Financed Car Crash & Insurance

Owlykatz

Hi, I'm wondering if anyone could help - it would be hugely appreciated.

Last week my parents and I were involved in a car crash on a main road. Another vehicle pulled out from a side road into our path. The police and paramedics attended.
The other guy admitted fault to the police and to us, apologising for causing the crash.

The car was new last year, and is being paid for monthly on finance. The police told us to call and get the car recovered, as it was on a main road. We called the car manufacturers, using the number on the windscreen (call for accidents or emergency- it is under warranty).

We are still dealing with the manufacturers, who are arranging a courtesy car until we hear about ours. 
We have now learned that our car is likely be written off.

I was told today that - even though it was the fault of the other party, we will be liable to pay the difference between what we have paid so far for the car and what is recovered back from the insurance from the other side.
We didn't have Gap insurance.

We do however have comprehensive insurance with another company. 
I have been told though not to get in touch with or speak to any other insurers, as it may compromise our ongoing case with the car manufacturers.

So I'm wondering whether anyone has any advice?
To me, it seems unfathomable that we should have to find a chunk of money to make up the difference to pay the car off. Especially when it wasn't out fault. Surely it is up to our side to negotiate with theirs to cover costs?

Should I get in touch with our insurers and risk our ongoing case with the manufacturer? 
(Their car was still driveable, so seems very unfair)

Any advice hugely appreciated....

Thank you 

Car_54

I don't quite understand what you mean by "our ongoing case with the manufacturer". Have they passed you to an accident management company? Have you agreed to let them handle it.

Whatever, the driver who caused the accident (or his insurer) is liable to pay you only the market value of your car (plus expenses such as hire car), but the market value is likely to be less than the amount you owe. That is why GAP insurance was invented.

You certainly need to inform your insurers ASAO. If you haven't already got a contract with an AM company, you can either claim direct from the 3rd party, or let your insurers do it.

DrEskimo

Your insurers agree to pay out market price for the car at the time the car is written off. The insurance company will come with an offer and you are free to challenge that offer should you think it is unreasonable, but many will simply be guided by the book price given by valuation guides.

You can present your argument, but simply listing list prices of other similar cars is unlikely to work, since the list price is not necessarily the price the car is sold at.

As for the financial shortfall, I'm afraid that is just the reality. The cars value at the time of the accident is less than the price paid when new. Had you paid outright, you would have absorbed this same material loss.
The fact you have chosen to spread that cost with a credit agreement is immaterial. The amount you chose to finance relative to the value of the vehicle is entirely subjective and had you financed only a small portion of the car, you would have no shortfall. If you finance the entire sum, then the shortfall could be substantial.

If you agree to finance a large proportion of the cars value and are not in a position to cover any shortfall in the event of a write off then then that is a risk you take. It's precisely why insurance like GAP exists, to mitigate this financial risk.

Best of luck with getting a fair price from the insurance company. Hopefully you can reach an agreement where you minimise the shortfall.

The_Fat_Controller

You don't deal with the manufacturer in case of an accident.

Are you actually dealing with the assistance service provided through the manufacturer ?

Are they dealing with the insurance companies involved ?

It's all a bit confusing at the moment, but you must ensure your own insurers are informed asap.

daveyjp

If you borrow too high a proportion of the value of a rapidly depreciating asset and pay off the loan at a slower rate than the vehicle depreciates you have a problem if the car is written off.

GAP was introduced to cover this and now enables manufacturers to maximise lending and make money on the GAP policy.

facade

Do you not have insurance that replaces the car with a new one in the first 12 months- or is the car more than 12 months old?

Then it is just a matter of the finance company agreeing to shift the finance to the replacement car.

Sandtree

Owlykatz said:
who are arranging a courtesy car until we hear about ours. 

We have now learned that our car is likely be written off.

I was told today that - even though it was the fault of the other party, we will be liable to pay the difference between what we have paid so far for the car and what is recovered back from the insurance from the other side.
We didn't have Gap insurance.

We do however have comprehensive insurance with another company. 
I have been told though not to get in touch with or speak to any other insurers, as it may compromise our ongoing case with the car manufacturers.

Its not a courtesy car, its a hire car being provided on credit to you

If you have finance and the finance is more than the value of the vehicle then this is exactly what GAP is for, the third party isnt liable for your finance bills.

Car_54

facade said:

Do you not have insurance that replaces the car with a new one in the first 12 months- or is the car more than 12 months old?

Then it is just a matter of the finance company agreeing to shift the finance to the replacement car.

Unlikely to be less than 12-months-old. Not many people buy new cars in the last few weeks of December.

Owlykatz

The_Fat_Controller said:

You don't deal with the manufacturer in case of an accident.

Are you actually dealing with the assistance service provided through the manufacturer ?

Are they dealing with the insurance companies involved ?

It's all a bit confusing at the moment, but you must ensure your own insurers are informed asap.

Many thanks for your response.

Yes, the assistance provided by the manufacturer. I did call our insurers on the day of the accident and they made a note.

Owlykatz

[Deleted User] said:

I don't quite understand what you mean by "our ongoing case with the manufacturer". Have they passed you to an accident management company? Have you agreed to let them handle it.

Whatever, the driver who caused the accident (or his insurer) is liable to pay you only the market value of your car (plus expenses such as hire car), but the market value is likely to be less than the amount you owe. That is why GAP insurance was invented.

You certainly need to inform your insurers ASAO. If you haven't already got a contract with an AM company, you can either claim direct from the 3rd party, or let your insurers do it.

Many thanks for your kind response. We were told to call them to get the car moved. So we have had to carry on with them. They are a 'provider of credit hire and intervention hire, to motorists involved in road traffic accidents.'

I did call our insurer the day it happened, they have made a note of it

Aretnap

Unfortunately it's a common problem. The at fault driver (or his insurer) does indeed have to make good the damage he's caused - but that's measured in terms of the value of the car at the time of the accident, not in terms of any finance that you might or might not have on it.

The way to think about it is that before the accident you had a car that was worth (say) £15000 and a debt that needed paying off. If the third party insurers give you £15000 then they've made good your loss - but you still have a debt that needs paying off. The fact that the debt is greater than the value of the car, or that the car is worth less than it was when you bought it, is not the fault of the other driver - depreciation costs are just part of the joy of owning a new car. 

You can argue about the exact value of the car of course, but I'm afraid you can't get away from the fact that the payout id based on the second hand value at the time of the accident, not on the type of finance agreement you used to buy it.