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Direct Line, along with many other insurers, offer a like for like replacement in the event of a major accident resulting in a total write off or the car being stolen and unrecovered. It would seem that they offer this type of policy if the car is purchased new but what doesn’t seem to be so clear is the position if you buy an ex-demonstrator with no miles on the clock.

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Currently it may take you 6 months to get a Range Rover, however, David Mitchell of Sidcup couldn’t wait so he bought a car from a main dealer that was pre-registered (i.e. registered in the name of the dealership). Soon after buying the car it was stolen so knowing that he had paid full retail price (ie the price he would have paid for an unregistered car) he asked Direct Line to replace it like for like as per his policy.

They refused, claiming that he could only make a claim if he was the first registered keeper, which he wasn’t, it was the main dealer. Instead they offered him the market value which was £10,000 less than the £60,000 he paid for it. After complaining Direct Line stood firm and refused to either replace the car or pay out the full amount paid referring Mr Mitchell to the terms of his policy.

So be warned. Had he taken out ‘back to invoice’ GAP insurance he would have recovered the £10,000 difference. But, to be honest, I’m a little concerned about the policy he took out as some of these like for like replacement policies can be a couple of hundred pounds more expensive. Assuming he didn’t misinform Direct Line when completing his application, stating that he was the second registered owner of the vehicle, he may have a case for miss-selling.

He was sold a policy to include a level of cover that they weren’t prepared to pay out on. Something they knew when he took out the policy and something they clearly failed to highlight. There could also be a claim under the Unfair Terms In A Consumer Contract 1999 legislation. The car was technically new as it was unused, should it really matter if someone else’s name appeared in the registration document first?

Direct Line said that they assumed any buyer of a pre-registered car would be paying much less for the car than a new unregistered car but this doesn’t seem to have been mentioned in the contract. Yes he paid full price for the car but he would have paid the same if the car was unregistered before he took ownership.

Shame on you Direct Line, personally I would take them to court and guess what, if you had legal cover included in your policy you could go through an independent solicitor and they would charge Direct Line for him to take legal action against the Insurer. Don’t you just love it! Sadly Mr Mitchell isn’t a client of mine so he has had to rely upon the advice of journalists. By Graham Hill