GAP insurance and Finance Company, and me stuck in the middle :(

1haterbs

I am in need of some advise, maybe somebody has been through the same situation I am in currently.

It was my first time taking out a lease car, and I was advised to get GAP insurance should the worst happen, a few months into the lease and the car was in an accident and sadly was classed as a total loss, my Insurance company dealt with the finance company and paid them just under £10k, this would have been more at 14k but the finance company wanted the car back, so the insurance company deducted this 4k value from their settlement.

The Finance company then came to me with a settlement shortfall of approx £2.5k, I thought simple, and there is where the GAP comes in and pays off this shortfall, but no.........the finance company have said that this amount due is classed as the following

Early termination charge (due to vehicle value deprecation)

And the GAP insurance are saying their only liability is not for the following

Any additional costs within the insurance settlement for anything other than the purchase of the motor vehicle. This includes, but is not limited to, administration charges, option to purchase charges, late payment charges and arrears, early settlement charges.

I am left really confused, the GAP insurance are telling me that the finance company are at fault here and in their words;

We do not cover any additional charges. This additional charge is something that XYZ have decided to charge you through no fault of your own and we have not come across this before.

We would suggest you contact The Financial Ombudsman about this charge as there is no mention of this in your finance agreement and going by the reviews on Trustpilot this company have had a series of disputes on this very subject.  

Anybody else been in this situation?
Regards

DullGreyGuy

Do you have a link to the insurance policy? As a new user you cannot post links but if you remove the https://www. from the front of the link it will allow you to post it as plain text. 

Presumably the calculations from the lease company include a credit for the salvage of the vehicle? 

How did you come to buy this GAP policy? Sold by the dealer? Lease company? Found it yourself online?

born_again

1haterbs said:

I am in need of some advise, maybe somebody has been through the same situation I am in currently.

It was my first time taking out a lease car, and I was advised to get GAP insurance should the worst happen, a few months into the lease and the car was in an accident and sadly was classed as a total loss, my Insurance company dealt with the finance company and paid them just under £10k, this would have been move at 14k but the finance company wanted the car back, so the insurance company deducted this 4k value from their settlement.

The Finance company then came to me with a settlement shortfall of approx £2.5k, I thought simple, and there is where the GAP comes in and pays off this shortfall, but no.........the finance company have said that this amount due is classed as the following

Early termination charge (due to vehicle value deprecation)

And the GAP insurance are saying their only liability is not for the following

Any additional costs within the insurance settlement for anything other than the purchase of the motor vehicle. This includes, but is not limited to, administration charges, option to purchase charges, late payment charges and arrears, early settlement charges.

I am left really confused, the GAP insurance are telling me that the finance company are at fault here and in their words;

We do not cover any additional charges. This additional charge is something that XYZ have decided to charge you through no fault of your own and we have not come across this before.

We would suggest you contact The Financial Ombudsman about this charge as there is no mention of this in your finance agreement and going by the reviews on Trustpilot this company have had a series of disputes on this very subject.  

Anybody else been in this situation?
Regards

Seems a very low valuation for a car on lease?

Was this a new car?

Nearlyold

Who did you buy the GAP insurance from? Was it Lease specific Gap Insurance?

1haterbs

born_again said:

1haterbs said:

I am in need of some advise, maybe somebody has been through the same situation I am in currently.

It was my first time taking out a lease car, and I was advised to get GAP insurance should the worst happen, a few months into the lease and the car was in an accident and sadly was classed as a total loss, my Insurance company dealt with the finance company and paid them just under £10k, this would have been move at 14k but the finance company wanted the car back, so the insurance company deducted this 4k value from their settlement.

The Finance company then came to me with a settlement shortfall of approx £2.5k, I thought simple, and there is where the GAP comes in and pays off this shortfall, but no.........the finance company have said that this amount due is classed as the following

Early termination charge (due to vehicle value deprecation)

And the GAP insurance are saying their only liability is not for the following

Any additional costs within the insurance settlement for anything other than the purchase of the motor vehicle. This includes, but is not limited to, administration charges, option to purchase charges, late payment charges and arrears, early settlement charges.

I am left really confused, the GAP insurance are telling me that the finance company are at fault here and in their words;

We do not cover any additional charges. This additional charge is something that XYZ have decided to charge you through no fault of your own and we have not come across this before.

We would suggest you contact The Financial Ombudsman about this charge as there is no mention of this in your finance agreement and going by the reviews on Trustpilot this company have had a series of disputes on this very subject.  

Anybody else been in this situation?
Regards

Seems a very low valuation for a car on lease?

Was this a new car?

Yes, new car, only 8 months old, Mokka EV

1haterbs

Nearlyold said:

Who did you buy the GAP insurance from? Was it Lease specific Gap Insurance?

ALA Insurance, the policy type is the 'Contract Hire GAP'

1haterbs

DullGreyGuy said:

Do you have a link to the insurance policy? As a new user you cannot post links but if you remove the  from the front of the link it will allow you to post it as plain text. 

Presumably the calculations from the lease company include a credit for the salvage of the vehicle? 

How did you come to buy this GAP policy? Sold by the dealer? Lease company? Found it yourself online?

Hi,

I bought the policy myself through ALA, it is the policy type 'Contract Hire GAP'

yes, £4000 has already been taken from the Settlement amount for the salvage value, leaving 10k which the insurance has already paid.

It is almost like that part is done, but now the finance company want an extra 2.5k from me for this 'Early termination charge (due to vehicle value deprecation)' which I cannot find mentioned in my contract with them.

Regards
Ian 

1haterbs

https://www.ala.co.uk/insights/gap-insights/policy-types/do-you-need-contract-hire-gap-insurance#:~:text=Contract Hire GAP insurance is the policy available,shortfall in the event of a total loss.

HHarry

The link 1haterbs has provided does state that early termination fee’s aren’t covered, but very much in the context of you ‘choosing’ to early terminate. I’d like to argue that a total loss write off isn’t a choice.

Does Gap Insurance Cover Early Termination?

If you return your contract hire vehicle earlier than planned, you may face early termination fees. GAP insurance doesn’t cover these unplanned costs but if you do choose to end your lease agreement, you can cancel GAP insurance at any time and receive a pro-rata refund of unused premium.

Additionally there’s a bullet point near the beginning of that link that says

• Never be out of pocket after writing off your leased vehicle

 That seems pretty unambiguous

1haterbs

HHarry said:

The link 1haterbs has provided does state that early termination fee’s aren’t covered, but very much in the context of you ‘choosing’ to early terminate. I’d like to argue that a total loss write off isn’t a choice.

Does Gap Insurance Cover Early Termination?

If you return your contract hire vehicle earlier than planned, you may face early termination fees. GAP insurance doesn’t cover these unplanned costs but if you do choose to end your lease agreement, you can cancel GAP insurance at any time and receive a pro-rata refund of unused premium.

Additionally there’s a bullet point near the beginning of that link that says

• Never be out of pocket after writing off your leased vehicle

 That seems pretty unambiguous

Hi @HHarry, yes it does seem very odd to say that you will never be out of pocket and then be out of pocket by £2.5k. It almost seems to me like I have 2 issues here;

1. The finance company trying to get 2.5k out of me with this 'Early termination charge (due to vehicle value deprecation)' when it hasn't been my decision to terminate early, the car is it total loss, I would be much happier still having it on lease.

2. The GAP insurance turning their back on me and telling me to take it up with the Finance Company, the GAP also refuse to speak direct with the finance company to come to an agreement.

Keep_pedalling

The lease companies action on this is very strange they seem to have technically turned a write off into something far more complicated. You would not normally have to fall back on GAP insurance for a write off in the first 12 months as the insurence companies usually pay out on the as new price. 

You say this was a new Mokka EV, but these have a minimum list price of £24k not £14k.