GAP Insurance..

[Marcellus]

I'm this will have been done to death but looked back and couldn't see where, so Gap insurance?

We're just buying a new car c£45k so thinking that we really should consider getting some but have no idea what, so when i do a google search for a quote ive no idea what level of cover i should be asking for.

Any pointers would be much appreciated.

[Simpo Two]

My neighbous bought a 1-yr old car today from a dealer and were offered (and bought) GAP insurance by them. I was also offered it by a sales bandit last year when he also failed to sell me Teflon coating, a video with Mike Brewer in it - and a Mercedes convertible.

Not my scene I'm afraid, I'll take my chances and hope I'm less likely to smash it to bits than the insurance company is to roll about in my cash

Edited by Simpo Two on Saturday 5th March 21:07

[12TS]

Only needed for lease and PCP IMHO.

If you've got a new car replacement on your policy then you won't need it.

You'll need enough to cover the loss over the first year so circa £10k plus a bit I'd say.

£150 should buy you the cover your need.

[Marcellus]

Thanks for this, we are PCP'ing so will use this as the base to get some quotes (adding in a bit).

As for running the risk we have on every other car we've bought but we've not bought a £45k+ car before so the risk is greater and the £150/200 premium sounds a bit like a no brainer!

[Mr Noble]

I'm in the same boat, new car of nearly £40k coming next week.

Dealer has been trying to sell me GAP at £550, but a 10 min Google and coupl of quotes reveals I can get the same cover from the main companies for about £180. That's with £25k of cover for 3 years.

So if I'm paying 60% in cash for the car, is GAP not necessary?

What happens if someone else destroys the car after a week? Are my insurance company obliged to return me 99.7% of what I paid for it brand new?

Or, is it a case of making sure I insure it with a proper 'car replacement new for old' clause?


Sorry to hijack your thread, but I think it's all relevant.

[TwigtheWonderkid]

My private car policies replace your car with a new one if written off and under 12 months old. Check your policy.

[Jockman]

I used to think this was a waste of time. On my last car I looked into it and it was so cheap I actually bought it. It was £429 for 5 years cover with £50,000 cover. Obviously a lot cheaper for, say, £20,000 cover. Get a quote.

https://shortfall.co.uk/

[bogie]

Like any other insurance, preys on fear and uncertainty

The premiums are cheap because the risk is so low. How much is your life insurance per month ? cheaper than gap ?

Its such a safe bet for insurers you have more chance of dying in the next 3 years from unknown cause than you do of claiming on gap insurance

[Jockman]

Agreed Bogie.

We both know the type of car I'm alluding to. The more you pay for a car the scarier it gets and I get the feeling this may be driving OP's thought process.

[bogie]

Jockman said:

Agreed Bogie.

We both know the type of car I'm alluding to. The more you pay for a car the scarier it gets and I get the feeling this may be driving OP's thought process.

Yes even more scary when its on a PCP rental deal....thats when gap insurance became popular; with the rise in popularity in PCP deals...and of course its "only" a few hundred quid extra on the finance, hardly worth bothering about

Last time I bought a used car from a dealer, it was 4 year old approx 40% down and the rest on finance over a couple of years. I Turned up to collect it and there was nearly £1600 of extras on the bill; paint treatment, tyre insurance, wheel insurance, gap insurance plus I was going to pay interest on this £1600 for the 2 years....crazy. Had to argue and nearly walk away to get them to remove all these "obligatory" extras, but I do wonder how many just look at the monthly payment and go along with it. Easy money for the dealer....

[TwigtheWonderkid]

bogie said:

Like any other insurance, preys on fear and uncertainty

But the fear and uncertainty wouldn't go away if insurance didn't exist. If I couldn't insure my house, I'd never leave it, and I'd have fire extinguishers in every room. Insuring my house allows me to actually have a life. So the fact that I've paid it for 35 yrs and never claimed does not mean it was money wasted.

[Mattt]

Ignoring the usual PH topic derailing - insurance is always a subjective topic.

ALA and Frank Pickles seemed to be about the cheapest.

[12TS]

Mr Noble said:

I'm in the same boat, new car of nearly £40k coming next week.

Dealer has been trying to sell me GAP at £550, but a 10 min Google and coupl of quotes reveals I can get the same cover from the main companies for about £180. That's with £25k of cover for 3 years.

So if I'm paying 60% in cash for the car, is GAP not necessary?

What happens if someone else destroys the car after a week? Are my insurance company obliged to return me 99.7% of what I paid for it brand new?

Or, is it a case of making sure I insure it with a proper 'car replacement new for old' clause?


Sorry to hijack your thread, but I think it's all relevant.

I think of it like this. As soon as I drive a new car out of the showroom I'll loose 20% of it's value. If I crash it or it gets knicked on day one you'll still owe the full price (less any deposit) which is what you'll need pay the finance co for. Assuming you don't have new cover on your policy, on a £40k car you'd be down £8k on day one if you had a total loss; this is what you'd get as a settlement from the ins co and you'd still owe £40k to the finance house. So this is where Gap comes in.

If you put a large deposit down then you won't need Gap as you'll get more back than you owe the finance co.

Personal choice as to if you need it. From memory I paid about £150 for £15k, which is cheap, but then as others have said the chances of need it are small which is why the cost if small.

[bogie]

TwigtheWonderkid said:

bogie said:

Like any other insurance, preys on fear and uncertainty

But the fear and uncertainty wouldn't go away if insurance didn't exist. If I couldn't insure my house, I'd never leave it, and I'd have fire extinguishers in every room. Insuring my house allows me to actually have a life. So the fact that I've paid it for 35 yrs and never claimed does not mean it was money wasted.

Yeah, I understand that, Im not suggesting you dont insure anything. I too have paid car/life/buildings insurance all my adult life and continue to do so. Having experienced total loss of a vehicle then Id say my car insurance premium has been good VFM

Perhaps GAP will be the next insurance mis-selling scandal, so at least those that do take it out can look forward to clawing some of the premium back in a few years....might be a win win if that happens

Plenty of info about it available - be sure to read the small print:

http://www.financial-ombudsman.org.uk/publications...

[jimi]

My mum got a new Mini Clubman, one of the first new models in December on a PCP. Two weeks later a drugged up 18 year old smashed in the back of it at a junction and wrote it off.

She didn't need the GAP insurance as generally in the 1st year of new car ownership a like for like replacement or cash offer is made under the motor insurance policy. She actually got paid out more than she bought the car for and got a new Volvo V60 instead.

[walm]

jimi said:

My mum got a new Mini Clubman, one of the first new models in December on a PCP. Two weeks later a drugged up 18 year old smashed in the back of it at a junction and wrote it off.

She didn't need the GAP insurance as generally in the 1st year of new car ownership a like for like replacement or cash offer is made under the motor insurance policy. She actually got paid out more than she bought the car for and got a new Volvo V60 instead.

GAP wouldn't have paid out though would it?
She would be claiming on the 18 year old's insurance, not hers!
(I may be totally wrong but isn't that how it works?)

[Jockman]

My understanding would be that market value would be paid and that it would be up to her to claim the difference on Gap.

Happy to be corrected.

[jimi]

walm said:

GAP wouldn't have paid out though would it?
She would be claiming on the 18 year old's insurance, not hers!
(I may be totally wrong but isn't that how it works?)

In this instance it wouldn't have paid out as the insurance payout was more than she paid for the car.

My point was that for year 1 people don't generally need GAP insurance for new cars - its benefit is in years 2,3 and 4.

She claimed on her insurance who claimed everything back from the other driver's insurers.

[bogie]

Jockman said:

My understanding would be that market value would be paid and that it would be up to her to claim the difference on Gap.

Happy to be corrected.

Yes, my understanding too - its return to invoice and pays the GAP between your car insurance and original invoice price. So within the first 12 months not necessary for most car insurance policies.

So again you pay for "3 years cover" with that new car and really could only claim on it for the 2 years. This is noted on the financial ombudsman site too.....

[Phateuk]

Jockman said:

My understanding would be that market value would be paid and that it would be up to her to claim the difference on Gap.

Happy to be corrected.

What has always bothered me about gap insurance is, why isn't the "market value" paid out by your actual car insurance enough to replace the written off car?

I'm guessing these gap policies are backed by the same insurance underwriters who are under-paying claims in order to pedal their gap policy as well? This gap insurance concept is fairly recent isn't it?