Thanks for all the advice in this thread David, the link to 'The Perils of New for Old Cover' was most useful...

 

http://blog.gapinsurance.co.uk/index.php/2015/02/23/the-perils-of-new-for-old-cover/

 

I'm currently attempting to ask the 3 questions to determine the need for GAP insurance in the first year with Admiral now but with limited success, they really are bloody useless!

 

Anyway it seems Admiral have no 'New for Old' policy at all, you get market value.

 

Seems like I'm going to need GAP for the full two years.

 

Can you provide a quote on here David?

 

So far as I'm aware (I'm an ex-customer of theirs myself and I was reviewing their terms for another customer earlier today) and as it appears you've discovered, Admiral don't offer any form of New-For-Old cover.

 

I can indeed provide a quote... it's up to you if you want to do it publically here on the forum or via PM or if you want to email the details to me ([email protected]) but I need as much information as possible (see below) in order to formulate an accurate quote for you.

• Have you bought it or leased it?
• If you've bought it (cash or financed)
  • What is the full manufacturer's list price and how much lower than this did you pay (e.g. after discount (but before finance and interest charges))
  • If you've financed it... what type of finance agreement over how long?
  • If you've financed it by way of a PCP agreement, how much is the balloon/residual value repayment at the end of the PCP term?
• If you've leased it (contract hire)
  • What is the structure of your agreement (e.g. how many monthly rentals upfront, followed by how many "normal" rentals")?
  • How much are your rentals (inclusive of VAT but exclusive of maintenance)?
  • Is it a personal or commercial lease?
  • Are you (or the company if it's a commercial lease) VAT registered?
  • What is the annual mileage limit of the contract hire agreement

I think that covers most things for now, but your answers to the questions above, might invoke more questions from me :-)

 

I look forward to hearing from you

 

David

That's great, thanks David.

 

It is a personal contract hire (PCH), I just signed up to it today.

 

2016 Skoda Octavia Scout 2.0 TDi, 150PS, 4x4, manual, non-maintenance.

 

8,000 miles per annum.

 

£2,548.66 deposit plus 23 monthly payments of £100, all inc. VAT. Total £4,848.66.

 

£25,405 list price.

 

I'm not VAT registered.

 

Delivery is expected early April.

Edited 9 March, 201610 yr by silver1011

That's great, thanks David.

 

It is a personal contract hire (PCH), I just signed up to it today.

 

2016 Skoda Octavia Scout 2.0 TDi, 150PS, 4x4, manual, non-maintenance.

 

8,000 miles per annum.

 

£2,548.66 deposit plus 23 monthly payments of £100, all inc. VAT. Total £4,848.66.

 

£25,405 list price.

 

I'm not VAT registered.

 

Delivery is expected early April.

 

Sorry for the delay.

 

Firstly, you need to check the terms of your Lease Agreemet to see if you actually need GAP insurance because it's not always the case that you do... the reason, is as follows:

 

In the event of your vehicle becoming a Total Loss, your finance company will calculate the remaining balance of the agreement.  This will be the combined sum of what they believe the vehicle to be worth and the as yet unpaid monthly rentals.

Your Motor Insurance will then pay (directly to the finance company) the amount that they (your motor insurer) believe your car to be worth.  This will either be sufficient to clear the remaining balance of the Contract Hire Agreement (and if so *some* finance houses will refund you the surplus funds) OR it will fall short of clearing the remaining balance.

If it falls short, the terms of your Contract Hire Agreement will require you to pay one of the following:

1. ALL of the remaining balance
2. SOME of the remaining balance
3. NONE of the remaining balance

Clearly you would have a greater need for GAP insurance if you're liable for ALL of the remaining balance (1), but no need for GAP insurance at all if the finance house would take your Motor Insurer's payout and allow you to walk away (3).

You should therefore check the terms of your lease carefully in order to determine if you actually need GAP insurance.

 

As for what policy you need... strictly speaking you need a Contract Hire GAP insurance policy which, in the event of your vehicle being written off will pay the difference between your Motor Insurance payout and the amount required to settle the remaining balance of the Contract Hire Agreement. 

 

In our case, we chose to merge our Invoice and Contract Hire GAP insurance policies in to one document in so much that if you're leasing the vehicle and it's subsequently written off, our policy will pay the difference between your Motor Insurance payout and the Contact Hire agreement settlement figure, but if you bought the vehicle (cash or finance) and it's written off it'll pay the difference between your Motor Insurance payout and the original invoice price.

 

Albeit somewhat confusingly, we decided (because we cover far more vehicles that are being purchased, than leased) to leave our policy with the name of "Invoice GAP insurance".

 

• Read more about Invoice GAP insurance here.
• Read the current Key Facts document here.
• Read the current full policy wordings here.

What will GAP insurance cost?

 

So... assuming you were liable for ALL the potential shortfall (see above) the first thing we need to look at is the total of all of your rentals (£4,848.66).  In theory then, the moment you start driving the vehicle (assuming you'd not yet paid the initial rental - some companies take this payment by DD up to 8-weeks after you take delivery of the vehicle) you'd need a policy that would cover at lease this sum, in which case you'd be looking at a policy with at least a £5k Claim Limit (The "Claim Limit" refers to the most that the policy would be prepared to pay in addition to that which you receive from your Motor Insurer towards (in the case of a lease) the settlement figure of the lease agreement).  However if you'd already paid the initial rental(s) by the time you started driving the vehicle, your remaining liability in terms of the rentals would drop by £2,548.66... as it happens though, £5k is the lowest Claim Limit we do.

 

Something else to consider though is the potential for the Motor Insurer and the Finance house to disagree over the value of the vehicle with the finance house pursuing you for any shortfall they perceived in the Motor Insurance payout. However if there is any such disagreement (remember they'll be using much the same (if not the exact same) industry guides etc to determine the value of the vehicle at the time of loss) it not usually by any considerable amount.

 

Taking this in to account, if you'd already paid the initial rental(s) by the time you started driving the vehicle, and you were liable for ALL of any potential shortfall (see above) I reckon a £5k Claim Limit should be more than sufficient.  But if the initial rental(s) was to be paid up to 8-weeks after delivery, I'd be nervous during that interim period that £5k might not be entirely sufficient so it may be prudent to consider a higher claim limit and the next level up would be £7,500.

 

I could offer you the following:

 

2 year GAP insurance, £5,000 Claim Limit = £103.70 less 10% BRISKODA discount =  £93.33

2 year GAP insurance, £7,500 Claim Limit = £100.89 less 10% BRISKODA discount = £90.80 (This is NOT a typo. For some strange reason the £7,500 Claim Limit option is actually coming out cheaper than the £5,000 option!)

 

NOTE

 

With the list price of the vehicle being £25,405 you're very close to £25,000 which is one of rating thresholds.  It's entirely possible that the P11d value of the vehicle (speak to the supplying dealer) may well be a figure less than £25,000.  If it is, I can provide a policy rated according to the P11d value which would reduce the price as follows:

 

2 year GAP insurance, £5,000 Claim Limit = £69.40 less 10% BRISKODA discount =  £62.46

2 year GAP insurance, £7,500 Claim Limit = £74.79 less 10% BRISKODA discount = £67.31

 

If I can be of any further assistance, please ask.

 

Best wishes

 

David

A great and detailed response, mirrors the great service I received

Thanks David, sounds like I need to get a copy of the T's & C's from VW Financial Services...

I brought a replacement GAP policy for my vRS from David at GAPinsurance was very happy with the product/price and David's explanation which as you can see from previous posts are very complete and easy to follow much better than a dealer just trying to take your hard earned! I even got a £5 refund for a review on Facebook!

I bought my own, which was much cheaper and allowed me to push the cover back 12 months to account for the new car replacement cover my insurance policy provided.

Good call and I did exactly the same

@David PM sent 

 

cheers 

Thanks David, sounds like I need to get a copy of the T's & C's from VW Financial Services...

 

Last week I went through a VWFS contract for another customer (and BRISKODA member) and was surprised to find this describing "your" liability to them in the event of a Total Loss:

 

8.2

 

If  we  terminate  the  hiring,  or  accept  your  repudiation  of  this  Agreement, you must pay us:

• all unpaid rentals and any unpaid maintenance   charges   and   other   payments due (which shall include interest, where applicable) ; plus
• as compensation or agreed damages on our   acceptance   of   your   repudiation, or as a debt on our termination, the  total  amount  of  rentals payable during the Hiring Period (excluding VAT) less the amount   of rentals paid or which  have  become  due (excluding  VAT) less  also  an amount (if any) equal  to  a  rebate  of  rentals  calculated  at  the  rate  of 4%  per annum on the  rentals (excluding  VAT) which  have  not  become  due;

plus

• all our expenses of recovering or trying to  recover  the  Vehicle,  repairing  or storing it and tracing you ( plus VAT); plus
• an administration charge of up to £100 (including VAT) where this is reasonably required to meet our processing costs.

Now... those first two bullet points above... no matter how many times I read them... I STILL see it that they're going to hold you liable for DOUBLE the outstanding rentals at the time of the loss (albeit with a discount of 4% per annum on the second "half").

 

This particular customer queried it with VWFS and was assured that it was likely a typo within the contract, however, I don't believe they actually clarified how they would calculate liability in the event of a Total Loss.

 

This being the case, for the time being and subject to getting absolute confirmation from VWFS I'd suggest you absolutely need GAP insurance (especially if (assuming it's not a mistake) they're going to try to hit you for double the outstanding rentals!)

 

David

Last week I went through a VWFS contract for another customer (and BRISKODA member) and was surprised to find this describing "your" liability to them in the event of a Total Loss:

 

8.2

 

If  we  terminate  the  hiring,  or  accept  your  repudiation  of  this  Agreement, you must pay us:

• all unpaid rentals and any unpaid maintenance   charges   and   other   payments due (which shall include interest, where applicable) ; plus
• as compensation or agreed damages on our   acceptance   of   your   repudiation, or as a debt on our termination, the  total  amount  of  rentals payable during the Hiring Period (excluding VAT) less the amount   of rentals paid or which  have  become  due (excluding  VAT) less  also  an amount (if any) equal  to  a  rebate  of  rentals  calculated  at  the  rate  of 4%  per annum on the  rentals (excluding  VAT) which  have  not  become  due;

plus

• all our expenses of recovering or trying to  recover  the  Vehicle,  repairing  or storing it and tracing you ( plus VAT); plus
• an administration charge of up to £100 (including VAT) where this is reasonably required to meet our processing costs.

Now... those first two bullet points above... no matter how many times I read them... I STILL see it that they're going to hold you liable for DOUBLE the outstanding rentals at the time of the loss (albeit with a discount of 4% per annum on the second "half").

 

This particular customer queried it with VWFS and was assured that it was likely a typo within the contract, however, I don't believe they actually clarified how they would calculate liability in the event of a Total Loss.

 

This being the case, for the time being and subject to getting absolute confirmation from VWFS I'd suggest you absolutely need GAP insurance (especially if (assuming it's not a mistake) they're going to try to hit you for double the outstanding rentals!)

 

David

 

I don't read it that way at all, and I see no typo:

 

Bullet 1 - says you have to pay unpaid rentals (ie ARREARS that were due but have not been paid by the hirer)

Bullet 2 - says you have to pay total rental less rentals already paid, future payments being due discounted by 4%

Edited 14 March, 201610 yr by Minimoke

Now I read it again, I think Minimoke is spot on.

I don't read it that way at all, and I see no typo:

 

Bullet 1 - says you have to pay unpaid rentals (ie ARREARS that were due but have not been paid by the hirer)

Bullet 2 - says you have to pay total rental less rentals already paid, future payments being due discounted by 4%

 

 

Now I read it again, I think Minimoke is spot on.

 

I see your point Minimoke (and it's a good one)... but I'm not entirely convinced... or should I say, if VWFS were to confirm that your interpretation IS infact their intention with this wording then I can see how it would stack up but, compared to other Contract Hire Agreements the wording is in my opinion, ambiguous to say the least. 

 

It's normally the case that any arrears etc are specifically referred to, as "arrears" or "overdue rentals" (or similar).  Interestingly, earlier in the same VWFS agreement, they do in fact refer to "overdue rentals", but (assuming your interpretation is correct) they then fail to do the same in the condition I've quoted.

 

As an example, I recently reviewed the terms of a Citroen Contract Hire Agreement and in the event of termination through Total Loss, they specify the following as needing to be paid to them:

 

8.4.1. All arrears of hire payments, other payments and other sums due under this agreement together with interest;

8.4.2. any excess mileage charge calculated in accordance with clause 12 and charged up to the time the vehicle is declared a total loss;

8.4.3. by way of liquidated damages and/or compensation for our loss an amount equal to all hire payments which had this agreement not terminated, were agreed to be paid by you to us until the end of the fixed period less a discount for accelerated payment at the rate of 4% per year;

8.4.4. a sum equal to the anticipated residual value for the vehicle.

 

The above is (in my opinion) considerably clearer than that of the same topic in the VWFS agreement.

 

Ultimately, my interpretation of the term "unpaid rentals" in the context of a settlement figure calculation after a Total Loss, particularly in the absense of specific reference to "arrears" or "overdue rentals" in the same or associated explanation, is that it relates to the monthly rentals which, by the time of the Total Loss occurring, had not yet fallen due and on this basis, there's an inference within the VWFS wordings that they might well have you pay them all but double the outstanding rentals - If that isn't the case (I suspect that even if it was, it'd never stand up to scrutiny (Fair Contract etc) on appeal), VWFS seriously need to improve their wording.

 

This confusion, is why I advise anyone with a Contract Hire Agreement who is considering GAP insurance (see my other posts about some Contract Hire Agreements possibly not needing GAP insurance at all), to clarify to the best of their ability (some finance houses are incredibly (alarmingly?) protective about revealing how they'll calculate liability in the event of a Total Loss)  what it is that they'll be liable for, by way of asking the finance company themselves (e.g. those that would be calculating that liability should the need arise, rather than the broker setting up the agreement in the first place).

 

David

David

I dont have a copy of the VWFS contract, but I think the clause quoted applies to repudiation of the contract? GAP insurance is surely irrelevant in that context?

If you want to see an example of a really badly worded finance agreement look at the Merc Agility contract. Its flawed from start to end.

Edited 15 March, 201610 yr by Minimoke

David

I do agree with your comment about understanding how liability is calculated on termination due to total loss (as opposed to repudiation). You are correct in pointing out that the wording can often be opaque.

David

I dont have a copy of the VWFS contract, but I think the clause applies to repudiation of the contract. Given that, GAP insurance is surely irrelevant in that context?

If you want to see an example of a really bad finance agreement look at the Merc Agility contract. Its flawed from start to end.

 

This is part of the confusion with the VWFS contract.

 

An earlier condition (5.3) states

 

If the Vehicle is lost, damaged or destroyed so as to become an actual ,

arranged or constructive total loss you must pay us, when we ask, such

sum as will equal the amount calculated in accordance with Term 8.2.

 

Yet Term 8.2 is, strictly speaking, relevant to the repudiation of the contract (for those that aren't aware, this is when you decide you want to get out early either voluntarily or through your lack of payment which results in VWFS terminating the agreement as a result).  I should perhaps have clarified that so far as I understand, it was this angle towards which the possiblity of a typo was advised by VFWS, e.g. that 8.2 might not be the correct term that applies in the event of a Total Loss... but... crucially... so far as I can see there isn't an alternative that would stand out as the obvious 'replacement' term.

 

The only copy of the VWFS agreement that I have, has sensitive information on it relevant to the person who sent it to me.  Whilst I do technically have the ability to edit the document and remove this information, I'm not comfortable making the resulting file accessible to third-parties on the off chance that it's possible for someone to reverse the changes I make and for that sensitive information to be visible again (I value my job!) If anyone with a VWFS contract who can remove their own details from it wants to make it accessible here for others to ponder this issue... feel free :-)

 

 

I'll have to seek out a Merc Agility contract Minimoke :|

David

I think my last post crossed with yours, but I believe we are sort of in agreement about the issues around calculating total loss liability.

This is not the right forum for discussing Merc agreements but if you do find one try and work out the contract commencement date. PM me if you can figure it out because MB are not really sure!

Edited 15 March, 201610 yr by Minimoke