations and advisers who can help you understand your options and support you in challenging unfair treatment.
How to Challenge Problems Getting Insurance
When you face problems getting insurance – such as being refused cover or offered terms that seem unfair – there are clear steps you can take to challenge the decision. Understanding your rights and approaching the situation methodically can help you get the answers and, potentially, the cover you need.
1. Gather Evidence and Know Your Rights
Start by collecting all relevant documents and information. This might include your application forms, any correspondence with the insurer, and details about your circumstances. Under UK law, insurers must treat customers fairly. The Equality Act 2010, for example, prevents discrimination based on protected characteristics such as disability, age or gender, unless the insurer can justify their decision with reliable and relevant information. Insurers are also required to be transparent about how they assess risk and decide on premiums.
2. Contact the Insurer for an Explanation
Once you have your documents in order, contact the insurer directly. Ask for a clear explanation of why your application was refused or why you were offered certain terms. Sometimes, decisions are based on incorrect or incomplete information, and providing further details or correcting errors can help. If you think the insurer’s reasoning is unclear or doesn’t seem fair, ask them to reconsider their decision. You have the right to request the specific factors that led to their decision, especially if it relates to health, age, or other protected characteristics.
3. Use the Formal Complaints Procedure
If you’re not satisfied with the insurer’s response, you have the right to make a formal complaint. Every insurer must have a complaints process, which should be easy to access and free of charge. Follow the steps outlined in your policy documents or on the insurer’s website. Clearly state your concerns, include all supporting evidence, and explain what outcome you are seeking.
For detailed guidance on how to make a complaint, see our complaints procedure for consumer services. This resource explains how to escalate your issue if you’re not happy with the insurer’s final response, including how to take your complaint to the Financial Ombudsman Service.
Practical Tips
Always keep records of your communications with the insurer.
Check if the insurer is following the rules set by the Financial Conduct Authority (FCA), which require fair treatment of customers.
If you believe you have been discriminated against, mention the relevant law (such as the Equality Act 2010) in your complaint.
If you need help, consider seeking advice from a consumer rights organisation or a specialist adviser.
By being proactive and informed, you can improve your chances of resolving issues and getting the insurance cover you need.
Making a Complaint to Your Insurer
Making a Complaint to Your Insurer
If you believe your insurer has treated you unfairly – such as refusing to offer you insurance, providing unsuitable cover, or handling your application poorly – you have the right to make a formal complaint. The process is straightforward, and there are clear rules insurers must follow.
How to Write an Effective Complaint
Start by contacting your insurer’s complaints department. You can usually find their contact details on their website, your policy documents, or any correspondence you’ve received. Complaints can often be made by phone, email, or letter, but it’s a good idea to put your complaint in writing so you have a clear record.
When writing your complaint:
Be clear and concise: State that you are making a complaint and explain what happened.
Stick to the facts: Describe the problem and why you think the insurer’s decision or behaviour was unfair.
Be polite and professional: This helps keep the process constructive and focused on resolving your issue.
For example, you might write:
“I am writing to complain about your decision to refuse my application for home insurance. I believe this decision is unfair because I have provided all the necessary information and have no history of claims. Please review my application and explain the reasons for refusal.”
What Information to Include
To help your insurer understand and resolve your complaint quickly, include:
Your full name, address, and policy or reference number.
A summary of what went wrong and when it happened.
Copies of any relevant documents (such as emails, letters, or policy details).
Details of any conversations you’ve had with the insurer, including dates and names of staff if possible.
What outcome you would like – for example, a reconsideration of your application, an explanation, or compensation.
Keeping a copy of your complaint and any responses you receive is important in case you need to take your complaint further.
Timeframes Insurers Must Follow
Insurers in the UK must follow strict rules set out by the Financial Conduct Authority (FCA). Once you make a complaint, they must:
Acknowledge your complaint promptly – usually within a few days.
Investigate and provide a final response within eight weeks. This response should explain their decision and what they plan to do.
If your insurer cannot resolve your complaint within eight weeks, they must write to you explaining the delay and informing you of your right to take the complaint to the Financial Ombudsman Service.
Remember, you do not have to accept the insurer’s final response if you are not satisfied. You can take your complaint further if you feel the outcome is still unfair.
Escalating Your Complaint
Escalating Your Complaint
If you’ve tried to resolve an insurance problem directly with your insurer but remain unhappy with their response, you have the right to escalate your complaint. In the UK, there are clear steps you can take to ensure your concerns are properly addressed.
When to Involve the Financial Ombudsman Service
If your insurer rejects your complaint or you’re dissatisfied with their final response, you can take your case to the Financial Ombudsman Service (FOS). The FOS is an independent body set up to resolve disputes between consumers and financial service providers, including insurance companies.
You must first give your insurer a chance to resolve your complaint – usually, they have up to eight weeks to respond. If you don’t receive a satisfactory reply within this period, or if you receive a final decision you disagree with, you can contact the FOS. You’ll need to do this within six months of receiving the insurer’s final response.
The FOS will review your case for free and make a decision based on what’s fair and reasonable, considering the law and industry standards. Their decision is binding on the insurer if you accept it.
Other Organisations That Can Help
Besides the Financial Ombudsman Service, there are other organisations that can offer guidance or support with insurance disputes. For example, you might find it useful to seek advice from consumer support groups or financial advice services. These organisations can help you understand your rights and the best way to present your case.
If your issue relates specifically to payment protection insurance (PPI), you can find more detailed guidance on taking your complaint further.
Keeping Records of All Communications
Throughout the complaints process, it’s important to keep clear and organised records. Save all correspondence with your insurer, including emails, letters, and notes from phone calls (with dates and names of people you spoke to). This will help you present a stronger case if you need to escalate your complaint, and may be required by the FOS or other organisations reviewing your dispute.
By following these steps and making use of the support available, you can give yourself the best chance of resolving your insurance problem fairly.
Special Considerations: Payment Protection Insurance (PPI) and Related Issues
Payment Protection Insurance (PPI) has been at the heart of some of the UK’s most widespread insurance issues, with millions of policies mis-sold over the years. If you’ve had a loan, credit card, or mortgage in the past, you may have been offered – or even automatically signed up for – PPI. Many people faced problems such as not being told about exclusions, being pressured into buying cover, or being sold a policy they couldn’t actually use.
Understanding Mis-Sold PPI and Your Rights
PPI was intended to cover your repayments if you couldn’t work due to illness, accident, or unemployment. However, it was often sold to people who didn’t need it, weren’t eligible to claim, or weren’t given clear information about the policy. If you think you were affected, you have rights under the Financial Services and Markets Act 2000 and related regulations, which require insurers and lenders to treat customers fairly and provide clear information.
Common signs of mis-sold PPI include:
You were told PPI was compulsory with your loan or credit.
You weren’t told about important exclusions (for example, if self-employed people couldn’t claim).
The costs, terms, or conditions were not clearly explained.
The policy was added without your knowledge or consent.
If you believe you’ve been affected, you can complain about mis-sold PPI to your bank or lender. Even though the official PPI complaint deadline has passed, you may still be able to complain in certain circumstances, such as if you weren’t told about high commission charges.
Commission and Other Charges: How They Affect PPI Complaints
A significant issue with PPI has been the high levels of commission paid to banks and lenders, often without customers’ knowledge. In some cases, over half of the cost of a PPI policy went straight to the lender as commission. The Supreme Court’s ruling in the ‘Plevin’ case means you might be entitled to compensation if you were not told about excessive commission – even if you missed the original PPI deadline.
If you think you were charged unfair commission, you can complain about PPI commission. It’s important to check your policy documents or ask your lender for details about any commission paid.
Further Help and Guidance
For more details on the types of issues people have faced, see our guide to problems with Payment Protection Insurance (PPI). Understanding your rights and the steps you can take is the first move towards resolving unfair treatment and getting the compensation you may be owed.
What is Payment Protection Insurance (PPI)?
What is Payment Protection Insurance (PPI)?
Payment Protection Insurance (PPI) is a type of insurance policy that was designed to help people keep up with repayments on loans, credit cards, mortgages, or other credit agreements if they became unable to work due to illness, accident, unemployment, or sometimes death. The main purpose of PPI was to provide financial security by covering monthly payments for a limited period, usually up to 12 or 24 months, when the policyholder could not earn an income.
How PPI Works
Typically, PPI was offered alongside loans or credit cards. For example, if you took out a personal loan, you might have been offered PPI to cover your repayments if you lost your job or became too ill to work. In theory, this could prevent you from falling behind on payments and facing financial difficulties or damage to your credit rating.
Why PPI Has Caused Problems
PPI became one of the most controversial insurance products in the UK because of widespread mis-selling. Many people were sold PPI policies that were unsuitable for their needs, or they did not even realise they had been sold the insurance at all. Some common issues included:
Not being eligible to claim: Many PPI policies had strict exclusions. For example, self-employed, retired, or people with pre-existing medical conditions were often not covered, yet were still sold the policy.
Lack of clear information: Insurers and lenders often failed to explain the terms, costs, or exclusions of the policy properly, leaving customers unaware of what they were buying.
Pressure selling: Some people were told they had to take out PPI to be approved for credit, which is against the rules.
Automatic inclusion: In some cases, PPI was added to loans or credit cards without the customer’s knowledge or consent.
These practices led to millions of people paying for insurance that was either unnecessary or useless to them. As a result, the Financial Conduct Authority (FCA) took action, and many people were able to claim compensation for mis-sold PPI. The main legal rules covering PPI mis-selling are found in the FCA’s Handbook, particularly the rules on treating customers fairly (Principle 6) and providing clear, fair, and not misleading information (Principle 7).
Practical Advice
If you think you were affected by PPI mis-selling, you may still have questions about your rights, even though the official deadline for making new PPI complaints passed on 29 August 2019. However, there may be other ways to challenge unfair treatment, such as if you were not properly informed or if there are exceptional circumstances. If you are facing problems getting insurance now because of a past PPI issue, it’s important to check your credit records and speak to insurers about any concerns you have.
Understanding what PPI is and why it caused so many problems can help you be more aware of your rights when taking out insurance or credit in the future. Always make sure you understand the terms of any policy, check your eligibility, and don’t hesitate to ask questions before agreeing to any insurance product.
Common Problems and Complaints with PPI
Common Problems and Complaints with PPI
Payment Protection Insurance (PPI) has been a major source of complaints in the UK, with many people discovering they were sold policies that were unsuitable, unnecessary, or unfairly priced. Understanding the common issues can help you recognise if you have a problem with your PPI and what steps you can take next.
Mis-selling Issues
Mis-selling of PPI was widespread, and many people were sold policies that did not meet their needs or circumstances. Some of the most common mis-selling problems include:
Being sold PPI without realising it: Some customers found PPI had been added to their loan, credit card, or mortgage without their knowledge or clear consent.
Pressure to buy PPI: In some cases, people were told they had to take out PPI to be approved for credit, which is not true. Lenders cannot make PPI a condition of giving you a loan or credit card.
Unsuitable policies: PPI was often sold to people who would never have been able to claim on it, such as those who were self-employed, unemployed, or had pre-existing medical conditions that were excluded from cover.
Lack of information: Many customers were not given clear information about the cost of PPI, what it covered, or important exclusions and limitations.
Under the rules set by the Financial Conduct Authority (FCA), firms must treat customers fairly and make sure insurance products are suitable and sold in a transparent way. If you feel you were not given the right information or were pressured into buying PPI, you may have been mis-sold the policy.
Unfair Commission and Charges
Another common complaint relates to the high levels of commission that some banks and lenders received from PPI sales. In many cases, the commission made up a significant portion of the cost of the policy, and customers were not told about this.
In 2017, the Supreme Court ruled in the case of Plevin v Paragon Personal Finance Ltd that failing to disclose high commission on PPI sales was unfair under the Consumer Credit Act 1974. If more than 50% of your PPI premium was taken as commission and this was not explained to you, you may be entitled to compensation, even if you were aware you had PPI.
Unfair charges can also include being charged for PPI after you cancelled it, or being charged interest on PPI premiums added to a loan.
How to Identify if You Have a Problem
If you are unsure whether you have a problem with PPI, consider the following questions:
Did you know you had PPI, or was it added without your clear consent?
Were you told that PPI was compulsory or needed to get the loan or credit?
Did the policy cover your circumstances (such as your employment status or health)?
Were you given full details about the cost, exclusions, and limitations of the policy?
Did you pay a high premium, or do you suspect that a large commission was involved?
If you answer “yes” to any of these questions, you may have grounds to make a complaint about your PPI. Even if you have already received compensation for mis-selling, you may still be able to claim for undisclosed commission under the Plevin rules.
Understanding these common problems is the first step towards resolving issues with PPI and ensuring you are treated fairly under UK law.
Additional Resources and Related Topics
If you’re facing difficulties getting insurance, there are several places you can turn to for further support and information. Many organisations offer free advice on your rights, what to do if you’ve been refused cover, or if you believe you’ve been treated unfairly by an insurer. You can also get help with making complaints or understanding the legal protections that apply to you under UK law, such as the Equality Act 2010 and the Financial Conduct Authority (FCA) rules on fair treatment of customers.
For issues specifically related to making a claim, it’s important to know your rights and the steps you can take if your insurer rejects your claim or offers less compensation than expected. Our guide on problems with an insurance claim explains the process for challenging an insurer’s decision, what evidence you might need, and how to escalate your complaint if necessary.
Understanding your broader consumer rights can also be helpful, especially if you’re dealing with other types of contracts or financial products. For example, if you’re renting, knowing your rights around rental deposits can help you navigate disputes with landlords and ensure you get your money back when you move out. These protections are set out in laws like the Housing Act 2004 and the Tenancy Deposit Schemes Regulations.
Your employment status can also affect the types of insurance you’re eligible for and the cover you’re offered. Different types of employment in the UK – such as full-time, part-time, self-employed, or zero-hours contracts – come with different rights and responsibilities. Understanding where you stand can help you find suitable insurance and challenge any unfair treatment from insurers who may not be following the rules.
If you’re unsure where to start, exploring these related topics can give you a clearer picture of your rights and options. For further advice, consider contacting a consumer advice service or speaking to an independent financial adviser, especially if your situation is complex or you need help making a complaint.
Related Topics on Insurance and Consumer Rights
If you’re experiencing difficulties getting insurance, you’re not alone. Many people in the UK face problems such as being refused cover, offered unfair terms, or sold policies that aren’t suitable for their needs. These issues can affect a range of insurance products, including car, home, travel, and payment protection insurance (PPI).
Understanding your consumer rights is essential. Under the Equality Act 2010, insurers must not discriminate unfairly, for example, on the basis of disability or gender. The Financial Conduct Authority (FCA) also requires insurers to treat customers fairly and provide clear information about products and costs. If you feel you’ve been treated unfairly or misled, you have the right to make a complaint.
Problems with insurance can include unclear exclusions, unexpected price increases, or claims being rejected without a fair reason. If you’re dealing with these or other problems with insurance policies, it’s important to review your policy documents carefully and contact your insurer for an explanation. If you’re not satisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.
Mis-selling of financial products is another common issue. This is when an insurance policy or financial product is sold without proper explanation, or when it’s unsuitable for your circumstances. A well-known example is PPI, where many people were sold cover they didn’t need or couldn’t use. If you think this has happened to you, learn more about problems with Payment Protection Insurance (PPI) and how to complain about mis-sold PPI.
In some cases, the issue may be with how much commission was paid to the company selling the PPI. If you weren’t told about this, you might be able to complain about PPI commission and claim back money you’re owed.
If your complaint isn’t resolved to your satisfaction, there are further steps you can take. Find out more about taking your PPI complaint further if you need to escalate things.
For more detailed advice and support on your rights and next steps, explore the related topics above. They offer practical guidance on dealing with insurance problems and making sure you’re treated fairly as a consumer.
