Lease car write off - read this!

cw8825

FlossieFlump said:

I have recently bought a new car on lease and made a particular point of choosing an insurance company that,  if the vehicle was written off, I would be reimbursed the full price of the vehicle when I first signed the lease (new for old), this also did away with the hassle of finding GAP insurance. There's a few companies that offer this option and if the cheapest one you find doesn't just get GAP insurance. It's well worth spending a little time to do a bit of research and hunting through different insurance companies for peace of mind with any new car purchase, whether it's lease or any other way of financing it. 

Is this a lease or a PCP?

anikz

Hi

I'm having the exact same issue with my insurance company. My lease car was written off with 1 month remaining on the contract. Vehicle market value is 30k, VWFS settlement figure is 23k. Insurance Co have stated that there terms say they will only pay the settlement figure, however this isn't clearly mentioned in their terms. This is their policy wording 

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

From my understanding This establishes only a maximum cap on liability — i.e. payment must not exceed market value. It does not grant them discretion to reduce the settlement below market value where the outstanding finance/termination amount is lower. The settlement figure isn't the "remaining finance" as this was a contract hire and not a PCP.

I'm in the process of disputing it.

Grumpy_chap

anikz said:

Hi

I'm having the exact same issue with my insurance company. My lease car was written off with 1 month remaining on the contract. Vehicle market value is 30k, VWFS settlement figure is 23k. Insurance Co have stated that there terms say they will only pay the settlement figure, however this isn't clearly mentioned in their terms. This is their policy wording 

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

From my understanding This establishes only a maximum cap on liability — i.e. payment must not exceed market value. It does not grant them discretion to reduce the settlement below market value where the outstanding finance/termination amount is lower. The settlement figure isn't the "remaining finance" as this was a contract hire and not a PCP.

I'm in the process of disputing it.

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

Let's dissect that clause.

no more than the car’s market value
The insurer will never pay more than the market value of the car.  In any event.

Then the qualifier about the car being on lease, PCH, PCP, in which event the insurer will
pay the outstanding finance, up to the car's market value

If the car is on specified finance type, the finance will be cleared in full, but this is capped at the market value of the car.  The driver could still be left with a shortfall if the finance exceeded the market value.

There are two caps and it is the lower that will be paid - market value of the car or the finance cleared.

MyRealNameToo

anikz said:

I'm in the process of disputing it.

On what grounds @anikz? 

The term is clear, for Lease they pay the lower of market value and outstanding finance

Knowing that you had a lease car why did you decide to buy a policy with such a term? It's fairly common but other terms are available. 

Motor insurance is almost, if not only, exclusively sold on a non-advised basis meaning it's your job to check if the terms suit your needs and wants. Unfortunately sites like this promote buying on price alone rather than actually reading the policy and deciding which is best value rather than cheapest. 

You have a right to complain but no grounds to based on what you've said here. 

cw8825

anikz said:

Hi

I'm having the exact same issue with my insurance company. My lease car was written off with 1 month remaining on the contract. Vehicle market value is 30k, VWFS settlement figure is 23k. Insurance Co have stated that there terms say they will only pay the settlement figure, however this isn't clearly mentioned in their terms. This is their policy wording 

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

From my understanding This establishes only a maximum cap on liability — i.e. payment must not exceed market value. It does not grant them discretion to reduce the settlement below market value where the outstanding finance/termination amount is lower. The settlement figure isn't the "remaining finance" as this was a contract hire and not a PCP.

I'm in the process of disputing it.

even if you are disputing it. at no point does it say they will pay you the market value - it would still og to the legal owner

cw8825

anikz said:

Hi

I'm having the exact same issue with my insurance company. My lease car was written off with 1 month remaining on the contract. Vehicle market value is 30k, VWFS settlement figure is 23k. Insurance Co have stated that there terms say they will only pay the settlement figure, however this isn't clearly mentioned in their terms. This is their policy wording 

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

From my understanding This establishes only a maximum cap on liability — i.e. payment must not exceed market value. It does not grant them discretion to reduce the settlement below market value where the outstanding finance/termination amount is lower. The settlement figure isn't the "remaining finance" as this was a contract hire and not a PCP.

I'm in the process of disputing it.

even if you are disputing it. at no point does it say they will pay you the market value - it would still og to the legal owner

Herzlos

Grumpy_chap said:

anikz said:

Hi

I'm having the exact same issue with my insurance company. My lease car was written off with 1 month remaining on the contract. Vehicle market value is 30k, VWFS settlement figure is 23k. Insurance Co have stated that there terms say they will only pay the settlement figure, however this isn't clearly mentioned in their terms. This is their policy wording 

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

From my understanding This establishes only a maximum cap on liability — i.e. payment must not exceed market value. It does not grant them discretion to reduce the settlement below market value where the outstanding finance/termination amount is lower. The settlement figure isn't the "remaining finance" as this was a contract hire and not a PCP.

I'm in the process of disputing it.

“We'll pay the legal owner no more than the car’s market value. If you got the car via a lease, contract hire or contract purchase agreement; we'll pay the outstanding finance, up to the car's market value, to the legal owner.”

Let's dissect that clause.

no more than the car’s market value
The insurer will never pay more than the market value of the car.  In any event.

Then the qualifier about the car being on lease, PCH, PCP, in which event the insurer will
pay the outstanding finance, up to the car's market value

If the car is on specified finance type, the finance will be cleared in full, but this is capped at the market value of the car.  The driver could still be left with a shortfall if the finance exceeded the market value.

There are two caps and it is the lower that will be paid - market value of the car or the finance cleared.

That's how i read it. If the value is more than the settlement, they'll pay the settlement. If the value is less than the settlement they'll pay the value and leave you with the shortfall. 

It's crap and it'll leave anyone in negative equity (common for most of a finance plan) having to find the balance, but it's pretty clearly written there so I'm not sure there's any scope to challenge it. 

facade

with a lease car, they should pay the owner (the lease company) the market value surely?

Otherwise, if they just pay the lease off the owner will come after the lessee for estimated market value of their asset at the end of the lease. (The whole point of being a lessor is you still have your asset at the end of the lease, and you were paid for lending it to the lessee)

The only way to put them back in the same position as before the total loss is to pay market value for a replacement car, that they could supply to the lessee for the remainder of the lease if they chose..

With a PCP car they pay the settlement amount to the owner (the finance company)

A HP car is the same, you don't own it until you pay the "option to buy" at the end, so again they should just pay the settlement to the owner (finance company) - tough if you only owe £250 on a £20,000 car, but I suppose the way round that is to settle the finance for £250 before putting in the claim so that you are the owner of a car with a market value of £20,000.

The solution is insurance that always pays market value to the owner, then for a HP or PCP the finance company should pay the customer the market value - settlement (or demand the difference, which is what GAP insurance is for....)

born_again

XRS200 said:

FlossieFlump said:

I have recently bought a new car on lease and made a particular point of choosing an insurance company that,  if the vehicle was written off, I would be reimbursed the full price of the vehicle when I first signed the lease (new for old), this also did away with the hassle of finding GAP insurance. There's a few companies that offer this option and if the cheapest one you find doesn't just get GAP insurance. It's well worth spending a little time to do a bit of research and hunting through different insurance companies for peace of mind with any new car purchase, whether it's lease or any other way of financing it. 

Which insurance company did you choose?

Don't you just hate it when someone posts something sort of helpful, then never answers the questions posed despite having been back after the question 🤷‍♀️🤦‍♀️

Last Active Sep 22, 2025