Money Grouse: Honesty not the best policy

ELAINE YOUNG is furious with an insurance company which has left her and her partner with no cover to protect their mortgage repayments.

In June 1991 Ms Young and her boyfriend bought a house and took on a mortgage of pounds 78,000.

They bought loan protection insurance through a broker. The policy with Consolidated Marine and General pays the mortgage in the event of redundancy, sickness, or accident. The premium was pounds 40 a month.

They were both salaried employees and took out the policy with the intention of obtaining long-term protection.

In September 1991 her partner was made redundant.

Ms Young says: 'We could have made a claim and not admitted that he was trying to earn a living as a sole trader. But we did not. Morally we thought it was not fair'.

With the loss of her partner's job, their income dropped substantially. But they continued to pay the insurance premiums.

At the beginning of August 1992 they received a letter out of the blue from Consolidated. The company was pulling out of providing mortgage protection insurance for clients introduced by brokers.

Ms Young says: 'We do not accept that the company has a moral or legal right to withdraw the cover provided. We have paid premiums regularly for more than a year without making a claim, even though we could have done so. It would appear that honesty is not always the best policy.'

Ms Young asked Consolidated for compensation and a refund of premiums. She got neither.

The policy is a monthly contract. Legally, Consolidated has the right to cancel with three months notice. Morally is another matter.

The policyholders have three months to get alternative cover. But there are only a handful of companies left in the market.

Ms Young says: 'We are now in a position whereby we cannot get cover from any other source. If I, as the major earner, am made redundant the chances are that we will lose our home.'

Write to Money Grouse, The Independent, 40 City Road, London E1CY 2DB. Please include a daytime telephone number if possible. Do not send original documents or SAEs as we cannot guarantee to deal with every letter personally.