[335DPOWER]

well as the car is now on its way I spouse its time I start looking in to these.

any one have any recommendations on what company's to use??

And what sort of price im looking at paying on a new c 63.

Thanks Lee

[peterg1965]

I paid £95 for a 2 year personal contract hire GAP policy with a max claim of £15k. It was with Direct Gap, I think, I also bought tyre insurance for 2 years as well, that was £249 if memory serves. The BMW dealer could not get anywhere remotely close to either.

[sheps]

You need to check the wording of your lease agreement to see what your exposure is in the event of a total loss; with a Mercedes Benz Corprate business deal our (Gap) exposure is 100% of the outstanding payments. Ergo, if I'd had a crash on day one of the lease, MB would have wanted 35 x (£750 + VAT) = £35k.

So the standard £10-15k of cover wouldn't have been sufficient for me.

You need to see what your exposure is, in terms of percentage of monthly payments, factor in your payment profile, and purchase accordingly.

Mine is with ALA.

Edited to add: congrats with the order. Welcome to the silly mpg club

[335DPOWER]

Originally Posted by sheps

You need to check the wording of your lease agreement to see what your exposure is in the event of a total loss; with a Mercedes Benz Corprate business deal our (Gap) exposure is 100% of the outstanding payments. Ergo, if I'd had a crash on day one of the lease, MB would have wanted 35 x (£750 + VAT) = £35k.

So the standard £10-15k of cover wouldn't have been sufficient for me.

You need to see what your exposure is, in terms of percentage of monthly payments, factor in your payment profile, and purchase accordingly.

Mine is with ALA.

Edited to add: congrats with the order. Welcome to the silly mpg club

Haha thanks I back in the sub 20 mpg club for a 4 time now so am getting a little use to it.

I have done a quote with ala and it covers me off £25000 I haven't checked my exposure yet but my full payment plan minus the depo will be a lot lower than 35 k, I'm struggling to find a company that will cover more.

[chrisbin]

Check your insurance policy too - they usually cover you for the first 12months so you can be covered for 3 years with only a 2 year policy, starting on month 13....hope thats clear!!

[creepy coupe]

Originally Posted by chrisbin

Check your insurance policy too - they usually cover you for the first 12months so you can be covered for 3 years with only a 2 year policy, starting on month 13....hope thats clear!!

This is correct. I know mine did. (Admiral)

The problem is when you want to own/lease the car for longer than 12 months. as you can only take out GAP cover up to 180 days after owning/leasing the car. So you end up double GAPing Will's going to get excited about that one.

[Darkeeboy]

I went with ALA recently too, they price matched against click4gap...

[SteveC]

....that GAP insurance isn't covering your payments....its covering the difference between what you bought the car for and what your insurance pays out.

Lets say on day 1 your stolen £65,000 car is valued by your insurance co. as being only worth £55K (new price less depreciation)....your GAP covers the difference between insurance payout and invoice....in this case £10K

Now lets say your car is 34 months old when its stolen and you have 'return to invoice' GAP insurance with a £25k max. You would only owe 1 payment, your insurance values your car at lets say £39,000 (40% depreciation). If you have return to invoice GAP insurance, it would pay you £25000...you would pay the lease company the outstanding balloon plus the single payment and pocket the rest.

[gIzzE]

But in the case of a contract hire you have to pay them for the car, and the rentals.

I have never thought about the consequence of this before.

You would have to ask the hire company where you stand, could you use the money from your insurance and gap payout to get another car and then hand that back or what happens?

[gIzzE]

Originally Posted by 335DPOWER

well as the car is now on its way I spouse its time I start looking in to these.

any one have any recommendations on what company's to use??

And what sort of price im looking at paying on a new c 63.

Thanks Lee

When you say personal lease what is it exactly?

Loan with a ballon or a contract hire??

[SteveC]

Originally Posted by gIzzE

But in the case of a contract hire you have to pay them for the car, and the rentals.

I have never thought about the consequence of this before.

You would have to ask the hire company where you stand, could you use the money from your insurance and gap payout to get another car and then hand that back or what happens?

Very simple: You buy a car with a value of say £50K.....the financial arrangement comprises:
£ deposit
£ interest
£ payments
£ final balloon payment (or hand the car back)

At any time during the lease, you remain liable for the balloon payment plus all outstanding payments.

You insure the car comprehensively for replacement value

Now lets suppose the car is stolen the day after you buy it

According to your insurance company, because you've driven the car, its worth 20% less than you paid, so they'll pay you out £50k less 20% so $40k.
You still owe all the payments, plus final balloon, less most of the interest...so about £50250. Without GAP insurance you would just have lost £10.250. With GAP insurance you would receive £40K from our insurer and £10K from your GAP insurance (return to invoice), so you'd be only £250 out of pocket.

[Mike in Hampshire]

Gents, I'm confused about the use of GAP insurance on a contract hire - not PCP or anything like that.
Scenario: two year contract hire agreement with Mercedes Benz, £1600 up front then 23 payments of £300 (say). So I'm committing to pay MB £8500. Let's say the car is worth £36k brand new (list price).

Worst case scenario, car is stolen a few days after I've got it. Admiral insurance say it is worth £29k (there is no mention of them paying in full if the car is new in the policy booklet). Do I owe MB £36k? Or do I have to pay them £36k plus 23 remaining payments of £300 (total £42900)? Is it correct that I have to pay the remaining payments, or will MB just give me another identical car?

If the latter, my maximum exposure is £42900 minus what Admiral pay out, namely £13900.

So I need a GAP policy with £15000 ish cover? Or have I got this all wrong?

Mike.

[gIzzE]

Originally Posted by SteveC

Very simple: You buy a car with a value of say £50K.....the financial arrangement comprises:
£ deposit
£ interest
£ payments
£ final balloon payment (or hand the car back)

At any time during the lease, you remain liable for the balloon payment plus all outstanding payments.

You insure the car comprehensively for replacement value

Now lets suppose the car is stolen the day after you buy it

According to your insurance company, because you've driven the car, its worth 20% less than you paid, so they'll pay you out £50k less 20% so $40k.
You still owe all the payments, plus final balloon, less most of the interest...so about £50250. Without GAP insurance you would just have lost £10.250. With GAP insurance you would receive £40K from our insurer and £10K from your GAP insurance (return to invoice), so you'd be only £250 out of pocket.

That is a lease purchase.

It is very different to contract hire.

I am asking what your obligations are when it comes to contract hire.

Contract hire is a x amount of rental payments, with no option to own the car.
This changes things when it comes to your obligations in the case of a complete loss.

[gIzzE]

Originally Posted by Mike in Hampshire

Gents, I'm confused about the use of GAP insurance on a contract hire - not PCP or anything like that.
Scenario: two year contract hire agreement with Mercedes Benz, £1600 up front then 23 payments of £300 (say). So I'm committing to pay MB £8500. Let's say the car is worth £36k brand new (list price).

Worst case scenario, car is stolen a few days after I've got it. Admiral insurance say it is worth £29k (there is no mention of them paying in full if the car is new in the policy booklet). Do I owe MB £36k? Or do I have to pay them £36k plus 23 remaining payments of £300 (total £42900)? Is it correct that I have to pay the remaining payments, or will MB just give me another identical car?

If the latter, my maximum exposure is £42900 minus what Admiral pay out, namely £13900.

So I need a GAP policy with £15000 ish cover? Or have I got this all wrong?

Mike.

This is my point, what would the hire company want??

The problem is hire companies usually offer such good deals as the are given very high buy back deals from the manufacturer.

So, they buy that £36k car from Mercedes and two years later Mercedes buy it back for £30k.
This means they have made £2500 from you if you have paid them £8500 over the same period.

They want the £8500 and the car back. However, if it is a complete loss what happens. Obviously it will be worded in the terms of the agreement, but I haven't got an agreement to look at.

I am not sure if GAP is of any use with a hire car??

[gIzzE]

Looking around it is a different policy that needs to be taken out, not the usual gap or return to invoice, it has to return the invoice owed plus the rentals still owed.

So, anyone who has a contract hire car make sure you have the right contract hire gap insurance, it is essential, more so than when you simply buy a car on finance.

[peterg1965]

Interesting, I have just read my personal hire contract (BMW finance) agreement for the first time! It says that if the car is written off the insurance payout goes straight to BMW finance, and they may negotiate directly with my insurer to get the best price for the car. However, I remain fully responsible for paying all of the remaining contract hire rental payments until the end of the hire agreement.

My GAP cover is with DirectGap.co.uk and is Finace Gap, which was specifically for Contract Hire, which I assume pays me the outstanding hire payments ( so i can then pay BMW) and also up to £250 insurance xs.

[gIzzE]

Under their policy it says...

This Insurance does not cover: -

1. Any claim where the Total Loss is not subject to an indemnity under the relevant sections of Your motor insurance policy.

2. Any claim where You have the option to receive a Replacement Vehicle under the terms of Your Motor Insurance Policy in respect of the Total Loss of Your Vehicle. (The balance of this cover can be transferred to the Replacement Vehicle on request).

3. This Insurance does not cover the cost of fuel, road fund licence fees and Negative Equity or any warranty charges, insurance premiums, or any costs in excess of the Vehicle Valuation...............

Surely that is the point??

[peterg1965]

Originally Posted by gIzzE

Under their policy it says...




Surely that is the point??

Who is this aimed at Gizzie?

Edit....looks like me as I have just sent that clause in the t&cs. In my mind how can I be in negative equity? There isn't a settlement figure or balance owing as there is no option to buy the car.

[gIzzE]

The whole point of gap is to cover negative equity, ie the insurer valuing the car at less than is owing. Whether that be a balloon or monthly payments due.

[225_AB]

Originally Posted by peterg1965

Interesting, I have just read my personal hire contract (BMW finance) agreement for the first time! It says that if the car is written off the insurance payout goes straight to BMW finance, and they may negotiate directly with my insurer to get the best price for the car. However, I remain fully responsible for paying all of the remaining contract hire rental payments until the end of the hire agreement.

My GAP cover is with DirectGap.co.uk and is Finace Gap, which was specifically for Contract Hire, which I assume pays me the outstanding hire payments ( so i can then pay BMW) and also up to £250 insurance xs.

Peter I have the same car and the same arrangement. So the insurance company pays direct to BMW the current value according to Glass's guide. BMW reserve the right to negotiate with the insurer to obtain best price. I remain liable for the excess and remaining payments minus interest and VAT. This is a policy specifically marketed for contract hire. I assume that negative equity would be if the value was less than the future guaranteed minimum value?

[225_AB]

Originally Posted by gIzzE

The whole point of gap is to cover negative equity, ie the insurer valuing the car at less than is owing. Whether that be a balloon or monthly payments due.

The point of gap for contract hire is to cover the outstanding monthly payments.
In the first year my insurer offers new car replacement so no problem. In second year it would be difficult for BMW and insurer to say he car was a different value hence the use of Glass's guide or have I got it all wrong?

[gIzzE]

Buy a 520d for £40,000.
Write it off at 13 months old, book value is around £23000, you owe maybe £33000 on finance still.
You have to find the extra £10000 to clear the finance, hence gap insurance.
Take out return to invoice and they pay the difference between market value and the invoice price, so £17000.
This gets you back in a new car.


That is the whole point of gap, to cover the negative equity that you find yourself in with cars, as they depreciate quicker than you are paying them off in the first 2 years or so.



We are discussing contract hire though, if you hire a car you need gap insurance that not only cover the above, but also the remaining payments, if you have hired it for 36 months you need insurance that will pay out the remaining 23 months as well as pay for the car, and any negative equity that may be in too.