Find out how you can make a credit insurance claim when you have a credit contract you cannot repay. Understand that you must always read the fine print before signing for such insurance so that you are confident of being covered if things go wrong.
A consumer credit insurance claim happens when you cannot make your repayments on a credit contract due to illness, accident, unemployment or death. It is not compulsory to take out this insurance, but you can be made to feel pressured into doing so. If you do decide to take out credit insurance you should compare the market before deciding what cover to take. It may seem easier to take it with the credit provider, but they may not be the cheapest.
Making a consumer credit insurance claim means that a worst-case scenario has occurred. For that reason, you will not want any added hassle with a related insurance claim. It is therefore crucial that you read the fine print with such insurance, and make sure it will provide sufficient cover for any eventuality you can envisage. There has been a great deal of controversy surrounding credit insurance in the UK in recent years, with many insurers being forced to repay customers who had been mis-sold unnecessary and wholly inadequate cover.
Making a credit insurance claim
If you do have credit insurance and you need to claim, here is the procedure:
- Read the policy to make sure you are covered.
- Get a claim form from the insurer as soon as you realise that your loan repayments cannot be made.
- Fill in the claim form, plainly stating that you fulfil the necessary criteria. If you are claiming for a total inability to work through disablement, state this clearly on your form and make sure it is backed by a medical certificate that states the same.
- Lodge your credit insurance claim with the insurance provider, including all related information and documents, such as medical proof of your illness/accident.
- Keep copies of everything for your records.
- Let your lender know that you cannot make your repayments and that you have made a credit insurance claim to cover them. Ask that they freeze your repayments and any legal enforcement action until you receive a decision on your claim. If they agree, ask for this to be confirmed in writing.
- Chase up the credit insurance claim after two weeks if you have not had any response.
If your credit insurance claim is refused
In this case, you will need to speak to the insurer and ask on what grounds you have been refused. Do they require some extra information, or something clarifying? If you believe there are any more details you can provide to help your claim, then you should forward this to the insurer.
You can also make a complaint to the IEC or FICS. Any such complaint to the IEC must be lodged within three months of having your credit insurance claim refused. There is no such requirement with the FICS, but logic will dictate that you should try and get your claim reviewed as soon as possible, especially if the lender is talking about legal action to recover your debt.
If you are in any doubt about how to proceed with a credit insurance claim, you should take some legal advice yourself.