Missold GAP Insurance Compensation Claims
GAP stands for guaranteed asset protection and it is safe practice to purchase GAP insurance. However, there are instances where people have been missold this insurance and may need to look at pursuing missold GAP insurance compensation claims.
When a person buys a new car and uses a new car loan or a lease agreement to purchase the car, it is common for that person to also take out gap insurance. The GAP insurance protects the buyer in cases where the car is written off through an accident or as a result of theft. When buying a new car, dealers have also been known to missell Payment Protection Insurance (PPI) to unsuspecting buyers.
The process involved in pursuing these types of claims are quite complex and therefore it is always advisable to contact missold GAP insurance compensation claims lawyers.
But first, let’s take a look at how GAP insurance works:
Let’s say you bought a car for £20,000. You paid down a deposit of £500 and have monthly repayments of £350. However, after six months, you have an accident and the car is written off i.e. the cost to fix it is more than the value of the car.
After six months, your insurance company determines that your car is worth £16,500. Assuming the accident is not your fault and there is evidence to prove that, the insurance company will pay you the £16,500.
The amount you have paid to date is the deposit plus six months of payments, which equals £2,600, so you still owe £17,400 on the car. In this case, your GAP insurance would pay the £1,100 difference between what the insurance covers (£16,500) and what you still owe (£17,400).
In effect, if you don’t have GAP insurance, this £1,100 must come out of your own pocket as the car dealership will not assume responsibility for the car.
GAP insurance does not make sense for everyone and really only applies to those who think that there is a possibility that the car will be worth less than what is owed on it.
GAP insurance makes sense for those who paid a low deposit on the car, if it’s a type of car that depreciates quickly, if there are high interest rates on the loan or if other costs were rolled over such as money owed on a trade-in into the new car loan.
There are two types of GAP Insurance:
- GAP Insurance taken out within 3 months of delivery of a new car – this insurance covers the shortfall or “gap” between the insurance settlement and either the original price paid for a vehicle or any finance that is outstanding.
- GAP Insurance bought more than 3 months after delivery or on a vehicle that is over 5 years old – this insurance covers the shortfall or “gap” between the insurance settlement and a Parker’s Private Guide valuation of the vehicle.
However, GAP insurance is not always necessary. Sometimes it is not required or simply unsuitable or can be missold and this explains the need for missold GAP insurance compensation claims solicitors.
Are you Eligible for a Missold Gap Insurance Compensation Claim?
There are a few scenarios under which you can be missold GAP insurance by car dealerships. They may simply want the extra money. They may be ignorant of the circumstances where GAP insurance applies.
They may have added it to the loan or lease agreement without advising the buyer what it is or if it is needed. In all these instances, it would be possible to pursue missold GAP insurance compensation claims. This type of thing usually only occurs with unscrupulous car dealers, but it is up to the consumer to protect against these types of people.
If you fit into any one of the following circumstances, you may have been missold GAP insurance and therefore have the right to pursue missold GAP insurance compensation claims.
- If you have adequate cash reserves to cover the shortfall between the insurance settlement and value of the vehicles, and so do not want to pay insurance premiums
- If you are already covered through your motor insurance
- If the loan agreement covers any gap in value
- If your vehicle is heavily discounted so there would not be a gap in value
Missold gap insurance policies can potentially cost motorists thousands of pounds in wasted premiums as they are often added to the finance deal at the start and gain interest. This means that your £5000 car could end up costing you £1000s more all because of unnecessary gap insurance.
If you have found that GAP insurance has been added to your agreement without your knowledge, where it is not needed or where it is even invalid, then you may be eligible for claiming a refund of policy premiums paid on this missold GAP insurance policy and this can be done by pursuing missold GAP insurance compensation claims.
Starting Your Missold Gap Insurance Compensation Claim
However, if you do think you have been a victim of this, the first thing to do is write to the car dealership. Send a detailed letter explaining why you think you were missold the policy and give all details of the policy, who sold it to you and on what date. Be as detailed and authentic as possible in order to maximise your results.
Let the car dealer know that you want a reasonable response within 14 working days or that you will take the situation further by contacting missold GAP insurance compensation claims lawyers.
Make sure to send the letter by recorded post so as that you have a record of sending it but more importantly that you have a record of the car dealer receiving it. Keep all your records in a safe place, as you’ll need them if the claim goes any further.
If the car dealer rejects you claim you can write to them a second time but this time make sure that the letter is seen by senior management. If at this point, you still do not receive a satisfactory answer from the car dealer and are confident of your rights, it would now be advisable to contact missold GAP insurance compensation claims lawyers.