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Insurance – credit card repayment policy – need to make claim with insurance company – bank not responsible
Mr C had a credit card account with his bank. Soon after receiving the card, he received an offer in the mail from the bank to consider credit card repayment insurance. He was then provided with a copy of the policy document which was issued by an insurance company.
The policy cover provided for the credit card monthly instalments (subject to certain maximum limits) to be met in the event of temporary or permanent disablement, death, or redundancy. In the event of redundancy, monthly repayments were to be made at the rate of 15% of the outstanding debt for a specified period.
Mr C was charged a premium based on a percentage of the outstanding credit card debt.
About eleven years later, Mr C lost his job and told the bank that the then outstanding credit card debt was to be repaid under the policy. Mr C’s understanding was that the policy would repay the entire outstanding amount and there was nothing more he needed to do.
The bank said he needed to complete a claim form, which should then be forwarded to the insurance company. Included on the claim form was a section on proof of redundancy whereby the claimant needed to provide the name, address and contact details of the employer who had terminated the job position. Mr C advised that he was unable to do this since his employer had apparently ceased trading and could no longer be located. The insurance company refused to consider the claim without some proof of redundancy.
Mr C then complained that the bank had refused to honour his insurance claim, saying that the bank had arranged the insurance and should therefore pay him under the policy. He saw no need to deal with the insurance company.
When investigating the complaint, the Banking Ombudsman obtained a copy of the policy document, including the terms and conditions applicable to Mr C. It was very clear that the policy was issued by the insurance company and not by the bank and that any claims under the policy would be made only to the insurance company.
The Banking Ombudsman then told Mr C that, while there were various steps that he could take in searching for evidence of his redundancy, the bank had no responsibility for handling his insurance claim. He needed to discuss with the insurance company the sort of evidence that would be acceptable to it, and generally to co-operate with it in the claims process.