PCP deals have gone from being a rare oddity in the motorcycling world to taking 20-30% of the new bike finance market, and it’s growing fast. But what happens if your PCP bike is written off?.
"I’m very tempted to go down the PCP route for my next bike but one question springs to mind: what are the insurance implications when a claim leads to a write-off?"
Andy Eyre, email
Answered by Rob May, Doble Motorcycles
PCP is a type of Hire Purchase, meaning the legal owner of the vehicle is the finance company. A total loss would lead to one of the two following outcomes:
1) Assuming the bike is insured on a comprehensive policy most insurers would replace the bike so long as it is quite new (anywhere between six months and one year old). If this were to happen then in most cases the finance agreement could be transferred to the replacement bike.
2) After any vehicle replacement period has expired then most insurers will offer ‘the market value of the vehicle at the time of the loss’. In this case, the money would be paid directly to the finance company but the customer would be responsible for any shortfall on the settlement balance (there may not be a shortfall depending on the amount borrowed and term).
Any customer purchasing a bike on PCP should consider an Optional Combined GAP insurance policy, as this would pay off any outstanding finance shortfall or return the customer to the original invoice value (whichever is greater at the time of the loss).
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