Non fault insurance claim with a car with oustanding finance

[killerferret666]

A colleague at work has had a non fault accident (that's already been agreed he wasnt at fault - the other car hit his car and two parked cars)

Now his car has finance on it and there is a good chance the settlement offered based on prices wont clear the finance.

Is there anything that can be done to make sure the settlement clears the finance. I dont know figures, but i think there is a £2-3k gap.

Trying to help the guy, hes young and his first proper car he bought new and don't want to see him out of pocket, so any advice / experience on this would be good.

[tigger1]

Tell him to travel back in time and buy gap insurance?

[cuprabob]

Nothing really he can do other than try and negotiate the best payout for his car.

This scenario is exactly why some people buy Gap insurance.

[killerferret666]

tigger1 said:

Tell him to travel back in time and buy gap insurance?

If hes got a time machine. I don't think the cash is going to be an issue for him

cuprabob said:

Nothing really he can do other than try and negotiate the best payout for his car.

This scenario is exactly why some people buy Gap insurance.

Cheers both. Got to say my knowledge on GAP insurance was not up to scratch until you both mentioned it. I presumed in the case of a non fault then the insurer would have to clear it. Every day is a school day.

[TwigtheWonderkid]

It's the tp's fault he crashed into the car, and he's responsible for the damage or the current value if it's a total loss. But it's not the tp's fault your mate owes more money on his car than it's worth. That's his own doing.

[Blue Oval84]

Your mate needs to put the pay out towards the finance and then either get a bank loan, or somehow roll the existing finance into a new deal on a replacement car of roughly the same value as his current one.

I can almost guarantee that unless his current "finance" is actually a bank loan, he'll have been offered Gap insurance at the time he bought the car and has turned it down... an expensive lesson!

[KevinCamaroSS]

Blue Oval84 said:

Your mate needs to put the pay out towards the finance and then either get a bank loan, or somehow roll the existing finance into a new deal on a replacement car of roughly the same value as his current one.

I can almost guarantee that unless his current "finance" is actually a bank loan, he'll have been offered Gap insurance at the time he bought the car and has turned it down... an expensive lesson!

GAP insurance is usually about half price if you go elsewhere to buy it.

[Blue Oval84]

KevinCamaroSS said:

GAP insurance is usually about half price if you go elsewhere to buy it.

I know, but it sounds as though he didn't buy it anywhere, half price or not...

[Alucidnation]

I would be stamping on the tp. insurer.

If they wont settle the finance, get them to replace with an equivalent.


I can't understand why people just roll over and accept low ball offers, especially when it is not their fault that they are put in this position.

[Blue Oval84]

Alucidnation said:

I would be stamping on the tp. insurer.

If they wont settle the finance, get them to replace with an equivalent.


I can't understand why people just roll over and accept low ball offers, especially when it is not their fault that they are put in this position.

Even if they buy a new car for him, he's still going to have to clear the finance so will need some form of bank loan. There's no evidence that he's been low balled, he may just be in negative equity which is a perfectly normal and utterly predictable situation. He could have mitigated the risk by buying Gap insurance but chose not to. Just because he's in negative equity doesn't mean the insurer is obligated to pay more than his car is worth...

[kiethton]

Alucidnation said:

I would be stamping on the tp. insurer.

If they wont settle the finance, get them to replace with an equivalent.


I can't understand why people just roll over and accept low ball offers, especially when it is not their fault that they are put in this position.

Thing is if you're buying the car it is not a low ball offer....he'll be paid market price.

The issue comes about by how he chose to purchase the car in the first place, the TP insurer can't be expected to account for that - what if you "theoretically" role £10k of negative equity into a purchase - why should they bail you out?

[KungFuPanda]

Alucidnation said:

I would be stamping on the tp. insurer.

If they wont settle the finance, get them to replace with an equivalent.


I can't understand why people just roll over and accept low ball offers, especially when it is not their fault that they are put in this position.

If he's stuck with a load of negative equity in the car it's not the third party's fault is it? All they have to do is put the OP's mate back into a car of the same value he had before the accident. The negative equity is his own problem.

[silentbrown]

KungFuPanda said:

If he's stuck with a load of negative equity in the car it's not the third party's fault is it?

Indeed. However the write-off has taken away the option of handing back the car at the end of the finance term.

Worth remembering that the insurance payout must be enough to allow you to replace the car with same model/condition/mileage. They can't just offer you the trade-in price for the car. (This doesn't mean you'd get forecourt sticker price, though...)

[Blue Oval84]

silentbrown said:

Worth remembering that the insurance payout must be enough to allow you to replace the car with same model/condition/mileage. They can't just offer you the trade-in price for the car. (This doesn't mean you'd get forecourt sticker price, though...)

And it will be enough to do that (or should be unless he accepts a daft offer) It's just that OP's friend will have to roll some negative equity into the deal. If he chooses not to do that then it means he'll have no car and a finance balance to clear.

I'd actually argue it should really be forecourt sticker price he gets, but that will still leave him in neg eg...

[TooMany2cvs]

KungFuPanda said:

If he's stuck with a load of negative equity in the car it's not the third party's fault is it? All they have to do is put the OP's mate back into a car of the same value he had before the accident. The negative equity is his own problem.

Yup.

<random figures>
He bought a car with £10k of finance.
The car depreciated faster than he paid the finance off.
He owed £7k. He still owes £7k.
He had a car worth £5k. The car no longer exists, he's been given the £5k value.

It's the whole reason gap insurance exists.

[Gavia]

Blue Oval84 said:

And it will be enough to do that (or should be unless he accepts a daft offer) It's just that OP's friend will have to roll some negative equity into the deal. If he chooses not to do that then it means he'll have no car and a finance balance to clear.

I'd actually argue it should really be forecourt sticker price he gets, but that will still leave him in neg eg...

Then he’d make a profit, as he’d negotiate some sort of reduction off the sticker price, so he’d be in a better position than he started from before the crash.

[Blue Oval84]

Gavia said:

Then he’d make a profit, as he’d negotiate some sort of reduction off the sticker price, so he’d be in a better position than he started from before the crash.

Depends on the dealer, try getting a discount at a car supermarket....

[Gavia]

Blue Oval84 said:

Depends on the dealer, try getting a discount at a car supermarket....

Wasn’t there a set process that the Ombudsman said all insurers should follow and if they didn’t they would always find against them? It was about using the main trade guides and using retail prices in them IIRC

[Blue Oval84]

Gavia said:

Wasn’t there a set process that the Ombudsman said all insurers should follow and if they didn’t they would always find against them? It was about using the main trade guides and using retail prices in them IIRC

Honestly no idea, but if I was claiming, I'd expect my payout to be enough that I could comfortably buy a replacement. Anything less and I'ld be looking into the Ombudsman, I certainly wouldn't accept vague claims of "well you'll probably haggle some money off so we're going to pay you less than the retail price".

[silentbrown]

TooMany2cvs said:

The car depreciated faster than he paid the finance off.
He owed £7k. He still owes £7k.
He had a car worth £5k. The car no longer exists, he's been given the £5k value.

It's the whole reason gap insurance exists.

Rather like owning shares - you haven't *actually* made profit/loss until you sell them... The writeoff 'crystallizes' the loss.

OP said the car was bought new. I'm guessing it's more than a year old now, so the insurer won't simply replace with new. (Does that still happen on PCP??)