Financial advice Re: Gap Insurance.

[Clydesdalestu]

I'm collecting a car tomorrow, and the dealer (and my company) are suggesting gap insurance.

The thing is, I'm paying cash, outright, for the car. It's list price is £37k, however with less than a year on it I'm getting it for £22k.

I've never had to buy a car for work before (I have a new job, which entitles me to a car allowance), but am pretty sure that gap insurance is primarily intended to make up any amount outstanding on a loan, if someone has purchased a car this way ?

Can anyone advise me of the best way to go ?

Cheers,

Stu.

[anonymous-user]

Gap insurance is primarily designed for when buying a new car on finance i.e. to protect you if the car is written off and you owe more on the car than the "market value" the insurance company will pay you for it. If I was buying cash I don't think i'd bother personally, but there are probably more knowledgeable people than me on these matters.

I recently bought a new car on PCP and managed to get gap insurance thrown in as part of the deal.

[eliot]

I never bother with all the extra junk they try and flog you when you seem to do anything nowadays.

Just bought a new house and they couldn't find a piece of paper for the boiler - so they tried to sell me an insurance policy to mitigate (plus £75 admin charge).

[Clydesdalestu]

I never bother with all the extra junk they try and flog you when you seem to do anything nowadays.

Just bought a new house and they couldn't find a piece of paper for the boiler - so they tried to sell me an insurance policy to mitigate (plus £75 admin charge).
[/quote]


Interesting - I'm just selling ahouse and they asked me to PAY an indemnity because I couldn't find the Corgi certificate, even though I could produce the installation guide which was signed by the installer and stamped with his CORGI registration details !..............

[RenesisEvo]

Clydesdalestu said:

It's list price is £37k, however with less than a year on it I'm getting it for £22k.

As I understand it, the gap insurance will pay out the difference between the insurance companies' market value pay-out, and the invoice price of the car. So for finance that makes sense - you only then have to worry about the interest on top when settling in the case the car is written off, especially if the car in question dropped in value significantly over the ownership period. The list price of £37k is irrelevant, it's the figure on the invoice that matters.

If you expect the car to depreciate quickly (and one would then ask why are you buying it but that's your choice), gap insurance might help but I would check the T&Cs with the finest of combs, I'm sure they will look for any excuse not to pay out.