Gap Insurance for PCH - confused

retireetobe

I've read the GAP guide and tried to research online but I'm still confused - maybe an age thing!

Next month I get my first ever brand new car on PCH. It will cost £510 per month for 24 months (I know, I know, but it's a bucket list thing and I CAN afford it!). 

1) Am I correct that if I choose a fully comp insurance policy which includes New Vehicle Replacement cover, then I don't need GAP? And if it doesn't include New Vehicle Replacement cover then I do?

2) In the unlikely event of a write-off, what actually happens with my PCH contract? Does the lease company provide a new car and the lease just carries on for the rest of the 24 months? Or do they just take the payout for the car and the lease ends (hopefully with no further payment due from me)? I will ask the lease company but I'd like a general idea before getting into what could be a complicated conversation.

Thanks for any input

DullGreyGuy

1) Vehicle replacement requires the agreement from the owner which under a PCH is the lessor, the FOS case library is littered with cases where the finance company has refused to accept a replacement vehicle

2) The lease ends on the total loss of the vehicle, the insurer will liase with the lessor to confirm how much you owe which normally is an economically neutral estimate of future lease payments and the value of the returned vehicle. Depending where you are in the lease this may be more or less than what your insurers liability is, which is capped at the market value of the vehicle. If it's under then you owe the lease company the shortfall and this is where GAP insurance comes in. If its over then it depends on the terms of the policy as to if you get the excess or if its lost. 

XRS200

Replacement vehicle may not apply to PCH 

cw8825

XRS200 said:

Replacement vehicle may not apply to PCH 

Fairly sure it wouldn't as OP wouldn't be the first registered owner

XRS200

cw8825 said:

XRS200 said:

Replacement vehicle may not apply to PCH 

Fairly sure it wouldn't as OP wouldn't be the first registered owner

Registered keeper

Shedman

As others have said its unlikely that the replacement car element of an insurance policy would apply in your financing situation and, in any event, would usually only cover the first 12 months.  So you would probably need (and be wise to have) something for the 2nd year anyway so I would definitely suggest getting GAP insurance covering the 2 years...given you're spending £12k+ over the 2 years the GAP insurance will be a very minor extra cost for a lot of peace of mind (eg I paid £335 for 5 years Back to Invoice cover for a £32k car 6 months ago through Platinum Gap).  

I think the FCA review into GAP insurance, which had put a moratorium on most providers at time I was looking so made my options very limited, has now been concluded so hopefully there should be a much wider choice of providers again now