Warranty Direct GAP insurance confusion as underwriter goes into liquidation

Published 02 September 2019

Warranty Direct customers are being told their GAP insurance is no longer valid after a major policy underwriter was placed into liquidation.

Lamp Insurance Limited was a key underwriter for Warranty Direct’s GAP insurance, but the company went bust on 31 May.

>>>What is GAP insurance?

Customers tell HonestJohn.co.uk it's taken Warranty Direct three months to contact them and say their GAP policies are no longer valid.

Some drivers have said the move has left them out of pocket, because they are unable to get GAP cover due to their cars being too old. In some cases, drivers have been quoted hundreds of pounds extra to renew the policy with another insurance underwriter.

Warranty Direct has told HonestJohn.co.uk that it stopped all sales as soon as it was made aware of the situation. It also stressed that customers did not lose cover, due to the affected GAP policies being live until the end of August.

A spokesperson said: “Remaining policies will be cancelled, and a refund of premium will be arranged for policyholders, through the Financial Services Compensation Scheme, on a 90 per cent pro-rata basis and according with compensation scheme rules.

"Conscious of the detriment policyholders will face with the cancellation of their policy, Warranty Direct has taken the decision to pay the 10 per cent of the pro-rata premium not covered by the FSCS."

Warranty Direct said it is now working with Pinnacle Insurance, the insurance arm of BNP Paribas, to offer GAP cover to new customers.

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Comments

on 2 September 2019

I fall into the category of customers who cannot get equivalent replacement GAP cover. Warranty Direct are still selling GAP policies but apparently won't accept any application for Return to Invoice cover for a vehicle which was purchased more than 12 months ago. LAMP Insurance went into liquidation with effect from 31st May 2019 and my vehicle was purchased on 21st June 2018. If Warranty Direct had informed me immediately about the liquidation, I would have been in with a fighting chance of being able to take out replacement cover. Let's hope their negotiations with Pinnacle, their new underwriter, are successful - provided that the price to the policyholder is reasonable, of course.

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