Car GAP insurance - claim not settled.

Arpo1

I took out GAP insurance for a car that was purchased on credit.
After the loan was paid off I phoned the GAP insurance company.  They told me that the GAP insurance could continue indefinitely, as long as I kept paying the premiums.  In the event that the car was a write off, I would still receive the purchase price of the car, even though there the car had been fully paid for. 
Some years later the car became a write-off, through no fault of my own.  The company through which the car was insured paid me the write-off value of the car.  Can't remember how much I got, exactly, it might have been around £900.  Again, can't remember the exact negotiations with the car insurance company at this time but I ended up keeping the written-off car.  I'm sure that the amount of the write-off settlement was reduced because of this.  I subsequently gave the car away to my sister.
The GAP insurance claim was long and protracted, compounded by the fact of the time that had elapsed since the GAP insurance was taken out (about six years) and the time the claim was made.  They kept asking and re-asking for documentation.
I'm still querying why the GAP claim for around £5,000 has not been settled.  The GAP company say that they now need something from the salvage agents to show that the car was forfeited and actually scrapped and a copy of the DVLA slip to say that I am no longer the registered keeper.
I have no communication from them, from the start of the GAP claim, that said I must scrap the car in order for the GAP claim to paid out. I'm pretty sure that scrap value for the car was deducted from my car insurance write-off claim.  I would be prepared for the scrap value of the car or the £900 car insurance write-off settlement figure to be deducted from the my GAP insurance claim.
Before I respond to the GAP insurance company, please can anyone tell me where I stand with this.  Is it true that in such cases, the written-off car must be physically scrapped, in order for a GAP insurance claim to be settled.  I paid the GAP insurance premiums for many years and this doesn't seem right to me.


 

Sandtree

I assume you have a "Return to Invoice" GAP insurance?

So assuming the allowable invoice price was £5,000 (RtI normally doesnt include some elements like delivery) and you received £900 total loss settlement which was net of the salvage then the GAP providers (depending on exact terms) should settle at £5,000 minus £900 settlement minus Salvage value... note that some GAP providers do not deduct the actual total loss settlement but what they feel was market value at point of loss (and needless to say they are more optomistic than car insurers).

You would need to go back to them with evidence from your motor insurers of what the salvage value was and state that you retained the salvage and therefore you anticipate and accept that their settlement is reduced by this amount also.

[Deleted User]

When you got the pay out from your insurance company you must have signed over ownership of the car to them. So you should have the V5 part and a letter from the insurance confirming that they took ownership and paid out.

That's all you need.

Sandtree

[DELETED USER] said:

When you got the pay out from your insurance company you must have signed over ownership of the car to them. So you should have the V5 part and a letter from the insurance confirming that they took ownership and paid out.

That's all you need.

The OP says they kept the car

DNLONEY

Arpo1 said:

I took out GAP insurance for a car that was purchased on credit.
After the loan was paid off I phoned the GAP insurance company.  They told me that the GAP insurance could continue indefinitely, as long as I kept paying the premiums.  In the event that the car was a write off, I would still receive the purchase price of the car, even though there the car had been fully paid for. 
Some years later the car became a write-off, through no fault of my own.  The company through which the car was insured paid me the write-off value of the car.  Can't remember how much I got, exactly, it might have been around £900.  Again, can't remember the exact negotiations with the car insurance company at this time but I ended up keeping the written-off car.  I'm sure that the amount of the write-off settlement was reduced because of this.  I subsequently gave the car away to my sister.
The GAP insurance claim was long and protracted, compounded by the fact of the time that had elapsed since the GAP insurance was taken out (about six years) and the time the claim was made.  They kept asking and re-asking for documentation.
I'm still querying why the GAP claim for around £5,000 has not been settled.  The GAP company say that they now need something from the salvage agents to show that the car was forfeited and actually scrapped and a copy of the DVLA slip to say that I am no longer the registered keeper.
I have no communication from them, from the start of the GAP claim, that said I must scrap the car in order for the GAP claim to paid out. I'm pretty sure that scrap value for the car was deducted from my car insurance write-off claim.  I would be prepared for the scrap value of the car or the £900 car insurance write-off settlement figure to be deducted from the my GAP insurance claim.
Before I respond to the GAP insurance company, please can anyone tell me where I stand with this.  Is it true that in such cases, the written-off car must be physically scrapped, in order for a GAP insurance claim to be settled.  I paid the GAP insurance premiums for many years and this doesn't seem right to me.


 

It is highly unlikely that you have an RTI / Invoice GAP insurance policy six years after initially taking the cover out.  Invoice GAP insurance is almost always provided for up to 4 years... much less frequently 5 years but, it's extremely unlikely to be 6.  What is probably more likely is that your policy started off as an RTI / Invoice GAP insurance policy and then reverted to a Finance GAP insurance policy in later years.

That aside, a GAP insurance claim would almost certainly require you to forfeit the vehicle to the insurer writing the vehicle off.  Buying the vehicle off the motor insurer at a salvage price *AND* benefiting from a GAP insurance claim payout is the equivalent of having your cake and eating it - E.g. you get a car back that you can repair and then sell on, along with funds that (assuming you did have RTI / Invoice GAP insurance) top-up your motor insurance payout to a sum much closer to the original invoice price you bought the vehicle for... take those GAP claim funds and add them to the money you raise from selling the car and you're being returned to a sum of money greater than you bought the car for in the first place.  That's never going to happen, that would be "betterment"... to a potentially considerable degree.

In short, you almost certainly don't have a claim to make on the GAP insurance policy.

Sandtree

DNLONEY said:
Buying the vehicle off the motor insurer at a salvage price *AND* benefiting from a GAP insurance claim payout is the equivalent of having your cake and eating it - E.g. you get a car back that you can repair and then sell on, along with funds that (assuming you did have RTI / Invoice GAP insurance) top-up your motor insurance payout to a sum much closer to the original invoice price you bought the vehicle for... take those GAP claim funds and add them to the money you raise from selling the car and you're being returned to a sum of money greater than you bought the car for in the first place.  That's never going to happen, that would be "betterment"... to a potentially considerable degree.

In short, you almost certainly don't have a claim to make on the GAP insurance policy.

What is the difference between getting £1,000 settlement from your insurers and going down a scrap yard and buying a car for £500 to getting a £500 settlement because you decided to buy back the salvage for £500?

Certainly the GAP claim should be based on the BER valuation net of excess rather than the final settlement amount (ie £1,000 in this example) but the fact they happen to use the settlement to buy a wrecked car from their insurer or anyone else is broadly irrelevant to the GAP claim.