Expensive payment protection insurance (PPI) policies could leave borrowers out of pocket and many may not even be able to make a successful claim.

Rising unemployment figures are likely to prompt more people to take out PPI, but workers have been urged to read the small print or risk being turned down if they claim. Research from Moneynet, a financial data service, has shown more and more people are being turned down for claims due to technicalities in the small print of their policies. Many borrowers who wish to pay off their loan early are also finding the cover is non-refundable.

Richard Brown, chief executive of Moneynet, said: “Most vulnerable are the self-employed and short-term contract workers – many policies discriminate against this profile of worker, so it’s crucial to check the policy details before signing up.”

He added: “Many borrowers are obliged to pay up front for their PPI cover, and then find that the insurance is non-refundable, which means that even if a well-intentioned borrower wants to clear their loan early, he or she will be out of pocket with the insurance premiums paid up front.”