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  • FIRST POST
    • moneysaver129
    • By moneysaver129 1st Mar 18, 12:53 PM
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    moneysaver129
    Gap insurance confusion?
    • #1
    • 1st Mar 18, 12:53 PM
    Gap insurance confusion? 1st Mar 18 at 12:53 PM
    I have leased/hired a new car on a PCH agreement with a finance company for two years.

    I have fully comprehensive car insurance with a mainstream UK insurer. Their policy says they replace a vehicle that is written off on a like for like basis.

    I have also been told elsewhere -

    'Many car insurers will replace a brand new car if it's written off in the first year. If your car has just rolled off the production line, check with your car insurer before you look for a Gap provider to see if you would be covered, at least for the first 12 months.

    So is GAP insurance required? The finance company think it is. They say they may not be recompensed in cash. Only recieving another car from the main insurer?

    It all seems very confusing for the customer.
Page 1
    • daveyjp
    • By daveyjp 1st Mar 18, 2:10 PM
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    daveyjp
    • #2
    • 1st Mar 18, 2:10 PM
    • #2
    • 1st Mar 18, 2:10 PM
    It depends how the finance company deal with a write off.

    Some will roll the loan over to a replacement car. You need to call, ask the question and get confirmation in writing of how they deal with it.
    • rs65
    • By rs65 1st Mar 18, 2:38 PM
    • 5,346 Posts
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    rs65
    • #3
    • 1st Mar 18, 2:38 PM
    • #3
    • 1st Mar 18, 2:38 PM
    I have fully comprehensive car insurance with a mainstream UK insurer. Their policy says they replace a vehicle that is written off on a like for like basis.
    Originally posted by moneysaver129
    Check what your policy says. It usually has to be new and registered in your name. A PCH car may not be registered in your name therefore the new car benefit won't apply and GAP insurance could be useful to you.
    • moneysaver129
    • By moneysaver129 2nd Mar 18, 11:01 AM
    • 51 Posts
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    moneysaver129
    • #4
    • 2nd Mar 18, 11:01 AM
    • #4
    • 2nd Mar 18, 11:01 AM
    So the finance company say they will not roll over the finance to a 'new replacement car' which is what the major insurer are adamant that is all they offer in the first year. This presents two problems:

    The finance company will not get their money.

    GAP insurance would not fill the whole cost of the vehicle so it is useless here as its main aim is to fill a shortfall.

    The main issue is to get a mainstream insurer that will pay settlement in the first year not a replacement car. Any recommendations?
    • lostinheaven
    • By lostinheaven 2nd Mar 18, 6:43 PM
    • 175 Posts
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    lostinheaven
    • #5
    • 2nd Mar 18, 6:43 PM
    • #5
    • 2nd Mar 18, 6:43 PM
    GAP insurance would not fill the whole cost of the vehicle so it is useless here as its main aim is to fill a shortfall.
    Originally posted by moneysaver129
    What you need, is Contract Hire GAP insurance.

    I've taken this from https://www.gapinsurance.co.uk/contract-hire-gap-insurance.asp

    What is Contract Hire GAP insurance?

    If your vehicle is the subject of a Contract Hire / Lease agreement and is declared a Total Loss (written off) through accident, fire, theft or flood your Motor Insurer will pay out only what they think your vehicle is worth at the time of claim.

    In the meantime your finance company will have calculated their settlement figure which, would normally be a combination of some or all of the following:
    • The amount that the finance company think your vehicle was worth at the time of loss
    • The sum of anything up to 100% of the as yet unpaid rentals under your Contract Hire agreement at the time of loss.
    • Administration & or penalty fees for wrapping up the agreement early.
    Your Motor Insurance payout might well fall short of this figure. If it does your finance company might hold you liable for anything up to 100% of the shortfall and this where Contract Hire GAP insurance steps in... to pay the difference between your Motor Insurance payout and the amount required to settle the remaining balance of your Contract Hire agreement.

    In addition, for a small additional premium, you can also choose to cover up to £3,000 of the initial rental you paid as part of your Contract Hire agreement, meaning that you'd be reimbursed some or all of your initial rental for you to use against the cost of setting up a new Contract Hire agreement on a replacement vehicle.
    Also you should verify this:

    The main issue is to get a mainstream insurer that will pay settlement in the first year not a replacement car. Any recommendations?
    Originally posted by moneysaver129
    Almost exclusively, Contract Hire vehicles are *excluded* from the new-car-replacement cover offered by motor insurers because in order to qualify for a new-car-replacement you have to have been the first registered keeper of the vehicle... with a Contract Hire vehicle you are NEVER the registered keeper of the vehicle (e.g. your name will never appear on the V5 registration document).

    In any case, if you have one of the few motor insurance policies that does provide new-car-replacement cover within the first year for a Contract Hire vehicle, it will almost certainly say within the policy wordings that they'll only replace the vehicle with a new one if it meets certain criteria which (apart from the financial cost of the accident repair bill needing to be over a threshold) specifies that an equivalent vehicle must be available AND that they'll only do it if anyone who has an interest in the vehicle (the finance company) agrees.

    Thus, if the finance company disagrees and rejects a replacement vehicle the motor insurer would have to revert a financial settlement. Then the question is, how is that financial settlement calculated?

    HTH
    Last edited by lostinheaven; 02-03-2018 at 6:48 PM.
    • moneysaver129
    • By moneysaver129 4th Mar 18, 2:42 PM
    • 51 Posts
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    • #6
    • 4th Mar 18, 2:42 PM
    • #6
    • 4th Mar 18, 2:42 PM
    Thank you lostinheaven for your detailed advice.

    The problem would seem to be the insurer will not talk to the finance company (at least in their advice to us). Of course I have no doubt they will negotiate with the finance house eventually. But they and the finance house both want it all ways. The FH want us to insure the vehicle on their behalf. They will not accept a vehicle (which is what the Insurers want). The insurers want to make us a settlement (eventaully) which we would pay the finance company (which they may reject). We would end up sitting in the middle for goodness knows how long with any amount as a shortfall. GAP may cover that - but who knows. What a muddle! It may be the best way forward to send this to a consumer TV /radio show and let them sort it out.
    • rs65
    • By rs65 4th Mar 18, 9:28 PM
    • 5,346 Posts
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    rs65
    • #7
    • 4th Mar 18, 9:28 PM
    • #7
    • 4th Mar 18, 9:28 PM
    Thank you lostinheaven for your detailed advice.

    The problem would seem to be the insurer will not talk to the finance company (at least in their advice to us). Of course I have no doubt they will negotiate with the finance house eventually. But they and the finance house both want it all ways. The FH want us to insure the vehicle on their behalf. They will not accept a vehicle (which is what the Insurers want). The insurers want to make us a settlement (eventaully) which we would pay the finance company (which they may reject). We would end up sitting in the middle for goodness knows how long with any amount as a shortfall. GAP may cover that - but who knows. What a muddle! It may be the best way forward to send this to a consumer TV /radio show and let them sort it out.
    Originally posted by moneysaver129
    If the car isnít registered in your name, I think you can forget about the replacement car benefit.

    If it is written off, your car insurer will pay market value.

    You then need to see what your PCH agreement says about what you owe. You may well have a shortfall which is where gap insurance comes in.
    • AnotherJoe
    • By AnotherJoe 4th Mar 18, 9:37 PM
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    AnotherJoe
    • #8
    • 4th Mar 18, 9:37 PM
    • #8
    • 4th Mar 18, 9:37 PM
    I bought gap insurance for PCH through ALA (theres a code in this website somewhere). It was about £100 compared to the £300 or so the lease company were happy to sell me it for ( same story with my last car and a main dealer)
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