Advice regarding GAP insurance

FlySi

Hope somebody can offer some guidance on this. I'm presuming that I've put it on the right board as it relates to insurance...

I bought car from Motorpoint in 2007 for £9499. By the time the extras were added in (getting the car to Glasgow, plates, registration, etc.) the final amount payable was £10648.12 This figure included:

Retail Price Protection/GAP for 3 yrs @ £299 and;
Extended Guarantee for 2 yrs @ £499

My existing car was to be traded in and I was offered £1800 as a part-exchange value. I also put down a deposit of £100. These were redeemed against the total cost of the new car and the balance remaining was £8748.12

I was under the impression that the £1900 (the part-exchange value and the deposit) had paid for a) the extra costs of the car (registration, the GAP insurance, the guarantee, etc.); and b) had paid £750.88 off the cost of the vehicle. The balance would be paid for through finance with Black Horse. I assumed that the finance would be for £8748.12 (excluding interest, etc.)

Recently, however, I looked at the finance agreement from Black Horse to see if there was any PPI included in the cost. Whilst there was no PPI included there was a charge of £798.99 for insurance. This insurance was over 48 months and the total charge for the insurance was £250.77 (£1049.76 gross).

For the car itself, the amount to be financed was lowered from £8748.12 (excluding interest, etc.) to £7949.13 Obviously the difference between these two figures is £798.99, which also happens to be the combined cost of the GAP insurance and the extended warranty.

I was under the impression that the amount to be financed was £8.7k on the car. The GAP insurance and the guarantee - to my mind at least - had been paid for with my deposit and the exchange value of my existing car. Could anybody offer some clarity on this issue? Under the heading Other Financial Information on the agreement it states that the total cash price for the car was £9849.13 and this included the registration etc. The deposit and exchange value were redeemed against this but did not include the GAP insurance and the warranty - these were left out and charged separately. Where does this leave me with regard to reclaiming costs? I was not aware at any time that the GAP insurance and warranty would be paid for separate to the finance for the car proper. What irks me more is that the GAP insurance was for 3 years and the extended guarantee for 2 years but I was paying out for 4 years. Surely this is wrong...? I always thought that the term of payment had to correspond to the term of the policy. If there is a case here for misselling (I suppose) then who is liable - Black Horse (as the provider of the finance) or Motorpoint (whose documents make no mention of paying for the GAP /guarantee separately)?

If it would help, I can scan the documents and upload them for anybody's reference.
Thanks is advance (and apologies to those that have already seen this on CAG!)

sophieschoice

A friend and I both recently received letters from the AA (we both took out car loans with them) saying to call them if we felt we had been mis-sold GAP insurance. We phoned and answered a couple of questions and they agreed we felt we had been mis-sold it.
We received £280 each which was the £199 premium and 8% interest.
TBH, I'm not awfully sure of your question but I hope this helps!

FlySi

@sophieschoice - I'm not entirely sure I know what I'm asking anymore!

I suppose the questions are:
1) Can I reclaim the costs of GAP insurance and the extended warranty? I know I chose to have them but I was under the impression that they had been paid for by my deposit and the part-exchange value.
2) Who do I reclaim/complain to? Black Horse (who structured the finance) or Motorpoint (or did not say it would be paid on finance)?
3) Do I have grounds to complain because I was paying for something for a period of time that was longer than what I was covered for?

sophieschoice

Well if the AA say you can I can't think why other companies would differ.
I would try reclaiming from Black Horse first.
Yes you have grounds, my answer was that I felt pressured into it.
Good luck.

amersall

FlySi wrote: »

Hope somebody can offer some guidance on this. I'm presuming that I've put it on the right board as it relates to insurance...

I bought car from Motorpoint in 2007 for £9499. By the time the extras were added in (getting the car to Glasgow, plates, registration, etc.) the final amount payable was £10648.12 This figure included:

Retail Price Protection/GAP for 3 yrs @ £299 and;
Extended Guarantee for 2 yrs @ £499

My existing car was to be traded in and I was offered £1800 as a part-exchange value. I also put down a deposit of £100. These were redeemed against the total cost of the new car and the balance remaining was £8748.12

I was under the impression that the £1900 (the part-exchange value and the deposit) had paid for a) the extra costs of the car (registration, the GAP insurance, the guarantee, etc.); and b) had paid £750.88 off the cost of the vehicle. The balance would be paid for through finance with Black Horse. I assumed that the finance would be for £8748.12 (excluding interest, etc.)

Recently, however, I looked at the finance agreement from Black Horse to see if there was any PPI included in the cost. Whilst there was no PPI included there was a charge of £798.99 for insurance. This insurance was over 48 months and the total charge for the insurance was £250.77 (£1049.76 gross).

For the car itself, the amount to be financed was lowered from £8748.12 (excluding interest, etc.) to £7949.13 Obviously the difference between these two figures is £798.99, which also happens to be the combined cost of the GAP insurance and the extended warranty.

I was under the impression that the amount to be financed was £8.7k on the car. The GAP insurance and the guarantee - to my mind at least - had been paid for with my deposit and the exchange value of my existing car. Could anybody offer some clarity on this issue? Under the heading Other Financial Information on the agreement it states that the total cash price for the car was £9849.13 and this included the registration etc. The deposit and exchange value were redeemed against this but did not include the GAP insurance and the warranty - these were left out and charged separately. Where does this leave me with regard to reclaiming costs? I was not aware at any time that the GAP insurance and warranty would be paid for separate to the finance for the car proper. What irks me more is that the GAP insurance was for 3 years and the extended guarantee for 2 years but I was paying out for 4 years. Surely this is wrong...? I always thought that the term of payment had to correspond to the term of the policy. If there is a case here for misselling (I suppose) then who is liable - Black Horse (as the provider of the finance) or Motorpoint (whose documents make no mention of paying for the GAP /guarantee separately)?

If it would help, I can scan the documents and upload them for anybody's reference.
Thanks is advance (and apologies to those that have already seen this on CAG!)

Don't think you will get get the warranty back,but put a complaint in for the way this "extra" was put on the loan,you were mis sold this and paid it over the term with interest if this was included in the monthly payment.
Send the complaint to Motorpoint.

FlySi

@amersall - Thanks for the advice. The warranty and the insurance were bundled together into the one payment. Would I be right in thinking that they would recalculate what was paid without the GAP insurance element included?

BJV

As I understand it when you buy a black horse gap insurance policy you are asked to sign a separate section on the documents for any and all insurance products. Which ever system motor point used from E-dan which is or was Black Horse's electronic system to manual paper documents you would of had to of signed twice.

I am not a re-claims expert but the best people to speak to would be black horse themselves as the last thing any insurance company wants is to be seen to promoting or advocating the miss selling of policies.

Good Luck

amersall

FlySi wrote: »

@amersall - Thanks for the advice. The warranty and the insurance were bundled together into the one payment. Would I be right in thinking that they would recalculate what was paid without the GAP insurance element included?

Yes they should,you go to motorpoint as they were the ones who sold you the loan and insurances,Black horse will just refer you to them,if you want to check this,ring Black Horse.

FlySi

UPDATE 22/02/12

Spoke to Black Horse today regarding a number of matters and this issue came up. The individual I spoke to was extremely helpful and understood my position, ie., having put down a deposit of £1900 it was reasonable to assume that this had paid for all of the extras (including the insurance) and paid for some of the car. However, he stated that it was 'standard practice' to structure the payment in this way. When asked if I would like to escalate it, I said yes and was told to expect a response within 48 hours.

No more than 2 hours later I received a call from the complaints department at Black Horse. They made their position quite clear that the agreement was structured properly. When I mentioned that PPI claims were being settled on the basis that the duration of payments must equal the coverage of the insurance policy (i.e.. 24 months of payments for 24 months of coverage) I was greeted with silence. I point out that the GAP policy was for 3 years, the warranty for 2 years but I was paying out over 4 years. I was told that I was paying out over the lifetime of the car finance agreement so it was acceptable. By that standard, if I had the same warranty and GAP policy on a 10 year finance agreement I would pay nearly £1000 in interest!!!!

I was told that I would receive a response in writing from them in the next few days and that I could contact the FOS if I wished. As it had taken less than 2 hours to decide on this I thought I'd take less than 30 seconds to contact the FOS. I've now submitted a complaint via the FOS: Black Horse has 8 weeks to investigate.

I'll let you know how what happens.

@amersall - Black Horse stated that even though Motorpoint sold it, Black Horse was responsible for it (as they structure the agreement) I fear this could end up with me being bounced back and forth between the two!

~Brock~

If the insurances were to be paid out of the deposit as you appear to have preferred, then there would have been less deposit to go against the car and you would have had to borrow more against the car instead, which would result in you paying the same amount of interest as you are at the moment.

Or have I missed something?

FlySi

~Brock~ wrote: »

If the insurances were to be paid out of the deposit as you appear to have preferred, then there would have been less deposit to go against the car and you would have had to borrow more against the car instead, which would result in you paying the same amount of interest as you are at the moment.

Or have I missed something?

I'm surprised nobody has raised this question! I agree - but there is a problem. The APR on the insurance was far higher than the APR on the car - by 10% Whilst I may have had to borrow more against the car (£798 more capital) it would have been at a lower APR and thus wouldn't have cost as much as it has as insurance. What's more, this charge for insurance was over 4 years whereas the charges should have been separated out into 2 year and 3 year charges (if it had to be done via finance).