Overdraft Protection Insurance

dav1dace

Some years ago I started a company. I asked the bank for an overdraft, however I was talked into taking out overdraft protection insurance. In 2012 I sold the company, my overdraft guarantees were released and the bank cancelled the insurance, obviously I couldn't have a policy for protecting an overdraft that I was not guaranteeing.

The new director bankrupt the company and it is now in the final stages of administration before being wound up.

The bank contacted me recently and said the overdraft protection policy had been miss-sold and I was entitled to a refund. I explained the situation with the company and asked if they were sure i was entitled to claim the refund. The person from the bank said yes the policy was in my name and has now sent me the paperwork.

Is he right or does the protection insurance remain with the company and therefor is it the liquidators that are entitled to the refund.

I don't really want to be doing anything wrong here.

dunstonh

If the overdraft protection was on the business account then a refund becomes an asset of the company.

If it is on your personal account then it belongs to you.

dav1dace

That's what I thought.

So really the bank get to keep it because how is the liquidator ever going to find out that a refund is due?.

dunstonh

So really the bank get to keep it because how is the liquidator ever going to find out that a refund is due?.

The bank should refund it to the administrator and they will use it towards those owed money.

dav1dace

Something really strange is going on here. The bank have not only sent me paperwork to claim the refund but they have also sent the person who bought the company from me an offer letter and calculated the premium and all associated interest. They are just waiting for him to accept. I think the bank have got their wires crossed. The insurance covered a period before the new person took over the company.

I haven't done anything with the paperwork until I find out exactly where I stand.

dunstonh

As a company it doesnt matter who the share holder was at the time. the money belongs to the company now.

dav1dace

I cant understand why anyone takes out overdraft protection insurance on a limited company. I put my house on the line for 15 years and I took out the insurance to protect myself. I now discover that if anything had gone wrong the insurance I took out that I thought was protecting me was not worth the paper it was written on and would not have paid out, so not only would the bank have taken my house but because the insurance was miss-sold all the premiums that had been paid along with any interest would have gone to the administrator.

Hardly seems fair does it.

dunstonh

and I took out the insurance to protect myself.

Problem is that with a limited company, its not you. Its the company. The company is the legal entity that took out the policy.

Hardly seems fair does it.

No. However, lots of things are not fair in business. You work hard and on the way you take some knocks. Some fair, some unfair.

dav1dace

Thanks for the advise. I think it would be wise of me to send the paperwork back to them with a letter explaining the situation with the company.