School me on GAP insurance please

[M5 London]

Hi Guys,

So its my first ever brand new car and I haven't got a clue about GAP insurance.

The invoice price on the car is £80,000 after discounts etc. I am buying it on a PCP with a term of 48 months. I believe the GFV is about £30,000 if I remember correctly.

I am not sure what amount of cover I require.

Also in terms of GAP insurers I have read about ALA. Are there any others that people on here may recommend please ?

Thanks !

[Smuler]

ALA is actually called back to invoice insurance so if I lost my car (which I own outright) I'd get the difference between my insurers settlement and the invoice price of the car, up to 15k because that's the agreed gap I paid 112£ for (3 year cover)

I don't know why you'd be different as its PCP. You get cover for the difference between what you paid and worst case scenario for market value after 4 years. Max ALA gap I believe is 50k anyway. Pay for 4 year cover. The policy would cover settling the finance owing if that was more favourable to you.

I believe all insurers replace new cars in a total loss situation in first year so maybe check that out and see if you need back to invoice insurance right away.

[jimbooo]

Typing on ipad that keeps crashing so brief. My car is also 4yr pcp used a gap insurer for years. 2 types of cover, pay off debt /market value cover or invoice cover.
I can send you contact details Monday when I'm back in office great rates from them. Recommend invoice cover as if writeoff in 3yrs you can then buy new car, market value cover would leave you £20k short. They explain it very well call them.
Full cover was about £450 I think one off payment covers 4 yrs. can buy policy any time within 12 months of buying car

DO NOT buy from bmw, massive markup

[Super Slo Mo]

You need cover for the full value as that's what you'd potentially be liable for in the event of a total loss.
As said though, it's probably not needed for the first year, although it might be possible to buy a deferred policy.

[Rob747]

Sorry to hijack the thread but does anybody know how it works on a straight personal lease, ie are you liable for the new value over the whole contract term?

[Super Slo Mo]

You're not necessarily liable for the whole amount but you'd need to check the terms of your lease. It's more or less the same as a pcp or loan secured on the car, you're liable for the outstanding finance. Usually that's more than the market value.

[nickfrog]

Good question Rob - that would be quite unfair but someone will surely have the answer to that one.

[rjn21]

Lots of providers out there, do your research as to which policy works for you in terms of duration, coverage terms and price. It's worth looking at longer, higher cap policies etc as the incremental price increase is generally not proportional to the extension.
Consider amongst others http://www.gapinsurance.co.uk/

Your primary insurance may (or may not, read the terms, Admiral doesn't for an example) provide new for old if a total loss in year 1, in which case you can defer the GAP start date (not its purchase date which is generally within 30 days of car purchase) for 1 year. Return to finance is usually of no purpose unless you are in negative equity on market value versus outstanding finance (generally finance co's try to match repayment amortisation to depreciation to have some security in the financed asset), Return to Invoice is a good policy, Return To Replacement is 'better' in that it pays whatever it takes, less primary insurance payout, up to the policy's cap, to replace the car with a new one at the time of claim - effectively covering intervening inflation. So if new cars go up in the meantime and you happen to have negotiated a good discount today, it doesn't matter.

With a PCP you have contracted to pay x amount per month until the end of the term and you may give the car back or pay off a settlement value. You can pay off a PCP at the then applicable settlement value at any time. So in the event of a total loss, you must continue to make monthly payments until a settlement number is provided and paid to the finance company. You would also have a claim for 'market value' (unless you have an 'agreed value' policy for primary insurance) at the total loss claim time against your primary insurer. If you have a GAP policy, you may also have a claim for any difference from primary insurer payout to original invoice price / then new price, subject to all excesses and terms.

For a lease, you have contracted to pay x amount per month until the end of the term and you have to give the car back, there is no purchase right. You need to review lease terms very carefully in the event of a total loss. Generally they say that in the event of a total loss, you have to continue to pay all lease payments until you pay them the amount they have recorded the asset at in their books - generally such value is at their discretion with no obligation to apply GAAP depreciation (most will though).

Edited by rjn21 on Sunday 29th November 12:34

[M5 London]

Thanks everyone for their input here ! Very much appreciated.

Car should be at the dealers, latest on Friday 4th and I already have a number plate assigned.

Armed with all of your information I am going to try and get the best GAP insurance cover I can.

Thanks !

[jimbooo]

Sorry I picked up my car today and forgot to reply about my gap company it's the one in the link above that ive used gapinsurance.co.uk