GAP insurers suspend sales
Discussion
Zippee said:
Why are people concentrating on finance and not the low ball payouts insurers seem to try and make. Gap in my mind (and why I have it on mine) is so I can get back into the same position I was pre accident and not to have to stump up several k to find the difference between trade payout and retail purchase
You should be able to negotiate a pay out which puts you back where you were - which is not in a brand new car. otolith said:
It’s not something I explicitly seek out and pay an extra premium for, no. Sourcing secondhand tellies and arguing the toss over value isn’t something insurers can be arsed with, though.
Well you do pay extra. If you have a policy that isn't new for old, your overall sum insured is for the 2nd hand value. So that £1000 TV that's worth £200 3 years later, you'd only allow £200 for it in your sum insured. On a new for old policy, you'd allow maybe £1100 for it, to buy a new replacement. Insurers don't have to source 2nd hand tellies. Just pay you the value of a 2nd hand telly. You can then source one or add £900 of your own money to buy a new replacement.
Zippee said:
Why are people concentrating on finance and not the low ball payouts insurers seem to try and make. Gap in my mind (and why I have it on mine) is so I can get back into the same position I was pre accident and not to have to stump up several k to find the difference between trade payout and retail purchase
Total loss claims on private motor insurance are settled on retail value. Trade value is only paying on claims on motor trade policies. The payoutshould allow you to buy the same car, same age and mileage.
The problem is people want the same amount as the advert for a similar car. They forget that just because something is advertised for a certain price, doesn't mean that's what it will sell for. People put their cars up for sale for more than they will actually accept.
TwigtheWonderkid said:
1. By saving up. You might save up to buy a new car ever 5 years. When your existing car gets written off after 3 years, you're in a hole.
2. Many insurers used to offer indemnity cover instead of new for old. Not so many now, because of lack of demand. People want new for old, which is nothing more than build in gap cover, under a different name.
3. Prices may have gone up, or may not have. Many RTI gap policies will actually pay for a new car if it has gone up.
1. I think that's a bit unrealistic. How many people actually save up and buy a brand new car these days? They're all on PCP, etc. and covering any finance shortfall with CAP probably makes sense.2. Many insurers used to offer indemnity cover instead of new for old. Not so many now, because of lack of demand. People want new for old, which is nothing more than build in gap cover, under a different name.
3. Prices may have gone up, or may not have. Many RTI gap policies will actually pay for a new car if it has gone up.
2. But I don't think the lack of Indemnity policies for Household cover is driven by lack of demand, more by insurers not offering it. My 2005 3 Series was made a Cat N last year. I've now got a £350 excess on a car WBAC value at around £850. I'd be happy to insured it TPF & T but nobody offers that any more either!
3. TBF I wasn't aware of that.
But it's like all insurance products. Insurers aren't charities, they are trying to make a profit. So if you have average luck it's cheaper not to have insurance cover - much like extended warranties.
Just depends how lucky you feel, and whether you could deal with it all going Pete Tong!
Mr Tidy said:
2. But I don't think the lack of Indemnity policies for Household cover is driven by lack of demand, more by insurers not offering it.
They don't offer it because no one wants it. The lack of demand drives the lack of the product. No one wants to, following a fire or flood, furnish their house with a 2nd hand sofa and fridge. By law, insurance is only allowed to pay "compensation". It's not allowed to venture into the territory of "gambling" by paying out what would essentially be winnings from misfortune.
For instance, you can't just go out and buy £100k of life insurance on, say, Mick Jagger in the hope of making some money. But if you're a concert promoter who's invested £100k in booking a tour you can certainly go out and insure the risk of the main act not being available to perform.
Similarly if you live in a £250k house you can't over-insure it and claim £500k if it burns down.
"New for old" insurance is allowed but the catch is you need to pay premium on the full replacement cost of your stuff and not the second hand value.
For instance, you can't just go out and buy £100k of life insurance on, say, Mick Jagger in the hope of making some money. But if you're a concert promoter who's invested £100k in booking a tour you can certainly go out and insure the risk of the main act not being available to perform.
Similarly if you live in a £250k house you can't over-insure it and claim £500k if it burns down.
"New for old" insurance is allowed but the catch is you need to pay premium on the full replacement cost of your stuff and not the second hand value.
I had Return To Invoice insurance when I bought my STi in 2003. It cost me £300 and activated in the second year and ran for three years.
When it got stolen at 3 1/2 years old, I got all my money back
3.5 years of free motoring in a brand new STi was really good value.
Bought my 3.2 Carrera with 1/2 of the proceeds
When it got stolen at 3 1/2 years old, I got all my money back
3.5 years of free motoring in a brand new STi was really good value.
Bought my 3.2 Carrera with 1/2 of the proceeds
It’s insuring an uplift from what you had to something better, it covers a narrow range of claims, it doesn’t cover third parties at all, but people mentally benchmark the cost against their normal car insurance. It’s also not risk priced and is given a hard sell by people on commission. Payment ratios and misselling investigation can’t be a surprise to anyone.
Panamax said:
By law, insurance is only allowed to pay "compensation". It's not allowed to venture into the territory of "gambling" by paying out what would essentially be winnings from misfortune.
For instance, you can't just go out and buy £100k of life insurance on, say, Mick Jagger in the hope of making some money. But if you're a concert promoter who's invested £100k in booking a tour you can certainly go out and insure the risk of the main act not being available to perform.
Similarly if you live in a £250k house you can't over-insure it and claim £500k if it burns down.
"New for old" insurance is allowed but the catch is you need to pay premium on the full replacement cost of your stuff and not the second hand value.
Half right. For instance, you can't just go out and buy £100k of life insurance on, say, Mick Jagger in the hope of making some money. But if you're a concert promoter who's invested £100k in booking a tour you can certainly go out and insure the risk of the main act not being available to perform.
Similarly if you live in a £250k house you can't over-insure it and claim £500k if it burns down.
"New for old" insurance is allowed but the catch is you need to pay premium on the full replacement cost of your stuff and not the second hand value.
There's no law restricting insurance payouts to compensation only. Betterment, which is what we're talking about, isn't a law, it's a principle that insurers work to, but only if they wish to. There is no law to stop you benefitting financially from insurance, and ending up far better off. My wife has a large life insurance policy which we took out on a level term basis to give me enough money to hire a live in nanny to help with the kids if she were to meet an untimely end. The kids are now grown up, I've retired, but the policy has a few years left to run. If she died today, financially I would benefit hugely. Luckily I'd rather she lived than have the money so she doesn't have to employ a food taster quite yet.
Re the Mick Jagger situation, the thing that doesn't allow for that is not betterment, but insurable interest. I don't have an insurable interest in him surviving so I cannot buy insurance on him. But as you say, the concert promotor does have an insurable interest and can.
Panamax said:
Similarly if you live in a £250k house you can't over-insure it and claim £500k if it burns down.
There's no law against it. You just need to convince an insurance co you didn't have fraudulent intentions.
Eg. You live in a road, where all the houses are 4 bed detached, apart from your house which is a 2 bed bungalow. The plot sizes are all the same. You might be quite happy with your 2 bed bungalow, but if it burnt down, you'd want to rebuild it to match all the other houses.
If you could convince an insurer you had no intention of committing arson, you don't actually want the hassle of a fire and a rebuild, but if the worst happened, you'd want the 4 bed rebuild, then an insurance co could quite legally issue you a policy for £500K on a £250K house. Of course, you'd pay the £500K premium for the privilege.
TwigtheWonderkid said:
Mr Tidy said:
2. But I don't think the lack of Indemnity policies for Household cover is driven by lack of demand, more by insurers not offering it.
They don't offer it because no one wants it. The lack of demand drives the lack of the product. No one wants to, following a fire or flood, furnish their house with a 2nd hand sofa and fridge. I wouldn't want a 2nd hand bed/sofa, etc but I've had loads of 2nd hand cars!
Mr Tidy said:
TwigtheWonderkid said:
Mr Tidy said:
2. But I don't think the lack of Indemnity policies for Household cover is driven by lack of demand, more by insurers not offering it.
They don't offer it because no one wants it. The lack of demand drives the lack of the product. No one wants to, following a fire or flood, furnish their house with a 2nd hand sofa and fridge. I wouldn't want a 2nd hand bed/sofa, etc but I've had loads of 2nd hand cars!
FCA lifts Gap restrictions on two firms, but doesn't say which ones. Helpful!
https://www.postonline.co.uk/news/7955585/fca-lifts-gap-restrictions-on-two-firms
https://www.postonline.co.uk/news/7955585/fca-lifts-gap-restrictions-on-two-firms
TwigtheWonderkid said:
Because these days, 85-90% of claims costs come from TP claims...
You're obviously in the industry so don't doubt your figures but how can that be? 1 car crashes it's a 1st party claim, if 2 crash and someone is at fault it's roughly 50/50 1st and 3rd party and if it's a no fault crash it's 2 1st party claims plus theft etc... all 1st party claims. No? What am I missing?pheonix478 said:
You're obviously in the industry so don't doubt your figures but how can that be? 1 car crashes it's a 1st party claim, if 2 crash and someone is at fault it's roughly 50/50 1st and 3rd party and if it's a no fault crash it's 2 1st party claims plus theft etc... all 1st party claims. No? What am I missing?
Personal injury?otolith said:
pheonix478 said:
You're obviously in the industry so don't doubt your figures but how can that be? 1 car crashes it's a 1st party claim, if 2 crash and someone is at fault it's roughly 50/50 1st and 3rd party and if it's a no fault crash it's 2 1st party claims plus theft etc... all 1st party claims. No? What am I missing?
Personal injury?TwigtheWonderkid said:
Zippee said:
Why are people concentrating on finance and not the low ball payouts insurers seem to try and make. Gap in my mind (and why I have it on mine) is so I can get back into the same position I was pre accident and not to have to stump up several k to find the difference between trade payout and retail purchase
Total loss claims on private motor insurance are settled on retail value. Trade value is only paying on claims on motor trade policies. The payoutshould allow you to buy the same car, same age and mileage.
The problem is people want the same amount as the advert for a similar car. They forget that just because something is advertised for a certain price, doesn't mean that's what it will sell for. People put their cars up for sale for more than they will actually accept.
These are trade journals so the insurer is not in the first instance offering a retail valuation, if insurers offered anything near a retail valuation, the majority of arguments over the valuation just wouldn't happen. If insurers don't like sellers having a margin maybe they should do the negotiating for the replacement.
The rule book may say one thing but the reality is different.
TwigtheWonderkid said:
otolith said:
pheonix478 said:
You're obviously in the industry so don't doubt your figures but how can that be? 1 car crashes it's a 1st party claim, if 2 crash and someone is at fault it's roughly 50/50 1st and 3rd party and if it's a no fault crash it's 2 1st party claims plus theft etc... all 1st party claims. No? What am I missing?
Personal injury?FMOB said:
TwigtheWonderkid said:
Zippee said:
Why are people concentrating on finance and not the low ball payouts insurers seem to try and make. Gap in my mind (and why I have it on mine) is so I can get back into the same position I was pre accident and not to have to stump up several k to find the difference between trade payout and retail purchase
Total loss claims on private motor insurance are settled on retail value. Trade value is only paying on claims on motor trade policies. The payoutshould allow you to buy the same car, same age and mileage.
The problem is people want the same amount as the advert for a similar car. They forget that just because something is advertised for a certain price, doesn't mean that's what it will sell for. People put their cars up for sale for more than they will actually accept.
These are trade journals so the insurer is not in the first instance offering a retail valuation, if insurers offered anything near a retail valuation, the majority of arguments over the valuation just wouldn't happen. If insurers don't like sellers having a margin maybe they should do the negotiating for the replacement.
The rule book may say one thing but the reality is different.
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