unfair payout for car insurance claim

Hamp61

Hi,

 

I don’t know if this is the right platform/email to send this to but, please advise.

 

I have just had my car stolen from outside my house 4 weeks ago, I had only owned it for less than 3 weeks !

 

It was a Mercedes e-class which I had purchased through a credit broker, `oasis car finance` who in turn found me `go-car credit` for the finance.

 

Then they found the car from a dealership, `Heston Automotives` .

 

My insurance company, `Hasting direct` have now paid off the settlement figure with go-car credit and I was left with £2000.

 

However, I had paid an initial £6,500 deposit to the dealership who I am presuming passed that on to go car credit.

 

So, my question was , why did I only receive 2k back and not the full 6.5k of my deposit.

 

I questioned Hastings about this and they ask me afterwards, did I take out GAP insurance, which I replied I had never heard of GAP insurance and that nobody had offered or explained to me what it was.

 

Is this a common situation or should I be taking this further with someone like the FCA ?

 

Please advise.

 

 

Momanns

You may need to check with Hastings Direct but sounds like your overall payout from the insurance is £4,500 less than you paid for the car. Essentially, the insurer have valued the car at X even though you paid Y.

Gap insurance is generally offered for new/nearly new vehicles where the car depreciates in value immediately.

You can question the figure Hastings Direct reached via a complaint and go from there but there is often a difference between the sum paid and the insurance value. 

dunstonh

Is this a common situation or should I be taking this further with someone like the FCA ?

The FCA don't handle consumer complaints.

I questioned Hastings about this and they ask me afterwards, did I take out GAP insurance, which I replied I had never heard of GAP insurance and that nobody had offered or explained to me what it was.

Cars depreciate in value and they do not follow the debt value.  So, you can find a gap in what you owe and what the car is worth.    This is what gap insurance is for.

Second hand values have been falling pretty fast with many vehicles recently (they were higher than normal post covid).   

If its a new vehicle, then many insurers will pay out the full price in year one.

BarelySentientAI

Extremely common and is why GAP insurance exists.  Also happens on many total loss car claims when the owner thinks their car is worth a lot more than the insurer's valuation (and there's not really any extra insurance for that).

The insurer has worked out that the value of your car was £4.5k less than the price you paid.  Just like with anything used, the value is not necessarily the price you paid, but if you have a reputable source for a different valuation then you can try to complain to Hastings about the difference.

TadleyBaggie

Hamp61 said:

Is this a common situation or should I be taking this further with someone like the FCA ?

Probably won't do a lot of good. The FCA have requested that insurance companies pause the sale of GAP insurance whilst they investigate the selling of it by dealers. So when you bought the car the dealer was probably not allowed to offer it. I bought a new car in March and initially after being offered GAP by the dealer, they had to withdraw the offer.

saajan_12

The key for Hastings is really the car value.  
The insurance would pay out the value of the car at the time of the loss. This was a 3 week old car, no longer a new car which therefore would have some depreciation vs brand new. The question is how much is a reasonable depreciation, considering an amount of driving that might be little more than would would be done in test drives. They've decided this is 4.5k less than the purchase price, its up to you to challenge their valuation. 

The gap insurance isn't really relevant if you didn't have it. However I would have thought that covers if the loan was actually more than the total valuation, ie if you were asked to pay more for the loan and got 0 of the 6.5k back. 

Brie

Did you check the price of buying the same car as the one you had stolen?  As in the same make, model, age, mileage?  Many times the payout will be less than what it takes to replace and sometimes the insurance company can be negotiated with to up their offer.

Aretnap

To clarify, did you buy the car brand new, or was it a second-hand car? 

(£4.5K depreciation in a few weeks is to be expected on a car that you bought brand new. On a second hand car it implies either that you seriously overpaid for the car, or that the insurers valuation might be questionable)

DullGreyGuy

the £4.5k will not only be depreciation but also the early settlement charge on the finance and their policy excess

The OP needs to get the numbers from Hastings and the Finance company to see what has actually been paid as the valuation (when you add the excess on) and what the finance company has taken

akira181

Does the payout not correlate to what you valued your car at when you got the insurance? 

If you lowballed it for a cheaper premium, then the payout will be lower than the value of the car (assuming the insurance don't declare the policy void).

If you highball it, would they not have to payout at close to that value since you've paid the premium to insure it at that value?

BarelySentientAI

akira181 said:

If you highball it, would they not have to payout at close to that value since you've paid the premium to insure it at that value?

No.