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Last Updated on August 6, 2012 by Work In My Pajamas
In the past, payment protection insurance was routinely offered to borrowers of all types. Policy-holders were able to file claims in case lost income prevented them from servicing the debt. PPI policies were attached to specific debt, suchas a mortgage, and claims were subject to many stipulations.
The majority of policies in the USA did not cover small-business owners. This did not stop lenders from selling policies to owners. PPI fraud was fought in several court cases, and owners are now able to claim the return of premiums. Find out more below about mis-sold policies, filing claims for return of premiums, and setting up personal payment protection insurance.
Mis-sold Policies
Many PPI policies do not cover the self-employed. Several high-profile lawsuits have been brought against lenders and insurers for mis-representing the policies and targeting customers who are disallowed benefits under the policy. Lenders have a responsibility, the courts have determined, to steer borrowers away from products that do not provide benefits.
Resolving Complaints
Claims management companies have stepped in to handle legal battles between business owners and sellers of PPI. Their services benefit owners in some cases where egregious harm has been done. If you are simply seeking to recover premiums with interest, it is to your benefit to first contact the lender who sold the policy. Several lenders now process PPI claims such as this, and you receive the total amount. A claims management company, on the other hand, charges a fee.
Alternatives for PPI
The need for payment protection is a real one for business owners. While PPI policies have been pulled by HSBC and other major banks in response to ongoing fraud, there are steps anyone can take to protect assets in case of inability to pay for a short time. The most important steps are establishing an emergency account, understanding coverage under existing life and health insurance, and maintaining a relationship with the lenders.
Emergency Funds
Emergency accounts function as your personal insurance against disaster. Funds can be placed in interest-bearing accounts, so long as they are easy to liquidate without penalty. A general rule is to set aside three months of payments for each loan, but more will not hurt your situation.
Existing Coverage
According to the DMV, some auto insurance policies cover lost wages. The wages are more difficult to document for self-employed workers, and claims are still subject to caps. Death and dismemberment policies, health policies, and homeowner’s insurance may also allow claims for lost wages. Read every policy carefully, and speak with an agent about your concerns.
Working with Lenders
All loan and credit providers have one goal, which is to get their money back with interest. In the event of lost wages, you should always contact the lenders. They are often willing to defer payments or reduce the minimum for borrowers exhibiting a sense of responsibility.
Payment protection insurance is still offered by some lenders, but it is specifically for wage-earners. Small-business owners have several alternatives for protection against lost income. Protection is important to prevent loss of assets due to loss of earnings.
Jess Reid is a guest writer for ppiclaims.uk.com where you can find information on mortgages, interest rates and special financing savings.