GAP insurance - what it pays for?

moneysaver128

On leasing a new car I am concerned if there is a write off my Car Insurer will actually pay the finance company (lessor) the full price. Looking at my Car insurers booklet  for cars below 24 months old (under the section -  new vehicle benefit) it says it will provide a new car.

But it also says  if the car is subject to a lease agreement, if I request cash and they agree, they will settle on my behalf. So far so good.

However, looking at the terms of a potential GAP insurer it states the following:

No GAP payout if insurer offers a replacement vehicle and it is declined.

No GAP payout if insurer repairs the vehicle but you have asked that it be dealt with on a total loss basis.

Am I missing something because this sounds like the GAP insurer is trying to avoid payment. An insurance company can at its whim always offer a replacement vehicle, and a finance company may well not want it. Also an insurer may well repair a vehicle irrespective of the insured's wishes.

The above leaves the individual who has the lease car in no man's land.

Does anybody have an answer to this conundrum?

400ixl

No, they are saying they won't pay out where you have made a decision that costs them.

If the insurer offers you a new car then there is nothing for them to pay, but if you refuse, the insurer may pay out less than the value which leaves a gap to the original cost and they will not cover that gap.

If the insurer repairs the vehicle there is no gap to cover. If you refuse repairs and insist on the write off, then that will leave a gap to the original value and they will not cover that gap.

Not heard of such issues as the finance company will accept a new car, and they would be unlikely to ever refuse a repair.

XRS200

Does the new car benefit apply to leased cars?  Some policies say you have to be the first registered keeper.

moneysaver128

XRS200 said:

Does the new car benefit apply to leased cars?  Some policies say you have to be the first registered keeper.

Yes it says you have to be the first registered keeper and the car mileage must be below 24,000 miles. I assume you are saying new car benefit does not apply therefore in this case?

BarelySentientAI

moneysaver128 said:

XRS200 said:

Does the new car benefit apply to leased cars?  Some policies say you have to be the first registered keeper.

Yes it says you have to be the first registered keeper and the car mileage must be below 24,000 miles. I assume you are saying new car benefit does not apply therefore in this case?

Are you the first registered keeper?

moneysaver128

No - the finance company who paid for the lease are the keeper and registered owner. Also  I have a personal lease not a business lease.

moneysaver128

400ixl said:

If the insurer repairs the vehicle there is no gap to cover. If you refuse repairs and insist on the write off, then that will leave a gap to the original value and they will not cover that gap.

Not heard of such issues as the finance company will accept a new car, and they would be unlikely to ever refuse a repair.

I hope it is the case that a finance company would be unlikely to refuse a repair.

I wonder why then the GAP proposal mentions the exclusion that they will not pay out if I refute the repair and request a settlement (total loss) payment. It seems to  me in any case that it would be more likely the finance company may request that and not me. Indeed in this three part situation (finance company, Insurer and GAP provider) I don't think I would have much of a say. Therefore I am not sure why the GAP clauses say - ' If you refuse....or you require' etc as my say would mean very little.

Aretnap

moneysaver128 said:

400ixl said:

If the insurer repairs the vehicle there is no gap to cover. If you refuse repairs and insist on the write off, then that will leave a gap to the original value and they will not cover that gap.

Not heard of such issues as the finance company will accept a new car, and they would be unlikely to ever refuse a repair.

I hope it is the case that a finance company would be unlikely to refuse a repair.

I wonder why then the GAP proposal mentions the exclusion that they will not pay out if I refute the repair and request a settlement (total loss) payment. It seems to  me in any case that it would be more likely the finance company may request that and not me. Indeed in this three part situation (finance company, Insurer and GAP provider) I don't think I would have much of a say. Therefore I am not sure why the GAP clauses say - ' If you refuse....or you require' etc as my say would mean very little.

Your insurance contract is between you and your insurer - the finance company doesn't deal with your insurer or have a say in what they do, other than via the clause that says any settlement money gets paid to the finance company before it goes to you. 

In practice you still wouldn't get much say in whether your car gets written off or repaired because the contract gives the insurer the right to decide that and they will make a decision based on costs - the customer's desires would only be taken into account in the most financially marginal cases, at best.

If you get a slight crack in your bumper and ask your insurer to write off the car instead of repairing it they'll almost certainly tell you to take a long walk off a short pier. From the GAP insurers point of view though, the clause is there just in case you do somehow persuade your insurer to write it off - you can't then complain to the GAP insurer about the fact that the write off that you insisted on has left you with less than the purchase price. It's very much a belt and braces clause - I can't imagine it actually gets invoked very often.

moneysaver128

Thanks for explaining fully  the thought processes behind the clauses - very helpful. Other answers were also appreciated.