The Problems With Payment Protection Insurance

It has now become a very important thing to provide insurance cover to every asset, irrespective of its monetary value. Although automobiles, homes and other tangible assets still constitute the major number of insured items, other things are also getting their fair share in the insurance game. We all buy consumer durables on credit these days. Whether it is a television, a refrigerator or an automobile, everything comes through financing.

This credit financing also comes with guarantees from the manufacture or the credit lender. If we buy a new home theatre system, we would get a guarantee of three to five years along with the breakdown warranty.

However, this warranty is not the only protection. There is also an insurance cover in case we are unable to pay the dues. The insurance policy will come in handy to avoid us from defaulting on any loans or credits.

This type of insurance is known as the payment protection insurance or PPI. As the name suggests, PPI is necessary for both the customers and the lenders. A PPI agreement will ensure that the price of an item will be paid in full, whatsoever maybe the financial or physical condition of the buyer. Similarly, it also ensures the lender that his money is safe.

There has been a lot of speculation in the consumers about the actual worth of PPI. Some think that a PPI arrangement is not good in the end. In case of defaults, one has to pay through one's nose and this insurance policy does not come to one's help. British market is experiencing a reverse of fortunes, when it comes to the importance of PPI. Some customers have complained to the Office of Fair Trading (OFT).

OFT has blasted the working of PPI on a number of factors. They have lamented the fact that PPI has failed to provide protection to customers. As this concept has become a business reality in the UK, every product now comes with PPI protection. However, customers do not know in all cases that they are also paying for PPI. Subsequently, in case of any default they are not aware of the rules and procedures. Manufacturers and service providers have to indicate clearly the PPI protection to avoid these incidents.

Another problem with PPI is the non-payment when a customer becomes a defaulter. The insurance cover, although present in the original deal, is complicated enough that the companies can easily exploit a customer and force him to pay out of his own pocket. Another noticeable thing in this whole process is the overpricing of PPI cover. Companies regularly misstate the price to get extra money from the customers and they are not aware of this massive deception.
It can be safely assumed that insurance providers and manufacturers are in cahoots to rob the customers of their hard-earned money. A strict surveillance of PPI is necessary to ascertain the shortcomings. Otherwise, this system has to be abandoned as it has failed to provide relief to customers.