Discussion
Always been a fan of GAP insurance when I’ve changed my car. Read all the posts about insurance companies low balling on valuations etc. just wondered how the GAP insurers react to a low offer which would increase their liability?
Do you let them negotiate the valuation?
No claims pending just a genuine query as to how you would go about a claim if one arose
Do you let them negotiate the valuation?
No claims pending just a genuine query as to how you would go about a claim if one arose
My experience a couple of years ago:
The car insurance company (Direct Line) and the gap insurance company (BMW) came up with their own valuations which were about £500 apart on roughly 30k write off. There was a brief, slightly surreal, attempt to negotiate (by me) with my suggestion that they talk to each other being rebuffed by DL.
As it was a while ago, details may be hazy, but I think I remember the gap insurer covering my excess, which meant it kind of played out fine.
I think I got slightly ambushed into verbally 'accepting' DLs valuation as it was out of the blue on a Sunday afternoon, when up until that point my understanding the car was likely to be repaired, but overall the gap part of it was relatively painless.
I wouldn't buy a new/newish car without it. I'm sure someone will come along and suggest that getting independent gap insurance would have been cheaper, but the fact the experience was relatively painless at each stage means I did exactly the same with the replacement vehicle.
The car insurance company (Direct Line) and the gap insurance company (BMW) came up with their own valuations which were about £500 apart on roughly 30k write off. There was a brief, slightly surreal, attempt to negotiate (by me) with my suggestion that they talk to each other being rebuffed by DL.
As it was a while ago, details may be hazy, but I think I remember the gap insurer covering my excess, which meant it kind of played out fine.
I think I got slightly ambushed into verbally 'accepting' DLs valuation as it was out of the blue on a Sunday afternoon, when up until that point my understanding the car was likely to be repaired, but overall the gap part of it was relatively painless.
I wouldn't buy a new/newish car without it. I'm sure someone will come along and suggest that getting independent gap insurance would have been cheaper, but the fact the experience was relatively painless at each stage means I did exactly the same with the replacement vehicle.
This has got me wondering:
1. Do the GAP inurers expect you to negotiate with your insurance company on their behalf or do they handle the negotiations for you to mitigate their loss.
2. Does your insurance company ask if you have GAP insurance - and given this would offer a very low end valuation to mitigate their loss, knowing that it doesn't really matter to the claimant as they are getting the GAP payout.
3. Would there be a situation where the GAP insurers would pay only the difference between the GAP insured amount and what the insurance company "should" have paid out.
1. Do the GAP inurers expect you to negotiate with your insurance company on their behalf or do they handle the negotiations for you to mitigate their loss.
2. Does your insurance company ask if you have GAP insurance - and given this would offer a very low end valuation to mitigate their loss, knowing that it doesn't really matter to the claimant as they are getting the GAP payout.
3. Would there be a situation where the GAP insurers would pay only the difference between the GAP insured amount and what the insurance company "should" have paid out.
richhead said:
Gap insurance does seem like an insurance industry con, normal insurance should by its very nature put you back in the same position as you were before the claim. Having more insurance to cover the low ball figure from the insurance company is mad. Or am i missing something?
Unless I'm mistaken, gap insurance bridges the gap between current market value/ins co offer and what you paid for the car. I've only had it once and the dealer quoted me £750 for 3 years, but my ins broker was either £150 or £250, it was a few years back, but a big difference.
I never buy it from the dealer - use an independent company who are a lot cheaper and will defer for 1 year on a brand new car since normal insurance is new car if written off under 12 months.
Very good on a claim - iirc I couldn't accept the insurance company offer until I had run it past them.
They were happy to pay the £700 difference to bring me back to the invoice value so 18 months of no depreciation! Still would have preferred to have had the car though!
Very good on a claim - iirc I couldn't accept the insurance company offer until I had run it past them.
They were happy to pay the £700 difference to bring me back to the invoice value so 18 months of no depreciation! Still would have preferred to have had the car though!
richhead said:
Gap insurance does seem like an insurance industry con, normal insurance should by its very nature put you back in the same position as you were before the claim. Having more insurance to cover the low ball figure from the insurance company is mad. Or am i missing something?
Yes, you're missing the whole point of gap insurance.For example, with a return to invoice policy, if your original £50k car is written off at 3 years old, and your insurance company give you a settlement of say £30k (market value), the gap policy will give you another £20k to bring you back to the invoice amount.
There are also other variations on the gap policy, i.e. car replacement, where if the equivalent new car now costs £55k, the gap policy will give you £25k, so that you can buy the same car again at the increased price.
richhead said:
Gap insurance does seem like an insurance industry con, normal insurance should by its very nature put you back in the same position as you were before the claim. Having more insurance to cover the low ball figure from the insurance company is mad. Or am i missing something?
Yes, you are missing a massive something. There are various levels of GAP insurance but anyone buying a new car on finance without "return to purchase price" GAP insurance is, in my opinion, completely bonkers.
OK, so I've guessed at all the figures but this is roughly how it works:-
You buy a new £30,000 car on finance - so total payment £40,000
9 mnths down the line it is a second hand car with 10K on the clock - so now worth £20,000
If that car gets written off the insurance co will pay out market value - £20,000
You are now £20,000 out of pocket for 9 mnths use of car, and still paying off the finance co.
"return to purchase price" GAP insurance will cover that £20,000 loss.
If you are paying, say, £500 insurance for the first £20,000 loss, why on earth would you not pay (approx) £100 for the other £20,000 loss.?
Just worth remembering that Gap will only pay out on total write offs.
Also worth making the point that some Insurers on brand new cars offer to replace with a brand new car up to 24months from Inception - most are 12 months though.
Additionally plenty of agreed value policies available which can also help to do away with the need for Gap.
If you do take Gap out then as above do it with an Independent company and not your own Insurer although I guess that would be a rare thing anyway.
Additionally plenty of agreed value policies available which can also help to do away with the need for Gap.
If you do take Gap out then as above do it with an Independent company and not your own Insurer although I guess that would be a rare thing anyway.
Yellow Lizud said:
richhead said:
Gap insurance does seem like an insurance industry con, normal insurance should by its very nature put you back in the same position as you were before the claim. Having more insurance to cover the low ball figure from the insurance company is mad. Or am i missing something?
Yes, you are missing a massive something. There are various levels of GAP insurance but anyone buying a new car on finance without "return to purchase price" GAP insurance is, in my opinion, completely bonkers.
OK, so I've guessed at all the figures but this is roughly how it works:-
You buy a new £30,000 car on finance - so total payment £40,000
9 mnths down the line it is a second hand car with 10K on the clock - so now worth £20,000
If that car gets written off the insurance co will pay out market value - £20,000
You are now £20,000 out of pocket for 9 mnths use of car, and still paying off the finance co.
"return to purchase price" GAP insurance will cover that £20,000 loss.
If you are paying, say, £500 insurance for the first £20,000 loss, why on earth would you not pay (approx) £100 for the other £20,000 loss.?
Just worth remembering that Gap will only pay out on total write offs.
Yes various forms of GAP, I normally pay outright when I change my car and get a back to invoice policy, which currently is for four years. You can get specific policies for leased cars that cover you where the insurers valuation is less than the finance companies outstanding amount. Others s will replace a car bought new with another new car.
I normally shop around for best quotes, car dealers invariably get a good a good commission on the ones they sell ……wonder how this will change given the current potential claims re finance commission.
I normally shop around for best quotes, car dealers invariably get a good a good commission on the ones they sell ……wonder how this will change given the current potential claims re finance commission.
GasEngineer said:
This has got me wondering:
1. Do the GAP inurers expect you to negotiate with your insurance company on their behalf or do they handle the negotiations for you to mitigate their loss.
2. Does your insurance company ask if you have GAP insurance - and given this would offer a very low end valuation to mitigate their loss, knowing that it doesn't really matter to the claimant as they are getting the GAP payout.
3. Would there be a situation where the GAP insurers would pay only the difference between the GAP insured amount and what the insurance company "should" have paid out.
In my experience (insurer was Zenith, GAP was ALA):1. Do the GAP inurers expect you to negotiate with your insurance company on their behalf or do they handle the negotiations for you to mitigate their loss.
2. Does your insurance company ask if you have GAP insurance - and given this would offer a very low end valuation to mitigate their loss, knowing that it doesn't really matter to the claimant as they are getting the GAP payout.
3. Would there be a situation where the GAP insurers would pay only the difference between the GAP insured amount and what the insurance company "should" have paid out.
1. You have to negotiate. This was largely because the motor insurance wouldn't entertain negotiations with GAP insurers (their contract is with you).
2. They didn't and I don't think it affected things. They offered, I said I'd check with GAP. They said they offer market rate, not what GAP wants, GAP accepted their first offer so it was moot. I thought it was a bit of a low offer, but as GAP were happy I was happy.
3. I'm not sure if that could happen, but it seems plausible.
richhead said:
Ok i get it, so its more like depreciation insurance.
It puts you back to the position you were in at purchase, not at write off.A mate of mine had a Maserati Quatraporte written off at something like 30 months old, his £90k new car was then worth £28k (the figures are made up but in the right ball park) so he was able to buy a new Maserati, not a second hand one.
The insurance low ball payouts seems to have changed, when my M140 was nicked this year the settlement offered was very fair, I could buy a similar age car with similar ish mileage approved used BMW for ish the payout. Would have been nice to still have GAP insurance, but had owned it too long.
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