mortgage protection insurance

mandy_woo

hi, i have been with a certain insurance company for my mortgage protection for just over 2 years, i remortgaged in december 08, i was advised to cancel the mortgage potection policy, containing the old lenders details, and start a new policy straight away containing the new lenders details. i was made redundant in january, and am trying to make a claim through the insurance company. they have informed me that there is a 90 day period to which we cannot make a claim, due to us having an existing mortgage when the new policy was taken out. this is not an excess period, as we have a policy with no excess, is this normal practice for all insurance companies, or are they just trying to get out of paying us. i can understand if we were new customers of theres, but we have not missed a premium payment for 2 years.
has anyone else had the same experience.
thanks

dunstonh

i was advised to cancel the mortgage potection policy, containing the old lenders details, and start a new policy straight away containing the new lenders details.

As you were advised to do this, you have some consumer protection regarding the quality of the advice.

is this normal practice for all insurance companies, or are they just trying to get out of paying us. i can understand if we were new customers of theres, but we have not missed a premium payment for 2 years.

Yes its normal. its to prevent people taking it out when they know they are going to lose their job.

However, the person that advised you to cancel has to justify that reason. It could be valid or it may not be. Some lenders "own" version of PPI will only cover their own mortgage. Whole of market versions though will cover any mortgage.

The FSA does take cancellation of existing policies very seriously when it comes to advice. It wholly supports justified recommendations but does not like unjustified ones. So, check your recommendation letter you got from the adviser and see what it says about the cancellation of the old plan and why it was best to change. It should also mention the new waiting period. If not, you have grounds for complaint.

mandy_woo

hi thanks for that. it was an independant financial advisor that told us to cancel the existing policy, she found the new mortgage for us and told us this is what we had to do. she told us this verbally, so we dont have it in writing. did we not need to cancel the existing insurance policy then. the insurance company is an independent company, not linked to the mortgage provider

dunstonh

she told us this verbally

Did she arrange the insurance for you or did you arrange that yourselves?

did we not need to cancel the existing insurance policy then. the insurance company is an independent company, not linked to the mortgage provider

Most are independent of the mortgage but a few are tied to the lender. These have to be changed but the independent ones do not.

mandy_woo

hi, she had arranged the mortgage protection insurance for us 2 years earlier, the insurance provider is not linked to the mortgage lender, they are completely independent of each other.

dunstonh

If she arranged it, she is liable for the advice given whether it was documented or not. With cancellations/rebrokering it is the advisers responsibility to get you on the right product and make you aware of any potential negatives.

So, you should take this to complaint.

mandy_woo

thankyou dunstonh for your help. in your opinion then, we have been mis-advised by being told to cancel the original policy, and start a new one. would the normal thing to have done be just to inform the insurance company of the change of lender, so the original policy could just be amended. the trouble is we have nothing in writing to prove that she told us this. i'm hoping that the telephone calls that we made to the insurance company may have been recorded, as i'm pretty sure that she rang them previous to my telephone call to inform them that we wish to cancel, but they needed to have my permission as well to cancel.
this is a complete mess, i just hope that it can be easily rectified.

thanks again for your help

dunstonh

in your opinion then, we have been mis-advised by being told to cancel the original policy, and start a new one.

Based on what you have said, yes. You should have been told that by choosing a new provider you would have a new qualification period for unemployment. You should have also been told the pros and cons of changing.

the trouble is we have nothing in writing to prove that she told us this.

You mention in your complaint that you never got anything in writing. If it wasnt issued, you would never have got it.

mandy_woo

The thing is, we haven't actually changed insurace provider, we have stayed with the same provider, but was told to cancel the original policy, and take out a new one straight away, we had the original policy for two years. we dont have in writing that she told us to cancel the policy, but she did tell us verbally, and if i remember correctly, she informed the insurance company before i rang them that we were remortgaging and needed to cancel the policy and set up a new one. the new policy states that it was arranged by a financial advisor, and states her name, so i am hoping that this will make it clear that it was not our choice to change the policy,

dunstonh

but was told to cancel the original policy, and take out a new one straight away,

Thats naughty. The existing provider should have been able to amend the sum insured if that figure was different. The only exception is that if the insurer couldnt carry the old one over but as i mentioned, that only applies to some lenders own brand versions usually.

I suggest you contact the insurer and ask them if the old one could have been kept going but amended to reflect the new mortgage amount. If yes, then that is the basis of your complaint.