An article in the Estates Gazette from 1995 ended with the following paragraph:

"Following the collapse in the property market, and with such clear court decisions, it is no surprise that the whole concept of MIG insurance has now altered. The fee charged to borrowers used to be called a premium. Significantly, in 1994, this was changed to an additional mortgage security fee so as to avoid confusion. In no way does it relate specifically to a premium or contract."

My query, why was it so significant that the fee name was changed and that it does not relate to a contract?

-- Matt (Mattyc@ntlworld.com), December 07, 2000

Answers

I think for the reasons we were discussing under the MIG thread a bit further down. Those MIG's drafted before 1993/4 were definitely insurance premiums, they were sold as such AND I am sure that a contract was created between the Borrower and the Insurance Co as well as the Lender i.e we are covered by the "premium" we paid to mitigate any losses incurred in the event of a repossession. Why would they otherwise spend so much time and effort trying to hide the older MIG's from us? Why hasn't a Lender taken an older MIG policy shortfall all the way to court? There would have to a judgement...which would create a precedent and they don't want that now do they?

-- Too scared to say (iwasduped@yahoo.com), December 07, 2000.

Having just spoken to an IFA I am much clearer about this:

The word 'Premium', being a "payment on an insurance contract", was changed so that there could be no doubt as to whether there was any contract between the insurer and the borrower. As the borrower had previously paid, as shown on the completion statement, the premium, this meant that there was a contract of insurance which could easily be seen in the eyes of the law, to cover both borrower and lender. Apparently in the early 1990's several cases came to court and the borrower was cleared due to this. This is mainly why the wording was changed - lenders and insurers act fast when they get stung. I have looked but it seems that these cases went unreported and that unless the court where the case was held is known it is impossible to find them.

As, where the word 'premium' was used, it means there was a in theory a contract it also means that the borrower has every right to a copy of the policy.

-- Matt (mattyc@ntlworld.com), December 08, 2000.

I understood that no cases ever reached court - they settled to avoid a judgement. I am relying on this exact argument in my case! If it comes to a head I will go public with every detail, but right now I am just too scared.

-- Too scared to say (iwasduped@yahoo.com), December 08, 2000.

There's been a recent addition to the HRP's Repossession section on MIGs, under the section called 'Why lenders refuse to supply documents'.

-- Eleanor Scott (eleanor.scott@btinternet.com), December 15, 2000.