UK Insurance for leased i3

[MikeS]

Flipsnacker - Thank you for your detailed explanation. My insurance is with BMW and both their detailed policy document and their representative confirm that they will do as i stated in Red above - and that is not just for the first 12 months…….

 

[FLIPSKNACKER]

Hello all.
I trust this helps and I hope I've not (and I'm sorry if I have) upset anyone by jumping in here.

I think it helps a lot.. one other thing your post reminded me of... not all GAP providers let you wait 180 days as that's quite a generous period for you drive round without an accident and then decide if I do write it off I'd like a brand new car. The company I went with had to be done within 28 days from delivery of the new car IIRC.

One other thing comes to mind...even if the insurer give you a brand new car as payout in the first 12 months, the lease agreement could include an element of finance. So you may still have more to pay on the lease than just the cost of a new car. This is just me "pondering" not a statement of fact.

Most Motor Dealer GAP policies currently have to be purchased within 30 days of buying the car, although some only allow you 7 days. The majority of the online providers though do now permit up to 180 days.

It's not usual for Leased vehicles to be eligible for New For Old cover so I'm a little unsure as to how a Leasing company would deal with the prospect of a physical replacement vehicle. I wouldn't however expect any additional fees from them to be anything more than an administration fee for updating some paperwork, afterall if the vehicle is replaced you'd continue to pay your monthly rentals until the end of the agreement and then hand the car back to them at the end so they shouldn't be too much out of pocket. Although you have to wonder what would happen if the replacement vehicle wasn't of the same specification as the original, particularly if it was deemed to be a lower spec. But, to counter that, it's normally part of the Motor Insurance terms conditions that the Leasing/Finance company must agree to the vehicle being physically replaced. Whether it's in the Motor Insurance terms or not, the Leasing/Finance company would surely have to agree anyway as ultimately, it's their vehicle! If they didn't agree to it, you'd be back to square one.

Similarly you'd also have to consider what would happen in the event that the Motor Insurer wasn't able to source a physical replacement vehicle at the time of claim. Either at all, or within their preferred timescale (if they have one)... in such circumstances many insurers will revert to a Market Value payout, perhaps even the equivalent of an original Invoice Value payout or at best a full vehicle replacement cost (as new) payout... but even then, those funds would go to the finance company, not you, and therefore you'd likely still have a financial liability to the finance company.


Just for the sake of clarity... I just had a conversation with a gentleman who was referring to his vehicle being leased, when in fact he had a PCP agreement. So... as far as a GAP insurance policy is concerned:

"Leased" means a "Contract Hire" or "Lease Hire" Agreement. For which a GAP insurance policy in the event of a claim, would aim to pay the difference between your Motor Insurance payout and the amount required to settle your remaining financial liability under that lease agreement. The ultimate goal being to leave you at a "zero" position with no finance remaining and no car.

Anything else, E.g. "Cash", "Hire Purchase (HP)", "Personal Contract Purchase (PCP)" or "Lease Purchase (LP)" is entirely different. For which GAP insurance would aim to pay the difference between your Motor Insurance payout and either the original invoice price paid for the vehicle (Invoice GAP insurance) or in the case of a brand new vehicle, the cost of replacing the vehicle at the time of claim with a brand new version of the same (or nearest equivalent) vehicle - even if that replacement vehicle costs more than you paid for the vehicle first time around (Replacement GAP insurance). The ultimate goal of either being to see you be able to clear off any finance that remains (where applicable) and have money left over to put towards the cost of a new vehicle.

 

[FLIPSKNACKER]

Flipsnacker - Thank you for your detailed explanation. My insurance is with BMW and both their detailed policy document and their representative confirm that they will do as i stated in Red above - and that is not just for the first 12 months…….

If that's the case, aside from the issues I highlight in my post immediately prior to this one, particularly if the Replacement vehicle option is not just limited to the first 12 months as it normally would be, then I'd agree that your requirement for GAP insurance is on face value, minimal to say the least.

I've just noticed one thing though... you've put that the policy says they will replace the vehicle if "...the cost of repair is more than 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage..."

Normally, Motor Insurance policies refer to the vehicle being declared a Total Loss if the cost of repair is more than X% (it varies but it's usually 50-60%) of the market value of your vehicle at the time of claim. By setting the threshold at 50% of the manufacturer's list price (which can and normally will, increase with time) of the new vehicle at the time of claim, it may be that they don't specifically limit the New-For-Old cover to the first 12 months but in later years it'll be "harder" (for want of a much better phrase) to have a repair bill breach 50% of the list price than it would to have it breach say 60% of the depreciated value of your vehicle at the time of claim.

In other words... is it possible that your car could be written off as a result of an accident, whereby the cost of repair is enough to have them declare the vehicle a write-off, but yet not high enough to breach 50% of the manufacturer's list price and therefore have them offer a Market Value payout instead of a new replacement vehicle?

Putting aside the New-For-Old part of your Motor Insurance policy... what does it state are the conditions that would invoke a Total Loss claim - specifically, in relation to the cost of repairing the vehicle?

I'm glad I jumped in to this now... it's fascinating.

 

[MikeS]

Flipsknacker - This is the exact and total wording in the BMW insurance policy document (not sure what else I can say):

5. Replacement car. If Your car is:
• stolen and not recovered; or
• damaged to the extent that the cost of repair is
more that 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage;
we will, at your request, replace Your car with a new one of the same make, model and specification.
We will only do this if:
• you have owned the car (or you have hired it under a
lease or hire purchase agreement) since it was first
registered as new;
• Your car is a United Kingdom specification model,
bought from a BMW Authorised Dealer in the United Kingdom;

Please also note that I paid the max I could up front - circa £18800 and only pay £44/month for the 4 year lease.

 

[FLIPSKNACKER]

Flipsknacker - This is the exact and total wording in the BMW insurance policy document (not sure what else I can say):

5. Replacement car. If Your car is:
• stolen and not recovered; or
• damaged to the extent that the cost of repair is
more that 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage;
we will, at your request, replace Your car with a new one of the same make, model and specification.
We will only do this if:
• you have owned the car (or you have hired it under a
lease or hire purchase agreement) since it was first
registered as new;
• Your car is a United Kingdom specification model,
bought from a BMW Authorised Dealer in the United Kingdom;

Please also note that I paid the max I could up front - circa £18800 and only pay £44/month for the 4 year lease.

There must be another clause within the policy that states under which circumstances they'd declare the vehicle a Total Loss (write it off). The "Replacement Vehicle" clause would normally be in addition to that.

Can you find nothing to that effect?

Though with that said, if you're only paying £44 per month, in the grand scheme of things your liability really is minimal and there's only minimal requirement for GAP insurance if any - subject to confirming the answer to my question in my previous post.

I'm curious... why have you put so much money upfront for a car you're leasing. (It's definitely a Lease/Contract Hire and not a PCP or Lease Purchase agreement isn't it?). I've just checked and it appears that by going for a higher monthly repayment the car can be leased for about the same amount over the 4 years but with a a fraction of that amount upfront. Then again, I guess if you have the funds to spare, why not clear the bulk of it upfront? You're going to pay it anyway!

 

[MikeS]

Flipsknaker - That is the only pertinent clause I can fine. You say - ''There must be another clause within the policy that states under which circumstances they'd declare the vehicle a Total Loss (write it off). ‘ - Does not this bit cover that - If Your car is:
• stolen and not recovered; or
• damaged to the extent that the cost of repair is
more that 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage;
we will, at your request, replace Your car with a new one of the same make, model and specification?

As to the funding - I have the money, don’t like paying monthly and investment rates are rubbish. Would have paid the whole lot if I could!

 

[FLIPSKNACKER]

Flipsknaker - That is the only pertinent clause I can fine. You say - ''There must be another clause within the policy that states under which circumstances they'd declare the vehicle a Total Loss (write it off). ‘ - Does not this bit cover that -

If Your car is:
• stolen and not recovered; or
• damaged to the extent that the cost of repair is
more that 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage;
we will, at your request, replace Your car with a new one of the same make, model and specification.

The reference to "list price", is a curious one because it leaves my previous question, which was:

Is it possible that your car could be written off as a result of an accident, whereby the cost of repair is enough to have them declare the vehicle a write-off, but yet not high enough to breach 50% of the manufacturer's list price and therefore have them offer a Market Value payout instead of a new replacement vehicle?

On reflection though, your car insurance policy is only a one year policy (I've been thinking from a 4-year approach) so it's incredibly unlikely that your car will be worth less than 50% of the manufacturer's list price in year one, so yes, the bit you've quoted does cover it, this year, though I'd be very wary of relying on that clause if it were in later renewals of your policy (assuming you stuck with them).