GAP insurance and leasing

[marc-smtu3]

Hi all,

I'm due to take delivery of a new Skoda Kodiaq around mid march on my first ever lease deal.

I've been told by my broker that they give me 3 months free GAP insurance but I'd need to take out a policy within 90 days of delivery of the car if I want to have GAP insurance beyond the 3 months.

My questions are, do I need GAP insurance? Should I have GAP insurance? What are the pro's and con's?

Thanks

[Brainpox]

I would, it isn't too expensive if you go through ALA and could save you a headache.

In the event of a write off the GAP insurance will cover the difference between what your insurance pays out for the car (which is what the value of the car is at the time of the write off) and what you paid initially.

If you are leasing it means that in the event of a write off you won't be left owing money to the lease company when you don't have their car anymore.

[Pica-Pica]

Well GAP insurance pays for total (economic) write off, it will be either:
a) return to invoice
b) replace like for like.

My car had GAP insurance as standard through NFU Mutual insurance, for the first two years. NFU was also the cheapest insurance anyway, so GAP was a bonus. So for me worth getting. The car is three years old now, so out of GAP terms.

[Jamescrs]

I used a company called Direct Gap and got cover on return to invoice for around £130 on a £14k car for 3 years.

Was well worth it for the money in my opinion. My car was a cash purchase but if I was leasing or financing in some other way I'd say it's even more important

[Far Cough]

It's an insurance product at the end of the day so it's what fits your personal circumstances. For very little money you can guarantee you will recover the full value of the car and not just market value should the worst happen.

One thing to check is that some insurers guarantee full value back in the 1st year anyway so you can buy the GAP but delay it for one year.

[Wacky Racer]

I took out Gap insurance with ALA on my three year lease of a Mazda 6.

So far 2 years and a bit, I haven't had to use it, but like all insurances you are glad of it if you do.

It's a gamble.

[PenelopaPitstop]

Pica-Pica said:

Well GAP insurance pays for total (economic) write off, it will be either:
a) return to invoice
b) replace like for like.

My car had GAP insurance as standard through NFU Mutual insurance, for the first two years. NFU was also the cheapest insurance anyway, so GAP was a bonus. So for me worth getting. The car is three years old now, so out of GAP terms.

Not for lease. For lease only product is finance GAP that will cover any finance shortage on write off and can also protect initial payment.

Insurance won't replace new for old on lease car.

[Sheepshanks]

As above - you need to see what the leasing company will do, but typically if the car is wrtten off the deal finishes, and the incurance company pays a settlement to the lease company. That's it.

I can't recall seeing anyone saying they were left out of pocket. Indeed, there was one poster on here where the car was worth more than the settlement and his insurance company wouldn't give him the difference.

I guess the biggest risk is if you make a large initial payment - say 9 or 12 mths - and then the car is written off pretty early. With some GAP insurerers you can cover that.

ALA is often recomended on here - not sure what the PH discount is, but I think MSE still have 25%.

[Tomo1971]

1. Regardless, dont get the GAP from the dealer or broker, will be far cheaper from elsewhere
2. Ensure that it covers any initial rental you place, or, in the event of the loss, they pay the GAP but you still need to fund the initial payment again for the replacement lease.

[Mr Tidy]

I only got talked into it once when I got an AUC BMW that was less than a year old, but I really didn't need it as I bought the car with an interest free loan from my employer (offered because I opted out of the Company Car scheme).

Next time I declined, because to me it just looked like insuring against depreciation in the event it became a write-off. And depreciation is just reality with a used car! After all any insurer is only in business to make a profit, so if you are an average risk you'd do better financially without it.

But if you are leasing it might make more sense, although I'm sure you could get it cheaper than from the selling dealer.

[sjg]

I did for my first one but haven’t bothered with the ones since.

Haven’t yet heard of any outcome from a write-off or stolen car that left the leaser liable for anything beyond the usual insurance excess. Insurer deals direct with lease funder.

Doesn’t cover the upfront payment though - I tend to go low on this to minimise that risk. You might want to look at cover for that if you’re on a 9 or 12 months upfront agreement.