To sue or not to sue?

ChocolateCough

Tarambor wrote: »

In law she only has to be put back in the position she was in and if she had a £7.5k car then that is to give her £7.5k. If she ends up with no car and no money after paying off the finance then that is a situation she has created for herself by buying a car on finance. Had she bought one with money she had then she would have a £7500 cheque to buy another. But she didn't, she bought it with borrowed money so has to give that cheque to the finance company.

You mentioned GAP insurance so I'm assuming she is on a PCP deal. I'm assuming she doesn't have the money for the balloon payment so she was always going to end up with no car unless she took out another deal, this just brings that date forward.

If she wants a car she'll have to do what she would have had to do at the end of the PCP deal and take out another deal. If she can convince the insurers her car is worth £8k-£9k she'll have a £500-£1500 deposit.

Personally I'd learn the lesson from this, buy a cheap car outright that she can actually afford to pay for in full and save up for a newer one so if she ever ends up in a total loss situation again at least she'll have money to buy a replacement instead of having no money and no car.

I've just spoken with her and it's not on a PCP deal. She would have had ownership of the car at the end of the loan period. When she initially called up her insurance company they mentioned that her GAP insurance, which it turns out she doesn't have, should cover the difference - hence me mentioning it.

As you may be able to tell I'm not particularly experienced in the ins and outs of car finance deals and claims having never taken one out personally. It just seems mad that she could be left out of pocket in this situation.

glentoran99

Tarambor wrote: »

In law she only has to be put back in the position she was in and if she had a £7.5k car then that is to give her £7.5k. If she ends up with no car and no money after paying off the finance then that is a situation she has created for herself by buying a car on finance. Had she bought one with money she had then she would have a £7500 cheque to buy another. But she didn't, she bought it with borrowed money so has to give that cheque to the finance company.

You mentioned GAP insurance so I'm assuming she is on a PCP deal. I'm assuming she doesn't have the money for the balloon payment so she was always going to end up with no car unless she took out another deal, this just brings that date forward.

If she wants a car she'll have to do what she would have had to do at the end of the PCP deal and take out another deal. If she can convince the insurers her car is worth £8k-£9k she'll have a £500-£1500 deposit.

Personally I'd learn the lesson from this, buy a cheap car outright that she can actually afford to pay for in full and save up for a newer one so if she ever ends up in a total loss situation again at least she'll have money to buy a replacement instead of having no money and no car.

The position she was in was with a car and with finance outstanding on that car, If she is given 6k she has no car and still has finance outstanding, that's not the same position.

rudekid48

glentoran99 wrote: »

The position she was in was with a car and with finance outstanding on that car, If she is given 6k she has no car and still has finance outstanding, that's not the same position.

You buy insurance to cover the vehicle - not how you choose to finance it.
The insurer will settle based on the market value of the vehicle - the amount of interest that has been accrued on any loan is immaterial.

If I bought a car for £5k and took out a loan with 100% interest, the car is still worth £5k - no more...

Head_The_Ball

ChocolateCough wrote: »

..It just seems mad that she could be left out of pocket in this situation.

Although I can understand her frustration, she isn't out of pocket.

Before the fire she had a car 'worth' £6,000 and she owed £7,500 to a finance company. She had negative equity of £1,500 overall.

After the fire she will have £6,000 and will owe £7,500 to a finance company. She still has negative equity of £1,500 overall.

I put 'worth' in quotes as the insurance company may have undervalued her car.

She should do some research on what an equivalent car will cost her and negotiate with the insurance company. She should also negotiate a temporary hire car while she sorts out a replacement car.

She could also attempt to come to some agreement with the roofing company, who may be willing to voluntarily cover some or all of the £1,500, but they are not legally obliged to do more than make sure that she is compensated for the loss of her car and their insurance are doing that with an offer of £6,000.

Suing them is pointless. Her losses have been covered by insurance so there is no substantive basis for successful legal action.

es5595

Hang on, we've missed two vital pieces of information from OP;

She looked online and similar cars are up for between 8-9k.

and

When she initially called up her insurance company they mentioned that her GAP insurance, [STRIKE](which it turns out she doesn't have,) [/STRIKE]should cover the difference - hence me mentioning it.

Maybe we actually need to be questioning the insurance payout, as there is the definite possibility that they have undervalued the car and are happy to let the GAP insurance pick up the difference.
The potential option is she had a £8500 car, which the insurance should have paid out £8500 for, allowing her to clear the remaining finance and have £1000 to put towards the new car, but is getting well and truly stiffed by her insurance.
She needs to look at like-for-like replacements, and then challenge what she is being offered if it is less.

Car_54

es5595 wrote: »

Hang on, we've missed two vital pieces of information from OP;

and

Maybe we actually need to be questioning the insurance payout, as there is the definite possibility that they have undervalued the car and are happy to let the GAP insurance pick up the difference.
The potential option is she had a £8500 car, which the insurance should have paid out £8500 for, allowing her to clear the remaining finance and have £1000 to put towards the new car, but is getting well and truly stiffed by her insurance.
She needs to look at like-for-like replacements, and then challenge what she is being offered if it is less.

The prices she has researched are asking prices, not actual selling prices. These can be wildly optimistic. That's why the Ombudsman's guidelines tell the insurance companies to use the trade guides for valuations.

That said, it can do no harm to negotiate. Don't ask, don't get!

dawyldthing

ChocolateCough wrote: »

How would she be able to buy another car and clear the finance though if she receives 7.5k? That would only clear the finance and leave her nothing leftover.

Is some of that £7500 the interest charged? As its like anything it takes a while to start paying the balance off and for a while you are just paying the interest off

dacouch

As a side note, roofing companies Public Liability almost always stipulate that heat equipment cannot be left unattended to prevent this type of situation.

As a result, the Insurers are likely to deny any claim payment which would leave the Roofing Company without Insurance

glentoran99

rudekid48 wrote: »

You buy insurance to cover the vehicle - not how you choose to finance it.
The insurer will settle based on the market value of the vehicle - the amount of interest that has been accrued on any loan is immaterial.

If I bought a car for £5k and took out a loan with 100% interest, the car is still worth £5k - no more...

the insurer however (not the op insurer incidently) should be giving them enough to purchase the same spec of car though, that way she is in same position

rudekid48

glentoran99 wrote: »

the insurer however (not the op insurer may I had) should be giving them enough to purchase the same spec of car though, that way she is in same position

No, the insurer pays the market value of the insured vehicle, nothing more, nothing less. That should mean that the op can then purchase the same age, spec, condition vehicle but the key is market value. Ads are just the asking price so not a perfect guide.