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 to your motorcycle insurance if your PCP bike is written off? MCN Compare answer your questions below.
What is a PCP deal?
PCP stands for Personal Contract Purchase/Plan. It is a type of Hire Purchase, meaning the legal owner of the vehicle is the finance company.
It’s now a very common way of buying a car or a bike. You pay a deposit then monthly repayments for usually 3 or 4 years, usually with an agreed annual mileage to adhere to. At the end of the contract term you can either pay an agreed balloon payment to own the vehicle or walk away or trade it in for a new PCP vehicle. For a more detailed look into motorbike finance, read MCN’s article on motorbike finance explained here.
What would a total loss mean?
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).
3) If you have third party fire and theft cover and something happens to you and your PCP bike your insurance company will only pay out to third parties affected, but, they will cover for repairs or compensation to the value of your bike if it’s written off or damaged as a result of a fire or stolen.
GAP insurance
Any customer purchasing a bike on PCP should consider an optional Combined GAP (Guaranteed Asset Protection) Insurance Policy, as this would pay off any outstanding finance shortfall or return to the customer the original invoice value (whichever is greater at the time of the loss).
Call our experts
MCN Compare have teamed up with Bikelawyer and are now offering a free accident advice line with you if you have taken out a policy with MCN Compare, this advice line is available to customers for the full year their policy is active for. Bikelawyer is a leading firm of specialist motorcycle accident solicitors founded on the principle of providing injured bikers with unparalleled expertise coupled with first rate service. So if you have an insurance policy with us and are unsure following an accident call 01446 794199 and reference your policy number for free accident advice from our experts!
