2 hours ago, KevC_Derby said:

Does that apply only if the write-off is your fault?

If someone else smashes into me, writes my car off and there is a GAP, who pays it?

 

Any insurance company either you own or another persons will only pay out a "fair" trade market value for the vehicle.

 

If you owe more to the lease company than that figure and don't have GAP then that money comes out of your own pocket. If you do have GAP then you claim on against your own GAP insurance.

 

A third party's insurance company is not liable for negative equity on a lease or finance agreement.

 

Lee

Edited 27 January, 20188 yr by logiclee

14 hours ago, logiclee said:

Any insurance company either you own or another persons will only pay out a "fair" trade market value for the vehicle.

 

If you owe more to the lease company than that figure and don't have GAP then that money comes out of your own pocket. If you do have GAP then you claim on against your own GAP insurance.

It does seem wrong that you have to take additional insurance to cover insurance not paying out the full amount...

 

Seems like a self perpetuating system for the insurance companies to keep generating more business for themselves.

On 1/27/2018 at 17:37, KevC_Derby said:

Does that apply only if the write-off is your fault?

If someone else smashes into me, writes my car off and there is a GAP, who pays it?

 

Generally speaking the GAP insurer doesn't really mind which motor insurer is paying you a Total Loss payout for your car (e.g. the third party insurer if a third party was at fault or your own insurer if you were at fault).  Their concern is really just that you are receiving *a* Total Loss payout.  However the usual process if your car is written off with a third party at fault is that you'd claim on your own motor insurance policy for the Total Loss of your vehicle (and then on the GAP insurance for any applicable shortfall) relevant to the policy type) and your motor insurer would pursue the third party's insurer for reimbursement of the amount they paid out to you.

 

On 1/28/2018 at 10:20, SWBoy said:

It does seem wrong that you have to take additional insurance to cover insurance not paying out the full amount...

 

Seems like a self perpetuating system for the insurance companies to keep generating more business for themselves.

 

This is a common misconception but, it isn't actually the case that you're covering the motor insurer "not paying out the full amount"... short of a new-for-old claim in the first year of owning & insuring a brand new vehicle or a claim on an Agreed Value type of Motor Insurance policy, the motor insurer is only obliged to return you to the position that you were in immediately before the incident that led to the vehicle being declared a Total Loss.  Thus the motor insurer would (should?) be paying out the "full amount" that they're obligated to pay.  The GAP insurance is then an entirely separate "risk" that you either choose to insure against, or not.

13 hours ago, David@GAPInsurance said:

Thus the motor insurer would (should?) be paying out the "full amount" that they're obligated to pay.  The GAP insurance is then an entirely separate "risk" that you either choose to insure against, or not.

The key word there is "should", GAP is only needed when the insurer claims the market value of your car is lower than any independent valuation - and sadly this seems to be the norm. But as I said it's somehow in the insurers business to undervalue your car - not only does that save them money on the claim but it also "encourages"the  owner to take out GAP insurance thereby generating extra income for the insurer (I'm pretty sure they don't pay out as much in GAP claims as they receive in premiums, but if they do their business sense is way off kilter).

 

Don't get me wrong I've taken GAP insurance but only because I needed to use the services of a solicitor when my first car was written off (in 1976 when there was no such thing as GAP insurance) and the insurer offered less than half the market value of my car.

44 minutes ago, SWBoy said:

The key word there is "should".

...it's somehow in the insurers business to undervalue your car - not only does that save them money on the claim but it also "encourages"the  owner to take out GAP insurance thereby generating extra income for the insurer...

...Don't get me wrong I've taken GAP insurance but only because I needed to use the services of a solicitor when my first car was written off (in 1976 when there was no such thing as GAP insurance) and the insurer offered less than half the market value of my car.

 

The key word is indeed "should" - hence me highlighting it. However the days of motor insurers considerably low-balling their initial offer (e.g. as you refer to having experienced in 1976) are well behind us and with the advent of FSA > FCA regulation and Treating Customers Fairly (TCF) insurers have to be really quite careful in what they do and don't do these days (of course I'm not for one second suggesting that it's all now a perfect world, but is considerably better than it has been in the past).

 

In handling your claim the motor insurer has to be able to justify their position and have it stand up to scrutiny should it ever escalate to a complaint involving the ombudsman.  My own experience is quite different to yours.  In December 2014 I wrote my then leased car car off in an accident.  I phoned my motor insurer whilst sat in the ambulance (the police asked me to contact the insurer to arrange for the removal of the vehicle from the highway as it wasn't in any fit state to be driven) and the claim administrator I spoke with, during that initial phone call, checked Autotrader to see what similar age, spec' and mileage, versions of the same vehicle were selling for.  He told me that there was an almost identical one (very slightly higher mileage) on sale for £14,900 (I later verified this myself) and that that would likely be the amount that they paid out.  From that day until a few weeks later when the claim was settled, the amount never changed nor was it ever questioned and after the deduction of my £100 excess, they paid out £14,800 to the finance company. It really couldn't have been any smoother.

 

44 minutes ago, SWBoy said:

GAP is only needed when the insurer claims the market value of your car is lower than any independent valuation.

 

That's not the case.  GAP insurance isn't about covering the difference between your motor insurance payout and the market value that they should have paid according to any given valuation.  It's much more than that.

 

In very simple terms...

 

Finance / Contract Hire GAP insurance - is about paying the difference between your motor insurance payout and the amount required to clear any outstanding finance at the time of claim.

 

Invoice GAP insurance - is about paying the difference between your motor insurance payout and the original invoice price that you paid for your car.

 

Replacement GAP insurance - is about paying the difference between your motor insurance payout an what it would cost at the time of claim to replace your vehicle with one of the same (or nearest equivalent) make, model, specification, age and mileage as was relevant to your original vehicle at the time you first bought it (e.g. if your original vehicle was purchased brand new, the replacement vehicle price at the time of claim would be the price of a brand new vehicle again).

 

Granted, from some providers, GAP insurance policies can then incorporate "Market Value" clauses and these come in two forms:

• The purchase price you paid for the vehicle - The GAP insurance policy will not cover any amount that you paid for the vehicle which was higher than what Glass' Guide (or any alternative that they may be using) said the retail value of the vehicle was at the time you bought it.
• The payout from the motor insurer - The GAP insurance policy will not cover any amount by which the motor insurer pays out lower than what Glass' Guide (or any alternative that they may be using) said the the retail value was at the time of claim.

GAP insurance policies with either Market Value clause should ideally be avoided.  GAP insurance policies with both of the above Market Value clauses should be avoided at all costs.

 

To be clear, for a vehicle purchased from a motor dealer, we have neither Market Value clause  (though we do have the first clause above if you bought the original vehicle from a private seller which would mean there'd be no VAT receipt/invoice etc from which we could evidence the price paid originally)

 

HTH

 

David

 

On 26/01/2018 at 22:16, Exeterj said:

I've just had a look at some figures on the GAP (as its close to my heart with a Golf R new lease looming and the risk of getting it nicked high!) and i think the issue is that the lease payments are always 'racing' the depreciation rate - on a graph the lease payments would be a straight line reducing the amount of finance owed, and the market value is a curve dropping steeper at the start.

 

Year 1 is likely to be ok, as many insurance companies 'replace for new' but after that the market value given will be significantly lower and will be a cliff edge in the insurance payout. The other issue is that the lease company buy the cars as significant discount and thus the monthly lease payment can be 'keener' than the depreciation rate in the first place.

 

There were some great deals on the golf R estate before Christmas. I missed out. Enjoy!