According to Property Portfolio Rescue, just over 66% of mortgage holders do not have insurance to cover the monthly cost of their mortgage should they become redundant.

The research also found that only 69% of homeowners have enough cash to see them through 3 months with no income coming in.

As unemployment is expected to surge past 3 million next year, losing your home after a relatively short period of unemployment, becomes a significant risk.

That risk could be really reduced if homeowners took out mortgage payment protection insurance. For example, a monthly mortgage payment of £1,000 could be insured for as little as £12.40 a month. But conditions do apply to these policies. Payments could be delayed for between 30 and 180 days after a claim depending on which policy you selected and some insurers will only pay for up to 12 months. If you’re unemployed for longer you’re on your own.

Last month a judgement slipped through the Newcastle County Court which could have major repercussions for the insurance industry.

The case related to a person who had been sold Payment Protection Insurance (PPI) by MBNA. The case was won on a technicality that will send shivers around the boardrooms of the companies that sold PPI.

The judge said that MBNA had created an “unfair relationship” by encouraging the client to take out PPI but failing to disclose the large commission that MBNA would earn as a result from the insurance company. Apparently, such an “unfair relationship” breaks new laws which were introduced in 2007.

As the judgement was delivered in a County Court, the case does not form a binding precedent but companies specialising in miss-selling compensation claims are rubbing their hands with glee. One claims company said, “This has massive ramifications. The unfair relationship issue is widely applicable as it underpins almost every sale of PPI”.

We think it probably applies to all other forms of insurance. Unless the seller informs the client of the commission they will earn, the case would seem to have been miss-sold.

The FSA plans to instruct banks to re-examine claims they have rejected for the miss-selling of payment protection insurance (PPI).

PPI was sold as a safety net to provide income to continue to repay loans and credit cards if the policyholder lost their job or became too sick to work or they had an accident. But these policies had restrictions. About 2 million people were excluded from claiming because they were self employed or part timers. Nevertheless the banks continued to sell the policies to people who had no possibility of making a valid claim. And it is not surprising that the banks were so keen on PPI – they made an estimated £1.4 billion a year from these insurances.

It now seems that the FSA believes that many of the compensation cases that have been rejected should not have been rejected. Consequently they are reported to be planning to instruct certain banks to review all the PPI claims they previously rejected. Apparently, this will affect around 40% of the companies that sold these policies and around 185,000 ex-policyholders.

The FSA have come to this decision because banks have been rejecting six out of ten miss-selling claims but when these rejections are referred to the Financial Ombudsman Service, nine out of ten are overturned in the customer’s favour.

So it seems that we can’t even rely on the banks to honestly review their own miss-selling without cheating!

We’ve all heard the talk that we’ve reached the bottom of the recession so we may be forgiven in hoping that the worst is over – but is it? It’s clear that as economists are predicting that unemployment will rise by another 500,000, many more workers will yet to face unemployment.

So maybe one of the key questions is have you got Redundancy Insurance? And do you have enough cover to maintain your mortgage repayment and any other loans that are secured on your house? And would you then have enough income to keep the family solvent?

Nobody likes considering these questions, but take my advice – no-ones job is 100% safe these days.

Redundancy Insurance is sold under a number of different names – Some policies also include cover for accidents and sickness and call the policy an Accident Sickness and Unemployment policy (ASU) some just call, it Payment Protection. So if you have any policies like these dust them off and establish exactly what you’re covered for and how much you’d receive if you were made redundant. Then work out how much income (after tax) you’d need to pay all the essential bills.

You can then buy cover in case you’re made redundant. The policies do not tie you in to a long tern contract and you can cancel them by simply informing the insurer and then stop paying.

But watch out. If you have reason to believe that you are about to be made redundant, it’s too late to buy a policy – your application will be invalidated. Our advice is be safe get a redundancy policy now. They cost in the region of £4-5 per £100 of monthly income for a policy that would pay out for up to 2 years.