Gap insurance...yes or no?

[Hard-Drive]

(Posted on behalf of a non-PHer mate)

Is it worth getting GAP insurance on a brand new contract rental I have taken out for an Audi A5 2.0TDI S Line Special Edition?

If so, any hints or tips on who to look at and any pitfalls to avoid would be greatly appreciated.

[homerjay]

ive always said no, until one of the work vans got written off and we had GAP on that for some reason (not a deal i did)

van cost 10k new,
now 3 years old, insurance paid out 4k, gap paid additional 6k.

not bad i guess for £8 month.

Edited by homerjay on Tuesday 24th August 11:31

[slipstream 1985]

if your planning on crashing yes

[gilla]

Yes - I'd have lost over £8K in just over a year on my s2000 without it. For an accident that wasn't my fault and the person didn't stop. Was quite a result really in the end!!!

[SarGara]

Id say no.

Drive your first year without it at least as insurance will cover like for like. IE: New car gets written off and replaced with a new car.

Then id look into getting it via a 3rd party for the 2nd year onwards.

[davethebunny]

i've never understood GAP insurance.

It's basically new for old cover isn't it?

If i crash my car in the first year i get a new car from the normal insurance.

If i crash it in year 3, i get a payout to the value of a three year old car, when i have a three year old car.

I'm not looking to replace a three year old car with a new one if i have an accident. Otherwise i would be looking to replace the car anyway

What's the point?

[Matt106]

davethebunny said:

i've never understood GAP insurance.

It's basically new for old cover isn't it?

If i crash my car in the first year i get a new car from the normal insurance.

If i crash it in year 3, i get a payout to the value of a three year old car, when i have a three year old car.

I'm not looking to replace a three year old car with a new one if i have an accident. Otherwise i would be looking to replace the car anyway

What's the point?

The payout will always be the full value of the car no matter how old it is. I think its a good idea especially on an expensive vehicle.

[AndrewW-G]

If you’re buying new or nearly new, then yes it's very much worth it, although with some, you are paid out on a new car and not just handed a cheque . . . . . . . . . . if you do need to buy a new car, dozens of PH's thicker / more jealous members will then try and give you stick for buying a replacement

OP mentions a contract / rental, not really sure how GAP insurance would work in that case?

[Sir Bagalot]

Yes I would say it was worth it. But as always shop around.

[LHD]

You would be crazy not to take it.

[eybic]

If buying on finance then I think it would be silly not to. Imagine you have £10k on finance, the car gets written off and is given a value of £6k, would you fancy still paying off £4k to a finance company for a car you no longer have?

[sinizter]

Saved someone I know twice from what could have been significant losses after writing off two sports cars leaning towards the more expensive end.

Absolutely no idea how it makes sense to get gap insurance, on what is essentially, a rental. But I get it on the cars I buy - even used ones.

Edited by sinizter on Tuesday 24th August 17:07

[SJobson]

If too many people claim on new-for-old GAP policies, then will the insurers decide that actually, it's just a gamble and not enforceable, and therefore deny the claims? Because there's no insurable interest.

Bit different if the car's on finance and the GAP policy just covers any difference between the amount outstanding and the market value.

[Superhoop]

I thought the idea of GAP insurance was to pay out the difference bewteen your insurance payout, and and oustanding finance on the vehicle??

Example: New car £30,000

Vehicle gets written off after 18 months

Insurance payout £18,000

Outstanding finance £21,000

GAP insurnace pays out £3,000 to completely settle finance

If it pays the invoice price of the car, then surely everyone would take out GAP, then after a couple of years, write the car off on purpose - That would give you two years free motoring, with absolutely no depreciation....

Ok, so your insurance premiums would go up a bit, say 1K, but from the example above, you would have saved 12k in depreciation?

[Ozone]

Superhoop said:

I thought the idea of GAP insurance was to pay out the difference bewteen your insurance payout, and and oustanding finance on the vehicle??

Example: New car £30,000

Vehicle gets written off after 18 months

Insurance payout £18,000

Outstanding finance £21,000

GAP insurnace pays out £3,000 to completely settle finance

Yes or you can have 'return to ticket' which pays out to settle the finance and buy a new replacement

Superhoop said:

If it pays the invoice price of the car, then surely everyone would take out GAP, then after a couple of years, write the car off on purpose - That would give you two years free motoring, with absolutely no depreciation....

A broker i spoke to a couple of years ago said it isn't uncommon for that to happen.

I would recommend having it but as said before shop around. You can usually get it for up to a six month old car IIRC.

[northandy]

I got it on my car last year, dealer quoted 499 for the 3 years, I had checked previously and knew I could get it cheaper, dealer dropped it to £229 for the same cover.

Moral is if you decide you want it there's lots of scope with dealers for reducing the cost.

[Matt35]

can anyone recommend a decent provider??

Thanks

[davethebunny]

Superhoop said:

I thought the idea of GAP insurance was to pay out the difference bewteen your insurance payout, and and oustanding finance on the vehicle??

Example: New car £30,000

Vehicle gets written off after 18 months

Insurance payout £18,000

Outstanding finance £21,000

GAP insurnace pays out £3,000 to completely settle finance

If it pays the invoice price of the car, then surely everyone would take out GAP, then after a couple of years, write the car off on purpose - That would give you two years free motoring, with absolutely no depreciation....

Ok, so your insurance premiums would go up a bit, say 1K, but from the example above, you would have saved 12k in depreciation?

That makes sense

Matt106 said:

The payout will always be the full value of the car no matter how old it is. I think its a good idea especially on an expensive vehicle.

That doesn't.

The value of the car is the value of the car.

If i write off my 2005 A8 i expect the insurance company to provide sufficient funds to be able to replace it with a 2005 A8, i.e. the market value of the car.

I don't expect them to provide me with a 2010 A8, or else everyone would be paying £500 insurance for a £16k motor and then throwing off a bridge and getting a £60k motor

[CampDavid]

I've never fully understood this.

Say I bought a brand new Ford Mondeo in titanium spec at £24k. 3 years on with 100k on it it's worth, say £4k as a swapper.

Surely for a lot of people a £20k payout is way, way too tempting.

[anonymous-user]

IIRC gap insurance is up to 3 years for "return to invoice value" version.