Please help! Insurance Car Claim following drunk driver writing off my car

soolin

Aretnap wrote: »

Your best hope is probably that the car is repairable.


You're correct that in the event that it is a write-off, the driver's liability (and therefore his insurers') will be limited to the market value of the car at the time it was written off. This will obviously be significantly lower than the price of a brand new car, and depending on how much is left on the finance you may be left with little or nothing once the finance is paid off.


This might sound unfai, but it follows from the general principle that the purpose of compensation is to put you back in the financial position you were in before the accident. In other words before the accident you had a car that was worth (say) £10,000 and a debt that needed paying off. If the insurer gives you £10,000 and your debt still needs paying off then you're back where you were - in financial terms at least. The debt doesn't represent an additional loss that you've suffered as a result of the accident, and if the insurer paid the debt off as well as paying you for the car, you'd be better off than you were before the accident (though it might not feel like that).


To get around the problem it's advisable to take out GAP insurance when buying a car on finance... though it's a bit late to say that now.


In fact insuring with Admiral may have been a mistake as well with hindsight. The majority of insurers will replace your car with a brand new equivalent if you've owned it from new and it's written off in the first year of its life - but Admiral, being positioned firmly at the "cheap and cheerful" end of the market, are one of the few insurers not to offer this feature.


Sorry not to be able to offer anything more positive. You can at least brush up n how the car should be valued - see the Financial Ombudsman's notes here.

DrEskimo wrote: »

Does your policy offer you new for old replacement for the first 12m? Are you the first registered keeper (is it brand new, not pre-reg or ex demo?).

Unfortunately the worst case scenario is that the market value is worth less than the outstanding finance...that means no car, no money for a deposit, and debt to pay....This is not uncommon as the depreciation is heaviest in the first year. If you got a good discount, then hopefully that is not the case with the £5k deposit.

I think it was worth doing more research on PCP...it is very likely that you would have ended the PCP agreement and the car would have been worth the estimated balloon payment. Where was the next £5k deposit for another car new PCP coming from? Are you able to save alongside the PCP payment? Did you intend to buy the car?

Post 5 states car is over 12 months old so the 1 year offer would not apply anyway.

jackaboy19

Hi, I was just wondering if there was an update available on this situation? It is basically the same scenario as I find myself in now (even down to the insurer Admiral)! Any advice would be appreciated on any difficulties you had. Thanks

MovingForwards

OP never came back.

unholyangel

EdGasketTheSecond wrote: »

You might have a claim for any shortfall from the Third Party if he has assets to pay; if you have legal cover with Admiral ask them about it or when you have final figures, decide if it is worth pursuing a claim yourself.

Unfortunately theres no legal basis for such a claim. The loss caused by the accident is the value of the vehicle, not the value of the finance. Because they would have paid off that amount finance even if the accident had not occurred so covering the finance value would be a betterment.

It can happen the other way - where your outstanding finance balance is less than the value of the vehicle. Just less likely these days, with the types of finance that are typical.

soolin

Just a warning that this is an old thread that has been bumped. The OP has never returned to update.

foxy-stoat

jackaboy19 wrote: »

Hi, I was just wondering if there was an update available on this situation? It is basically the same scenario as I find myself in now (even down to the insurer Admiral)! Any advice would be appreciated on any difficulties you had. Thanks

Keep us updated on your situation - or start your own thread with the details.

Would help others wondering if GAP insurance is worth or folk trying to decide to buy a secondhand car that can afford or a PCP deal on a new car they cant.

AdrianC

jackaboy19 wrote: »

Hi, I was just wondering if there was an update available on this situation? It is basically the same scenario as I find myself in now (even down to the insurer Admiral)! Any advice would be appreciated on any difficulties you had.

As has been pointed out, this is a year-old thread, but the generic situation is clear.

The insurer is only liable to pay the market value of the car.

The "deposit" on the PCP is part of the finance package. Depreciation is less linear than the repayment of the debt.

Let's look at some examples...
Your "deposit" is £5k on a £20k new car, with £15k financed.

-case 1-
At the time of the collision, the settlement value was £12k and the car was worth £13k. It has depreciated faster than you've paid off the finance.
Insurance will pay £13k, £12k of which will go to the financier, £1k left over for you.

-case 2-
At the time of the collision, the settlement value was £13k, and the car was worth £12k. You have paid off the finance faster than it's depreciated.
Insurance will pay £12k, and you will need to find another £1k to settle the finance.

It's simply a question of whether you are in negative or positive equity in the finance at the time of the claim. Gap insurance is there to fill the gap in the event of negative equity.

You're still in the same overall position as you were... You had possession of a £12k asset, security against a £13k liability, so £1k overall liability. Your asset and liability are simply crystallised by the insurance claim.