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  1. #1

    mortgage insurance cover

    Since husband's redundancy, we have tried to cut our outgoings and approached our mortgage lender via telephone to ask if we could take out an alternative insurance policy to cover our mortgage (which is now consirderably less). The insurance policy was in wife's name only. Yes we were told, "I will cancel one you have and re-start another". Telephone clerk duly went through new policy questionaire. This was going to be 30.00 cheaper per month. We have now received letter refusing cover. Were we given bad information/advice, is there any redress? We now have no cover.

  2. #2
    Hello there and welcome to the site.

    Yes, this sounds a bit odd. Insurers will not accept you for mortgage-related insurance after a redundancy has been made or, indeed, even if it is imminent.

    I have asked an expert to come back to you with a more comprehensive answer, so watch this space...

  3. #3
    Financial Services Professional
    Join Date
    Mar 2004
    Posts
    2,073
    Whilst this is being wise after the event, it is NEVER a good idea to cancel one lot of cover BEFORE you know the new cover is sorted out.

    This is harder, though, for mortgage lender-arranged payment protection insurance as they often will not allow you to have too much cover - as you would do during the overlap period.

    You have clearly been appallingly advised. There is no way they should have allowed you to cancel the original cover if you could not qualify for the new cover.

    They should reinstate your original policy as if it had never been cancelled.

  4. #4
    Arge has hit the nail on the head here.

    Go back to your lender explaining what has happened. If you feel you are struggling to get anywhere with them I would advise you to speak to the FSA to take the complaint further.

  5. #5
    Financial Services Professional
    Join Date
    Mar 2004
    Posts
    2,073
    I should take it through the lender's complaint process and then to the FOS.

  6. #6
    Matt Morris of insurance IFA Lifesearch, was compelled to add to this - even from his Blackberry in Thailand! He said:

    "The company that did this has committed a cardinal sin. If it was an advised sale then you can take it to the ombudsman, no problem. I suspect it was non-advised in which case it's a bit less straightforward.

    "You may be able to reinstate the old policy if cancelled less than 12 months ago but will have to pay backdated premiums. You need to get proper advice asap."

  7. #7
    Financial Services Professional
    Join Date
    Mar 2004
    Posts
    2,073
    Whether it was advised or not - and I agree, it probably was not - it is simply appalling advice to ever advise cancellation of one policy before a replacement policy has been underwritten.

    You cannot expect the customer to know that; but the professional should know it and even a lender's staff "selling" on a non-advice basis should have sensible procedures to avoid this risk.

  8. #8
    I agree. For a professional to cancel someone's policy before making sure the new one is reinstated is as bad as it gets.

    The client needs to take independent advice as soon as possible.

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