Insurance pay out

[kinaero]

One of my friends recently involved in an nasty accident! Good chance his vehicle would be a write off! Thankfully he bought GAP insurance, so hopefully he should not be losing any money over it.

It got me thinking that I currently on contract hire my Merc for 2 years, I believed if you write your car off in the first year, the insurance would replace with an new one, but what happen if I wrote my lease car off in the second year?

What then? Where do I stand if insurance pay less than market value? Do I need to pay to cover the shortfall?

Thanks in advance!

 

[wemorgan]

From my one and only experience the insurance pays out to buy an equivalent replacement. I went on Autotrader, showed them roughly the same car as I owned and they agreed to pay out that amount minus my excess. In your example, Mercedes main dealers own 99% of 1-2 year cars so it should be very easy to find their value.

 

[IanA2]

From my one and only experience the insurance pays out to buy an equivalent replacement. I went on Autotrader, showed them roughly the same car as I owned and they agreed to pay out that amount minus my excess. In your example, Mercedes main dealers own 99% of 1-2 year cars so it should be very easy to find their value.

What he said.

 

[Dryce]

It got me thinking that I currently on contract hire my Merc for 2 years, I believed if you write your car off in the first year, the insurance would replace with an new one, but what happen if I wrote my lease car off in the second year?

What then? Where do I stand if insurance pay less than market value? Do I need to pay to cover the shortfall?

Insurance will nornally replace the car *if you own* the car and are the first owner. If you have the car on a contract hire agreement you won't be the owner.

Check the small print on the policy.

Check Ling's post from early last year (ormaybe late 2012) on the subject.

The insurance company will normally cover the contact hire company's loss. The contract hire company will basically cancel the agreement at that point. It is unlikely that the car will be on the books of the finance company at more than market value as they normally get a whopping great discount and also need to make surec that their assets are appropriately valued on their balance sheet.