gap insurance - worth it?
gap insurance - worth it?
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Discussion

NiceCupOfTea

Original Poster:

25,606 posts

281 months

Thursday 1st August 2013
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Mrs has been offered it on her new used car by the insurance company - 80 odd quid for 3 years. I know nothing about it. Worthwhile or waste of time?

Birdster

2,548 posts

173 months

Thursday 1st August 2013
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A friend of mine had it and it was useful when his used 911 was stolen after a few months. Got the full purchase price. Not sure if that was just because the car couldn't have really depreciated much in that time.

Janesy B

2,625 posts

216 months

Thursday 1st August 2013
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Birdster said:
A friend of mine had it and it was useful when his used 911 was stolen after a few months. Got the full purchase price. Not sure if that was just because the car couldn't have really depreciated much in that time.
Well no the whole purpose of GAP insurance is to cover the difference between the payout and the purchase price of the vehicle.

rj1986

1,107 posts

198 months

Thursday 1st August 2013
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If you buy it and dont use it- You'll think "oh well"
Dont buy it and get into a pang- Lots of swear words
Buy and and have to use it- Best £80 you'll ever spend.

GF got 5 year gap on her Mini for £112.
6 months later, lorry goes into her car, gap covers £1100 shortfall, including the £90 road tax on the car!

markmullen

15,877 posts

264 months

Thursday 1st August 2013
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Janesy B said:
Well no the whole purpose of GAP insurance is to cover the difference between the payout and the purchase price of the vehicle.
That is Return To Invoice price (RTI) gap.

Financial shortfall gap covers the difference between an insurance payout and a finance settlement so you don't end up paying out on a car you no longer have if the car is an insurance loss whilst a finance deal on it is in negative equity.

Personally I think both are worthwhile products.

Krikkit

27,938 posts

211 months

Thursday 1st August 2013
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markmullen said:
Personally I think both are worthwhile products.
Agreed, for their relatively small cost they are worth it. Obviously either scenario has quite a small chance, but the consequences mean it's better to spend than regret on a new car purchase.

Bear Phils

891 posts

166 months

Thursday 1st August 2013
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A friend of mine's mum had bought a C63 AMG and took out gap insurance for a few hundred.

Drove through a flood, wrote the car off and if she hadn't taken it out would have cost her *gulp* £13.000 yikes

Craikeybaby

12,148 posts

255 months

Thursday 1st August 2013
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Yes, but shop around for it, rather than buy one that you are offered, most likely by someone getting a commission for selling it.

Gio G

2,995 posts

239 months

Thursday 1st August 2013
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Craikeybaby said:
Yes, but shop around for it, rather than buy one that you are offered, most likely by someone getting a commission for selling it.
This.. When I looked for GAP on the Cayman, the dealer was some 4 x more expensive than searching online. They load these products up with so much profit. I suspect it also depends how much you are spending on a car, whether it is worth it.

Siscar

6,315 posts

159 months

Thursday 1st August 2013
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With all insurance on average more is paid in premiums than is paid out in claims, otherwise insurance companies would go out of business so, on average, insurance is never worthwhile.

But the problem is that is the average of a lot of people, for some they will get back more than they pay in and it's a question of whether you will be one of them.

My view is to insure against events you couldn't afford and don't insure against events you can.

otolith

69,339 posts

234 months

Thursday 1st August 2013
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Your normal insurance won't put you in a better car than the one you've just written off. In the even of it being written off, Gap insurance enables you to upgrade your car to either a new one or one that is worth what your outstanding finance is worth. It covers a relatively small sum for a narrow range of circumstances, and looks like very poor value for money compared to a standard insurance policy covering what the car is actually worth, the cost of repairing in cases where the car is not written off and millions of pounds worth of third party damage you could do. I guess it depends how much your normal motor insurance costs, it doesn't seem to be risk priced so I suppose it looks like better value to someone who pays thousands a year for their main policy than someone who pays a few hundred - especially if buying something that will depreciate like falling rocks.


siovey

1,969 posts

168 months

Thursday 1st August 2013
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I'd always have this on a new car. A small initial outlay to offset a potentially large shortfall if anything happened . No brainer for me, especially at £80.

kiethton

14,660 posts

210 months

Thursday 1st August 2013
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When I got my 335i at 21 years old I made the decision to take out GAP, for <£200 via ALA against the probability of a young driver (in-experienced with RWD beyond a few months in a 2.5 s-type) it seemed like a no-brainer.

Didn't need it in the end though...

Justin Case

2,195 posts

164 months

Thursday 1st August 2013
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I always thought that the point of insurance was to put you back in the same position, ie if your 6-month old car was written off you would be paid enough to buy another 6-month old car and not a new one.

However when I looked at a new Vauxhall a few years ago, it appeared that the GAP insurance that I was offered was to cover the fact that the car would be depreciating faster than I could pay it off eek So , like a Sun reporter, I made my excuses and left smile

grayze

790 posts

198 months

Thursday 1st August 2013
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buy it, just not from the dealer, look online and get the return to invoice product.

Siscar

6,315 posts

159 months

Thursday 1st August 2013
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Justin Case said:
I always thought that the point of insurance was to put you back in the same position, ie if your 6-month old car was written off you would be paid enough to buy another 6-month old car and not a new one.

However when I looked at a new Vauxhall a few years ago, it appeared that the GAP insurance that I was offered was to cover the fact that the car would be depreciating faster than I could pay it off eek So , like a Sun reporter, I made my excuses and left smile
There are three sorts of gap insurance. At the lowest level you are insuring that if you write it off they will give you the difference between the amount of any outstanding finance and the insurance payout, if there is a negative difference. The middle level is that they will give you the difference between the amount you paid for the car and the amount you get from insurance. The top level is that they will give you the difference between what the car (or equivalent) would cost to buy today and the amount you get from insurance.


Siscar

6,315 posts

159 months

Thursday 1st August 2013
quotequote all
swerni said:
For £80, it's an absolute no brainier
Depending on what it is, if it's to insure the difference between the insurance payout and the value of your finance then there is no point if you don't have much finance on it.

Even at £80 the insurance company is not expecting to have to pay that much out on average, otherwise they wouldn't be doing it.

Markhoskins

109 posts

159 months

Thursday 1st August 2013
quotequote all
NiceCupOfTea said:
Mrs has been offered it on her new used car by the insurance company - 80 odd quid for 3 years. I know nothing about it. Worthwhile or waste of time?
Useful if you need to claim and get a return to invoice policy. Not useful if you don't claim.

Siscar

6,315 posts

159 months

Friday 2nd August 2013
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swerni said:
Wow really, is that how it works.

Every day's a school day.
Pleased to be of service.

bigdavy

1,085 posts

237 months

Monday 28th October 2013
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Bump smile

OP How did you get on buying GAP?

About to buy some GAP insurance for new car on PCP. Seen a good deal with ala, any one had dealings with them good or bad?