Insurance

Do I have to get insurance?

It’s your responsibility to look after the goods while you’re paying them off. If you haven’t insured the goods and they are lost, stolen or damaged, you will still have to keep paying for them.
Creditors may require you insure the goods and/or your ability to repay the loan. You may be asked to take out the following types of insurance:

• payment protection, or lifestyle protection insurance – covers your payments in some instances if you lose your job, become ill or die
• gap insurance – covers the gap between the unpaid balance of a credit contract and the amount paid out under other insurance if the goods are destroyed
• extended warranties – covers some types of repairs, for example, mechanical breakdown insurance for a motor vehicle.

The creditor’s insurance requirements must be reasonable. So if you already have enough insurance cover, for example household contents insurance, it may not be reasonable for the creditor to include extra insurances in your credit contract.

If you can’t use the insurance you do not need to get it. For example if you are not employed then the creditor can’t make you get redundancy insurance.

Check what insurances have been added to your contract. If they weren’t necessary, or you can’t take advantage of them, you may be entitled to a refund of the premium and the interest charged.

Requirements and the policy

Your credit contract should explain any insurance requirements, including how much of the premium you’ll get back if you repay the loan early. See the early repayment section.

You must be given a copy of the insurance policy within 15 working days of taking out the loan. Read your policy and check what it covers you for, or ask the insurance company the following questions:

• What does the insurance cover me for?
• What doesn’t the insurance cover me for?
• If I claim under the policy will it cover my debt to the creditor?
• Are the benefits to me under the policy more than the cost of the policy itself?
• What protection does this insurance give me above other insurances I already have? Do I really need it?

What if the creditor made me get insurance that I don’t need, or can’t ever use?

You can ask the Court to void the insurance and order the creditor to refund the money you paid for the policy and any interest you incurred. The creditor must correct the key information in your contract by taking out the insurance fee and giving you an updated copy.

What if I am not given a copy of my insurance policy?

You can cancel the policy and the creditor may have to pay you statutory damages.
See here more information about these damages.