Car on hire purchase agreement and insurance issues after crash

ER81

Please, please help!

I had a car on a hire purchase agreement and had an accident 3 weeks ago after aquaplaning on water on a busy A road and hitting the central reservation. Thankfully myself and my passenger weren't hurt but after 3 weeks of tiresome liaising between lease company and insurance company the car was finally taken to a garage this week and written off. I've been given a settlement fee by the finance co and my insurers have just cheerfully informed me that their 'first duty of care' is to the lease co, and that if the valuation of the car is less than the settlement fee, I'm liable for the difference. I had originally put in a deposit and part exchanged my last car (which was costing a fortune in repairs, hence entering a lease agreement in the first place as I could never have afforded a decent car outright), which amounted to £1000. I have no savings and if I end up paying anything I will have lost all that, plus almost 2 years worth of payments on a 3 year lease. I'm utterly flabbergasted as I have never defaulted on any payments, have always been up to date with insurance and car tax, and feel that I've been taken for a complete mug. I also feel utterly let down by all parties, not least because I was informed of the write off through an anonymous text message from a FOURTH party and had to make calls to follow it up with no idea to whom I was speaking. I will be taking this further whatever the outcome as I feel I have been totally unfairly treated. Any similar experiences/advice would be so grateful received right now.

Thanks all.

glentoran99

Who has treated you unfairly? It pretty common that a write off valuation is less than finance outstanding, that's where gap insurance was born from

Silver-Surfer_2

The simple answer is yes, you're liable for the difference. You took out finance with interest on a depreciating asset, as said you should have taken gap insurance.

TadleyBaggie

I suspect he hasn't yet found out that his full annual insurance premium will need to be paid, probably deducted from the payout.

AdrianC

It's very simple.

Your car insurance pays out the value of the car just before the collision.
Unfortunately, that value was less than the debt you owe on a loan secured against it.

So, yes, you need to pay the difference, because you need to clear that debt after the insurer's paid out. If the debt was less than the value, you'd expect to receive the difference, wouldn't you? So why is the reverse such a surprise?

As others have said, there are gap insurance policies which cover the gap between the value of the vehicle and the debt, but it's a bit late to take one out after you've crashed your car...

Double_V

Is there a time frame in which you have to take out the Gap insurance when buying new car ?
I don't have gap insurance and my car is year old now.

daydotz

Up to 30 days after purchase

jackr5

ER81 wrote: »

have always been up to date with insurance and car tax

Unfortunately you don't get any well done points for just doing something you're meant to do by law

bigjl

The new version of Forza does have some very tricky new standing water effects.

Very easy to loose control, you will soon win some races and purchase a nicer M3

thescouselander

daydotz wrote: »

Up to 30 days after purchase

Actually, you can buy it up to 6 months after purchase if it's a new registration.

Mr.Generous

gap insurance is ideal if you think you are likely to right off a car on finance. Never bothered personally.