PCH exposes more consumers to potential write-off risk, says AutoProtect

AutoProtect is urging automotive retailers that are offering personal contract hire (PCH) agreements to consider how consumers can be better protected in the event of a vehicle write-off.

According to YouGov research published last year, one in 10 motorists in the UK - an estimated 6,350,000 people, had experienced their car being written off or stolen in the previous five years.

Just 17% could replace their car on a like-for-like basis using their comprehensive insurance payout alone.

James Barr, AutoProtect Group's corporate business development director, said: “GAP products are not all the same.

“Dealers and their customers need to be aware that the distinctive nature of personal leasing, notably the cost of early termination that would arise in the event of a total write-off, means that offering a dedicated lease GAP product is the right way to go in ensuring a good customer outcome should the policy be required.”

Any early PCH termination typically means paying up all or most of the outstanding monthly payments. This is good for enhancing retention and customer lifetime value, but a write-off risks leaving customers exposed and the suppliers at risk of losing a customer.

Barr added: “Lease GAP is not universally available, but it is one that all businesses providing personal leasing/PCH should have available.

“Using a standard GAP policy, even if well intended, could leave the customer exposed."