GAP Insurance on Company Leased Vehicle
Discussion
Hi All,
Wonder if you can help - I've always bought fairly high value BMWs on PCP for many years, usually £70k to £100k and got GAP insurance from the main dealer I got the car through.
I am looking at returning my current 7 series at the end of its term in Jan 25 and getting a BMW i7 on a company lease. Leased through Alphabet (their company lease partner) to my Limited company. The car is £140,810 and finance has been approved. I've got several other BMW's and Mini's on company leases for my staff, all using Alphabet. I am choosing a company lease rather than PCP because a) it will be more tax efficient on my company and b) I am looking at getting a new house next year and certainly dont want a £140k PCP debt on my personal self - especially as the month repayments are quite considerable.
The car is on order, although I've not yet signed the Alphabet agreement, and I can back out.
The problem I've got is insurance. I can't find any fleet insurers who will insure over a £100k vehicle. That's fine though, as I can get private insurance and just specify that the vehicles registered keeper and owner is the company lease provider Alphabet.
The issue I am having is with GAP insurance. Nobody will insure a vehicle over £125,000, and majority won't insure a Ltd company who is leasing the vehicle. They want the lease to be private, not company.
BMW used to provide GAP insurance, but no longer do. Their own vehicle (not GAP) only covers private vehicles, not company leased. I've got the big-wigs at Sytner BMW all looking into this, but they've honestly never come across it. It's very odd, as the BMW i7 starts at £120,000 (for the xDrive 60 M Sport which is what I am getting), before any options, and they say they do company leases for it all the time, but oddly they've never been had a query on GAP. If you want my opinion I dont think many people know about GAP, and if they do they choose to take the risk.
If I do the risk, then its a big risk. I've "heard" (not confirmed this yet), that an insurer will pay out the full value of the vehicle if a full loss in the first year, but won't in year 2, 3 or 4 (the lease I am getting is a 4 year lease). It's a big risk, as I reckon they'd only pay out £70k on the vehicle in year 2, leaving me with the balance to pay of probably £50k, which is a big amount. Sure, my business is doing well, but I'd rather not have the worry of some low life stealing my car, or me potentially writing it off in an accident and then being faced with a bill for the difference.
I did speak to Alphabet who confirmed that in the event of a full loss, my insurer would pay whatever they believe (finger in the air kind of job, or like in South Park, they'd cut the head off a chicken and make it run around) it is worth, and then they'd bill the Ltd company the balance (e.g. could be £50k+).
I surely can't be the only person in this predicament. How do people do GAP on high value cars?
Welcome any comments and hopefully this is also the right forum for this. Thanks!
Wonder if you can help - I've always bought fairly high value BMWs on PCP for many years, usually £70k to £100k and got GAP insurance from the main dealer I got the car through.
I am looking at returning my current 7 series at the end of its term in Jan 25 and getting a BMW i7 on a company lease. Leased through Alphabet (their company lease partner) to my Limited company. The car is £140,810 and finance has been approved. I've got several other BMW's and Mini's on company leases for my staff, all using Alphabet. I am choosing a company lease rather than PCP because a) it will be more tax efficient on my company and b) I am looking at getting a new house next year and certainly dont want a £140k PCP debt on my personal self - especially as the month repayments are quite considerable.
The car is on order, although I've not yet signed the Alphabet agreement, and I can back out.
The problem I've got is insurance. I can't find any fleet insurers who will insure over a £100k vehicle. That's fine though, as I can get private insurance and just specify that the vehicles registered keeper and owner is the company lease provider Alphabet.
The issue I am having is with GAP insurance. Nobody will insure a vehicle over £125,000, and majority won't insure a Ltd company who is leasing the vehicle. They want the lease to be private, not company.
BMW used to provide GAP insurance, but no longer do. Their own vehicle (not GAP) only covers private vehicles, not company leased. I've got the big-wigs at Sytner BMW all looking into this, but they've honestly never come across it. It's very odd, as the BMW i7 starts at £120,000 (for the xDrive 60 M Sport which is what I am getting), before any options, and they say they do company leases for it all the time, but oddly they've never been had a query on GAP. If you want my opinion I dont think many people know about GAP, and if they do they choose to take the risk.
If I do the risk, then its a big risk. I've "heard" (not confirmed this yet), that an insurer will pay out the full value of the vehicle if a full loss in the first year, but won't in year 2, 3 or 4 (the lease I am getting is a 4 year lease). It's a big risk, as I reckon they'd only pay out £70k on the vehicle in year 2, leaving me with the balance to pay of probably £50k, which is a big amount. Sure, my business is doing well, but I'd rather not have the worry of some low life stealing my car, or me potentially writing it off in an accident and then being faced with a bill for the difference.
I did speak to Alphabet who confirmed that in the event of a full loss, my insurer would pay whatever they believe (finger in the air kind of job, or like in South Park, they'd cut the head off a chicken and make it run around) it is worth, and then they'd bill the Ltd company the balance (e.g. could be £50k+).
I surely can't be the only person in this predicament. How do people do GAP on high value cars?
Welcome any comments and hopefully this is also the right forum for this. Thanks!
Edited by richywombat on Saturday 16th November 19:38
I wouldn’t rely on the year 1 replacement on a leased vehicle, all my recent insurance policies have specifically excluded leased vehicles from this.
A lot of GAP products got pulled earlier in the year, not sure if they have all returned to market
Is ‘return to invoice’ insurance still a thing?
A lot of GAP products got pulled earlier in the year, not sure if they have all returned to market
Is ‘return to invoice’ insurance still a thing?
essayer said:
I wouldn’t rely on the year 1 replacement on a leased vehicle, all my recent insurance policies have specifically excluded leased vehicles from this.
A lot of GAP products got pulled earlier in the year, not sure if they have all returned to market
Is ‘return to invoice’ insurance still a thing?
Yeah as far I can tell GAP almost isn't a thing anymore. BMW no longer offers it on any vehicles. There are no high-street (well known) insurers offering GAP - only weird named companies that I've never heard of - some pretty dubious!A lot of GAP products got pulled earlier in the year, not sure if they have all returned to market
Is ‘return to invoice’ insurance still a thing?
Ref your comment on year 1 replacement. What do you mean please? What I was on about is an insurer offering the full vehicle value on the first year of the vehicle insurance. I was told a few places that is the case, however year 2 onwards they'd offer significantly less (e.g. year 2 may be £70k), which is where I am having issues with needing this GAP insurance.
You say the car is £141K, and if it's written off after 2 years, the market value is £70K, which is what insurers will pay. Leaving you with a £50K debt.
How will you have a £50K debt? Surely after 2 years, the lease co will have had your initial deposit plus 24 months of payments. What does that add up to? If it's a 5 year lease, the insurers will have hoped, if it ran it's term, to sell the car, maybe for about £30K, and have your deposit plus 60 months of payments. That would cover the purchase price of the car (which for Alphabet sourcing thousands of cars from BMW, will be way below list) and allow for some profit. £50K seems a lot to be adrift after 2 years, plus you're assuming a £70K payout on a £140K car, 50% depreciation in 2 years. That also seems pessimistic.
Ultimately, just speak to Alphabet, and say you'll pull out of the deal unless they agree to accept insurer's market value on the car plus what you've already paid at the time of any total loss during the lease term. Alphabet can then decide to say yay or nay.
How will you have a £50K debt? Surely after 2 years, the lease co will have had your initial deposit plus 24 months of payments. What does that add up to? If it's a 5 year lease, the insurers will have hoped, if it ran it's term, to sell the car, maybe for about £30K, and have your deposit plus 60 months of payments. That would cover the purchase price of the car (which for Alphabet sourcing thousands of cars from BMW, will be way below list) and allow for some profit. £50K seems a lot to be adrift after 2 years, plus you're assuming a £70K payout on a £140K car, 50% depreciation in 2 years. That also seems pessimistic.
Ultimately, just speak to Alphabet, and say you'll pull out of the deal unless they agree to accept insurer's market value on the car plus what you've already paid at the time of any total loss during the lease term. Alphabet can then decide to say yay or nay.
TwigtheWonderkid said:
You say the car is £141K, and if it's written off after 2 years, the market value is £70K, which is what insurers will pay. Leaving you with a £50K debt.
How will you have a £50K debt? Surely after 2 years, the lease co will have had your initial deposit plus 24 months of payments. What does that add up to? If it's a 5 year lease, the insurers will have hoped, if it ran it's term, to sell the car, maybe for about £30K, and have your deposit plus 60 months of payments. That would cover the purchase price of the car (which for Alphabet sourcing thousands of cars from BMW, will be way below list) and allow for some profit. £50K seems a lot to be adrift after 2 years, plus you're assuming a £70K payout on a £140K car, 50% depreciation in 2 years. That also seems pessimistic.
Ultimately, just speak to Alphabet, and say you'll pull out of the deal unless they agree to accept insurer's market value on the car plus what you've already paid at the time of any total loss during the lease term. Alphabet can then decide to say yay or nay.
Thanks for going into detail on this one. You're right with that way of looking at it, which I never really thought of. Let's assume full loss in year two (e.g. a theft or write-off), and vehicle has depreciated by around 30% (which seems to be about what I am reading online) - It's £140,810 minus £9000 deposit, minus £27,000 (lets go with 18 months) of repayments. Then that's £104,810 left on finance. If the vehicle has depreciated 30% from its original invoice value then it will be £73,367 - leaving £31,443 on finance, which is the GAP element I need some help with. Sure, if it were £10k I could take the risk, but £31,442 is quite significant.How will you have a £50K debt? Surely after 2 years, the lease co will have had your initial deposit plus 24 months of payments. What does that add up to? If it's a 5 year lease, the insurers will have hoped, if it ran it's term, to sell the car, maybe for about £30K, and have your deposit plus 60 months of payments. That would cover the purchase price of the car (which for Alphabet sourcing thousands of cars from BMW, will be way below list) and allow for some profit. £50K seems a lot to be adrift after 2 years, plus you're assuming a £70K payout on a £140K car, 50% depreciation in 2 years. That also seems pessimistic.
Ultimately, just speak to Alphabet, and say you'll pull out of the deal unless they agree to accept insurer's market value on the car plus what you've already paid at the time of any total loss during the lease term. Alphabet can then decide to say yay or nay.
What you don't know (and unlikely anyone will tell you) is what Alphabet are paying for the car - they may well use internal "transfer" pricing which could easily be 40% less than list. So the car could well sit on their books (or the books of whoever is prividing the finance behind Alphabet - likely BMW Financial Services) at a way lower than the figure you're using.
There have been a couple of examples on here of lease cars being written off and it just seems to be worked out between the insurer and the leasing company. One PH member was cross because the car (a Golf R) had a total loss value of more than the finance company wanted but the insurer wouldn't pay him the extra.
It does seem like a hefty risk to your business though. I think throwing it back at Alphabet and telling them to come up with a solution is a good idea - now and again you see leases with GAP cover included (the very low cost Jeep leases on here a while ago included GAP) so it's obviously possible.
There have been a couple of examples on here of lease cars being written off and it just seems to be worked out between the insurer and the leasing company. One PH member was cross because the car (a Golf R) had a total loss value of more than the finance company wanted but the insurer wouldn't pay him the extra.
It does seem like a hefty risk to your business though. I think throwing it back at Alphabet and telling them to come up with a solution is a good idea - now and again you see leases with GAP cover included (the very low cost Jeep leases on here a while ago included GAP) so it's obviously possible.
I would guess that this isn't a common issue given the company lease desire along with then the value and the choice of car - its the "painful" combination.
ALA used to be a sponsor on PH but whether they will be able to help I know not.
Most Insurers on a brand new car offer a full replacement up to 12 months old and there is also the possibility of you getting an agreed value policy which would then in theory remove the need for any GAP purchase.
I would also guess that the 7 will in reality depreciate seriously heavily.
ALA used to be a sponsor on PH but whether they will be able to help I know not.
Most Insurers on a brand new car offer a full replacement up to 12 months old and there is also the possibility of you getting an agreed value policy which would then in theory remove the need for any GAP purchase.
I would also guess that the 7 will in reality depreciate seriously heavily.
alscar said:
I would guess that this isn't a common issue given the company lease desire along with then the value and the choice of car - its the "painful" combination.
ALA used to be a sponsor on PH but whether they will be able to help I know not.
Most Insurers on a brand new car offer a full replacement up to 12 months old and there is also the possibility of you getting an agreed value policy which would then in theory remove the need for any GAP purchase.
I would also guess that the 7 will in reality depreciate seriously heavily.
A someone has aleady mentioned, when a leased car gets written off it isn't replaced - the deal just ends.ALA used to be a sponsor on PH but whether they will be able to help I know not.
Most Insurers on a brand new car offer a full replacement up to 12 months old and there is also the possibility of you getting an agreed value policy which would then in theory remove the need for any GAP purchase.
I would also guess that the 7 will in reality depreciate seriously heavily.
ALA's online system has a value limit of £125K at a seemingly low cost for £50K of cover for 4yrs of £172 on contract hire - interestingly it's £660 if the car was a cash purchase. Maybe they could offer higher value if contacted?
Sheepshanks said:
A someone has aleady mentioned, when a leased car gets written off it isn't replaced - the deal just ends.
ALA's online system has a value limit of £125K at a seemingly low cost for £50K of cover for 4yrs of £172 on contract hire - interestingly it's £660 if the car was a cash purchase. Maybe they could offer higher value if contacted?
Yeah I tried ALA by email - They told me they only insure up to £125k and only privately, not company leased. They also said that the max invoice value on the car can't exceed £125k, and if it is, even if less than that is owing on finance, it would void the insurance (It's all in their policy wording document which you can actually download on their site), so I am afraid ALA was a no go for me.ALA's online system has a value limit of £125K at a seemingly low cost for £50K of cover for 4yrs of £172 on contract hire - interestingly it's £660 if the car was a cash purchase. Maybe they could offer higher value if contacted?
Sheepshanks said:
Is this a wind up?
Why would it be or appear to be a wind up?If your Insurer replaces new for old for 2 yrs, why would you need GAP Insurance for those 2yrs?
You buy a new £50k car today, it gets stolen when 23 mths old & your Insurer replaces it with a brand new identical model (which may now be a little more than £50k given inflation). Where in that scenario would GAP insurance be of benefit?
w8pmc said:
Why would it be or appear to be a wind up?
If your Insurer replaces new for old for 2 yrs, why would you need GAP Insurance for those 2yrs?
You buy a new £50k car today, it gets stolen when 23 mths old & your Insurer replaces it with a brand new identical model (which may now be a little more than £50k given inflation). Where in that scenario would GAP insurance be of benefit?
Well, the OP isn't buying a car. He's leasing it.If your Insurer replaces new for old for 2 yrs, why would you need GAP Insurance for those 2yrs?
You buy a new £50k car today, it gets stolen when 23 mths old & your Insurer replaces it with a brand new identical model (which may now be a little more than £50k given inflation). Where in that scenario would GAP insurance be of benefit?
OK, you could be excused for not knowing that insurance companies don't replace leased cars - except that two people already pointed it out in the thread, one of them in the first line of the first reply.
Sheepshanks said:
Well, the OP isn't buying a car. He's leasing it.
OK, you could be excused for not knowing that insurance companies don't replace leased cars - except that two people already pointed it out in the thread, one of them in the first line of the first reply.
Fair point & i had spotted this, although wasn't aware that a blanket insurance ban on new for old on Lease vehicles existed.OK, you could be excused for not knowing that insurance companies don't replace leased cars - except that two people already pointed it out in the thread, one of them in the first line of the first reply.
w8pmc said:
Fair point & i had spotted this, although wasn't aware that a blanket insurance ban on new for old on Lease vehicles existed.
I don't know that it's a ban as such - more likely leasing companies don't want some random car appearing on their books. There's also the point I made earlier - manufacturers using their leasing arms to dump cars. So the insurance company isn't going to want to have to buy a car for (in this case) £140K that was sat on the leasing company's books at maybe £100K.You can see the difference in the ALA GAP prices I mentioned for lease vs cash purchase. ALA expect to get spanked if it's a cash sale, if it's lease, they get off far more lightly.
Sheepshanks said:
I don't know that it's a ban as such - more likely leasing companies don't want some random car appearing on their books. There's also the point I made earlier - manufacturers using their leasing arms to dump cars. So the insurance company isn't going to want to have to buy a car for (in this case) £140K that was sat on the leasing company's books at maybe £100K.
You can see the difference in the ALA GAP prices I mentioned for lease vs cash purchase. ALA expect to get spanked if it's a cash sale, if it's lease, they get off far more lightly.
Makes perfect sense now & understood.You can see the difference in the ALA GAP prices I mentioned for lease vs cash purchase. ALA expect to get spanked if it's a cash sale, if it's lease, they get off far more lightly.
richywombat said:
Let's assume full loss in year two (e.g. a theft or write-off), and vehicle has depreciated by around 30% (which seems to be about what I am reading online) - It's £140,810 minus £9000 deposit, minus £27,000 (lets go with 18 months) of repayments. Then that's £104,810 left on finance. If the vehicle has depreciated 30% from its original invoice value then it will be £73,367 - l.
£140,810 less 30% is £98567, not £73,367. Plus Alphabet buy thousands of BMWs a year. They didn't pay £140K. I'd be amazed if they paid much over £100K.
If Alphabet get £98K off the insurers and have had £36K off you, they'll be bloody quids in. They'll be having an office party to celebrate your misfortune.
Edited by TwigtheWonderkid on Monday 18th November 20:38
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