CMFAS PGI Motor Insurance question: total-loss payment

CMFAS PGIMotor Insurance

A finance company holds a hire-purchase interest in an insured car that is written off. How is the total-loss payment typically handled?

A The registered owner receives it all and must repay the finance company separately
B The finance company takes the wreck as salvage in place of any payment, and the insured gets nothing
C The financier's outstanding interest is usually settled first, with any balance to the insured
D No payment is made until the insured has paid off the outstanding finance in full

Show the answer and explanation

Answer: C. The financier's outstanding interest is usually settled first, with any balance to the insured

Where a financier's interest is noted, the total-loss settlement typically discharges the outstanding finance first, with any remaining balance paid to the insured, reflecting each party's insurable interest.

Common mistake

The financier's noted interest takes priority from the payout; the insured receives only the balance.

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CMFAS PGI Motor Insurance question: total-loss payment

Answer: C. The financier's outstanding interest is usually settled first, with any balance to the insured

Common mistake

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CMFAS PGI Motor Insurance question: total-loss payment

Answer: C. The financier's outstanding interest is usually settled first, with any balance to the insured

Common mistake

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