GAP Insurance - What's the catch?

[Davie_GLA]

Morning all.

I wonder if someone could shed some light on this. Sorry if this is the wrong section.

I've recently bought a car on finance and got a call from the finance company.

Basically GAP insurance and normally i would resist it immediately. But this one seemed to be different.

What they propose is that i take the insurance and the premium is only payable at the end of the term, effectively increasing the term by one month. No up front payment, no hard sell nothing.

I was surprised by this and accepted it in case the worst happens.

I have 14 days to cancel it from receiving the docs, so thought i would ask?

David.

[S3_Graham]

that sounds bloody cheap! BMW offered it to me for something silly like £1300!!

[Davie_GLA]

That's what I thought. It effectively only costs around 10% more than a monthly payment.

I'll be sure to read the paperwork very carefully. It's also on a BMW, 5 series if it matters but not offered from BMW.

[p1doc]

cost me £250 for new forester to cover 3 years-worked well when wife flipped first forester and landed in a wall
martin

[hebbhog]

I would check who the underwriter is and make sure that they are FSA authorised and part of the FSCS.

Additionally, assuming the car is on HP I would also see what would happen if you decided to hand the car back to the finance firm after the minimum term; this is usually about half way through the original finance period.

[Herman Toothrot]

Got it on my bike, was very cheap and appears to a very sensible insurance, basically if stolen or crashed whilst still on finance and written off it means zero depreciation.

[Davie_GLA]

i did wonder about if i wasn't to complete the term.

Also, this finance agreement is flexible in that i can pay as much into it as i wish with no penalties, the same with early settlement. So i wonder how it works i was to clear the finance tomorrow. Would i just pay the GAP premium and still be covered?

Just seems a little too easy for a product i usually avoid because it's so expensive.

[Wacky Racer]

Miles cheaper to buy gap insurance online, typical quote around £200 to cover a 15k brand new car for three years.

[Davie_GLA]

So has it always been this way and i've just instantly rubbished it because it's just someone else trying to sell me another insurance policy?

[otolith]

Look at the risk they are covering, and what it costs, and compare it to the risk your regular insurer is covering and what that costs. On that basis, even cheap GAP insurance looks very expensive to me.

[wildoliver]

There is no con. Basically it usually costs in the vicinity of £300 ish.

Say your taking finance over 36 months.

You can either have that £300 spread over your 36 months which assuming your paying say £300 a month will mean you now pay circa £309 a month. Or stick it on the end of the term so you have finance for 37 months instead. The figures are very simplified and don't actually add up perfectly but hopefully explain how it all works.

As for the product there is no con. It's an insurance product, you need to make sure you need it and your main insurance doesn't contain a degree of the same cover and that you want it, in other words how much is it likely to pay out versus how likely is it to be needed versus how much does it cost you.

[lazyitus]

Davie_GLA said:

So has it always been this way and i've just instantly rubbished it because it's just someone else trying to sell me another insurance policy?

Yes, in a word.