Drowning in abusive Insurance costs (+Start your claim)

by Legal editorial team
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Drowning in costs is one of the consequences of the unfair practice of Spanish Banks of 'forcing' insurance costs (Life insurance, Mortgage repayment Insurance) upon the borrower.

Banks have for years been pressure selling expensive insurance policies to those seeking a mortgage to purchase a property in Spain.

Most bank staff have pressured borrowers, by insisting that the policy was 'a requisite' to obtain the mortgage, with most borrowers being unaware that they could shop around and find cheaper quotes from insurance companies.

The only insurance that a bank can insist on linking to a mortgage is buildings insurance!

Borrowers were incorrectly told that Life insurance was mandatory and the Banks then imposed a particular insurer (usually a part of the same company or financial group) on the borrower.

In most cases the 'salesperson' managed to tie the borrower into paying the premiums for the full term of the policy simultaneously with the mortgage agreement - sometimes out of the amount borrowed.

An example: A 20 year mortgage agreement with life insurance at premium of €1,000 p.a..

The bank lends the agreed capital mortgage PLUS an extra €20,000 which is added to the total (sometimes with interest charged on the basis of a personal loan).

This is the “one-off financed premium” which means that the borrowers pay the premiums for the whole term of the mortgage, up front, with a loan.

Most borrowers have not been properly advised of what they were agreeing to, or the financial consequences.

In many cases the borrower was not made aware of the financed insurance premium, as it was practically hidden within the small print of the contract - which could not be read by foreign borrowers.

Our first legal claims began passing through the local Spanish Courts in mid-2015.

The rulings passed were all in favour of the claimants/the borrowers.

The Banks must cancel the policies and return the one-off premiums paid for the term of the mortgage yet to elapse (for example a 20 year insurance policy signed 5 years ago would have 15 years remaining, therefore the bank would have to return the premiums for the 15 years yet to come).

Some Banks did appeal the first instance judgements.

The Courts of Appeal have thus far maintained the decisions of the lower Courts.

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