Gap insurance?

[Flying machine]

Does anyone take this out? Having just bought a new (used) car from a dealer I was offered this and my first thought was "do I really need this?". Why wouldn't my insurance company pay out enough of a market value so that I could buy an equivalent should the worst happen? Am I just being painfully naive here?

[markmullen]

They'll pay out market value for your car but that won't get you back to where you started.

Eg you buy a pre-reg'd car (essentially new but unused, your arse is amongst the first to sit on the seats etc) and 2 years 11 months down the line it gets written off.

Rather than hawking around looking at 3 year old used cars, having to sort the good ones from the bad ones, looking for hidden histories, gaps in the service history, poor quality repairs etc if you'd had RTI GAP (as opposed to finance GAP) then you are back where you started, go and find a nearly new car.

[andy665]

Two types of GAP insurance - lots of different names:

1. Finance shortfall - will pay out the difference between what is owed to the finance house and the amount paid out by the insurer

2. RTI (Return to invoice) - pays out the difference between what you originally paid for the car (less RFL) and the insurers pay out. E.g You buy a car new for 10k, two years later its written off, insurer pays you the current market value, lets say 6k, RTI will pay out 4k - returning you to the position you were in when you originally bought the car

Sbsolutely recommend it buy buy on-line, I'd recommend www.click4gap.co.uk

[trashbat]

I bought a RTI policy, though NOT from a dealer, was about half price from a third party (click4gap as above).

I paid £5,000 for my car. 10 months later insurance would probably cough up £3,600 tops. I've got a two year policy for £70. Took it out in part because this is my first car, thus higher risk of a prang, but it seems a sensible investment.

[anonymous-user]

Having had a car written off and had to go through the haggling process with the insurers, supplying comparable cars etc, I wouldn't be without GAP, but as stated RTI GAP. Bear in mind that if you have finance on the car the insurers will pay them directly so if their value is less than you owe you're left without a car and still owing money - hencey GAP IMO is very worthwhile.

I have a 5 year policy that costs £10 a month fixed for that term, which I think is damn good value considering if the car was written off in the 5th year then the difference between what the insurance value the car at and the original invoice price paid by me is huge.

Edited by anonymous-user on Wednesday 27th July 10:39

[andy665]

GAP (certainly RTI) is a strange insurance product as the net benefit to the customer increases as time passes

[otolith]

andy665 said:

GAP (certainly RTI) is a strange insurance product as the net benefit to the customer increases as time passes

It's an odd product in several ways. There is often no risk pricing, so you are paying the same rate as an 18 year old kid. You are insuring a fairly narrow set of outcomes - it doesn't pay out unless there is a total loss, so it doesn't need to cover the costs of a typical repair accident, and it doesn't need to indemnify you for millions of pounds of third party liability. In most cases it doesn't need to cover you for the first year, when many insurers will replace with a new car. In a worst case scenario with the worst depreciating car on the market written off on the last day of the policy it is only going to have to cover 80% of the value of the car, more likely 40%-60%. Compared to the cost of a fully comprehensive policy for someone with a few grey hairs, GAP looks like a lot of premium for not a lot of cover.

[homerjay]

not something i would usually buy, but we had RTI on the works van.

member of staff wrote it off.

insurance co gave us 4k, then the gap gave us another 7k.

van was worth about 3k.

Edited by homerjay on Wednesday 27th July 12:05

[R34L15T]

Worth every penny! Get the RTI one though.

[Flying machine]

Thanks chaps! Looking around it's £129 for three years to return to invoice, maybe worth a closer look then.

[jason s4]

It wont be long before even these premiums will start to increase.

[Defcon5]

You could potentially work out in massive profit if you wrote off every car you had, even with the increased insurance