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Anyone got any useful advice on GAP insurance.  i.e. where to get it from? do I bother? what would be a reasonable amount to pay for say 3-5 years GAP cover?

Thanks in advance.

How much is the car your buying??  How much is the finance in full?   i bought a mini for £11k crashed it the insurance is only paying out £7k  the gap is going to pay the rest of my finance for me so in my case it was worth it

You should only pay around £250 for the gap

Hi Junior

GAP £250 for a £15k car. 3yr unlimited mileage policy back to full invoice price.

I've done mates rates on a £35k BMW for £320.

Buy from the dealer just for a point of contact/support if it goes tits up.  

Regards

M

snap is fingers off IMO

buying the car cash for £15K. so no finance but obv worried about prangage and write off in first 3 years.

Audi R8 for 15k?

it's who you know!!

obv not getting an R8, was lying...


so any more views on GAP insurance?

Only looked at it with work and our insurance broker told us that its a waste of money unless you have shite insurance.

Sort of. It also comes down to how the used car market is doing which is what I'm guessing happened to Rhodesy in his post if he pranged it during the recession. If the used car market is strong (like right now) there most likely wont be a gap between valuations, and the UK used car maket is projected to be very strong in the next 24 months or so, but with financial uncertainty never far away in the real economy I would probably plump for gap right now.

Without saying yes or no to the actual insurance i would advise you to check the price from insurance companies. Add ons in many industries tend to be high profit. Extended warranties, travel insurance, payment protection etc etc.

Sandy

Hang on? Can you even have gap insurance if your paying cash?

It covers the gap between the finance outstanding and the market value?

If you have no finance, you would only need the market value to replace it?

i thought it guarenteed the price of the vehicle at what you pad for it so if i the wife writes it off within 2 years we will get back what we paid for it rather than the current value of the car.  So say I am buying it for £15K now and it is worth £9k in 2 years i will still get the £15k for it.

that's my read anyway.

You can insure shite?

I've got Life Insurance :D

I could well be wrong. There is a first for everything.

It was about 4 years ago when we first started getting contract hire cars at work. The company who arranged the cars tried the hard sell on the GAP insurance. We checked with our insurance broker and he said it was worthless to us as our insurance would cover the value owed.

Very diifferent as they are leased, and our insurance is corporate covering a fleet.

Well I've got GAP insurance and normal insurance and I think it's worth it depending on how you bought the car.

I bought my car from Sytner so get all the extras that they provide. Free coffee is all I can think of at the moment but I'm sure there must be something else for the ridic mark up. Shiny showroom I suppose.

If I write my car off I will get market value for it from my insurers. Market value is approx 17k atm but Sytner have them on the forecourt for 22k. This means that without GAP I would have to buy one from somewhere else. Privately for example to get similar to what I currently have.

The GAP insurance will top it up to the 27k that I originally paid meaning that I could get one of the same age from the same place in the same condition that mine was when I first bought it.

GAP is worth having if you have paid a premium for the car. If you have got a bargain it is a complete waste of money as there won't be a gap between market value and what it would cost to replace. If you lease it is a complete waste of money.

Another thing with GAP is it increases in value the longer you have the car.

What I mean is if you pay for 5 years worth and write your car off on day 1 you have wasted your money because your regular insurance will pay in full.

If you crash it just before your 5 years is up it's paiiiiiiiiiiiii day because the gap between what the insurer will pay you and what you originally paid will be huge.

I guess it's just a gamble really.

Personally I've had it for my last 2 cars. It was about £270 for my current car and I think it's money well spent as I know that if I happen to write my car off I can go straight back to Sytner and buy a nice shiny year old 5 series instead of having to spend 17k on something I don't really want.

This.

Except the last line. It is even more important to get gap insurance if your car is leased.

I love the fact it that you are thinking about getting Gap cos the think the wife might crash it and not you

There are 3 kinds of gap insurance.

Return to value.

Return to invoice.

Vehicle replacement.



Junior would be best to get RTI.  Car costs £15 and he gets a payout from the car insurance of £10k so the RTI would pay £5k. Etc


As with any kind of insurance, make sure you read the small print and get the correct kind.

Sandy

ps buy insurance from insurance people and save a fortune if you actually think you need it

Whats the difference between return to value and return to invoice?

And what is vechicle replacment GAP? please.

Also you missed Shortfall out of your 3 types of GAP

Regards

M
 

Someone said above this was a gamble. I see it more like risk management.

In poker when thinking about calling a bet we consider things like how much the bet is and how much is in the pot and how many outs we have. From this we can make a decision based on the known information and the probabilities on the unknowns.

Is gap insurance not the same?

How much is it to call = the cost of the policy

How much is in the pot = unknown but if the car cost £15k and worth say £5k in 3 years then pot is between £0 and £10k so assume £5k average (at £250 for policy thats 19/1).

How many outs = what are the chances of me writing off the car? Well again it's an unknown but when I made my decision on this I considered how many miles I will drive in the car and how many miles my wife will drive in the car! (enough said). You could be even more anul and research some stats (as the insurance companies do) but I'm pretty sure the chance of writing off the car will be much higher than 19/1.

Also consider how much you are risking. I have been offered this twice and with my own car I took it but my wifes I didn't. (higher value car and higher mileage in mine, high risk, very low mileage in wifes and lower value therefore very low risk)

A few different points and views about GAP Insurance.

It's gets to a point where do you stop insuring yourself for this and that.

I have seen massive benefits for customers who have taken out GAP insurance.
They're better off financially and time/worry wise, were better off because they buy another car.

I have GAP on the Mrs Car. She works as a Mum and does 5000 miles a year.



You pay £20000 for a used car you can do 30T miles a year in 30 Months the car has done
100T Whats it worth then?

It gets written off you get all your cash back in super quick time and go and get another nice car.

What a great product. Nobody can say GAP is not a good thing. You can moan about the price.

Regards

M 








 



   



 

i can just about see the benefit of GAP insurance to make up the shortfall in a finance settlement in the event of a total insurance loss, although even with this there is an element of the buyer buying insurance for the benefit of the finance company and/or insurance company.

i fail to see the benefit of this type of product for 'invoice value' situations, where they will make up the shortfall between the insurance valuation and what you paid for the car. If you total your 2 years BMW with 40K on the clock your car insurance will cover any potential losses you incur, and will reimburse you the value of a 2 year old BMW with 40K on the clock, enabling you to buy a replacement (i am aware that there is a certain amount of negotiation required at this point).

why do you need insurance to take it back to the price you paid for it ? this is merely another product sold by car dealers which cashes in on customers fear factor. like the payment protection racket that went before it.

this is merely another product sold by car dealers which cashes in on customers fear factor.

Is most insurance down to a certain element of fear factor? I think a majority of us are insured
or get insurance just because of the fear factor. 

Like I said before where do you stop regarding insurance.

I don't know much about the PPI Racket. It always looked to expensive to me.

GAP insurance will cover you for X ammout. You maybe the customer that wants to drive a car from new
and never buy a used car. You may see £450 as a small ammount to pay for potential time saved if you did have
your car written off.

It's your choice.

Regards

M

Sorry to slightly derail, but I have a lease that is coming up to end of contract in a month, so am looking at my options.

AFAIK I was quoted a GMFV (which is higher than the current market thx I guess to the arse falling out the market in the last 3 years).  I don't have GAP insurance.

My options are: a) keep the car for MGFV settlement (yeah right!) or b) use it to finance another lease (yeah right!) or c) hand it back in and walk away

I am currently thinking a) if I can line up an insta- sale thru a dealer which covers the MGFV and some $$ on top or if the margin is too small to be worth the effort, just do c)

Does the "GAP concept" come into play at all here?  Out of curiosity, is it going to disadvantage me in some way over and above what I could have done if I'd set it up better 3 years ago?  And out of need, is my current plan the best one?

TIA!

you are missing the point.

you are insuring something you dont own, namely the invoice value of the car. Interestingly enough the number of cars 'written off' by insurance companies has fallen quite dramatically since this GAP insurance was introduced. Obviously it is often different insurance companies that will underwrite the car policy and the gap policy but in insurance very little happens in isolation.

of course the real winner here is the dealer who sold the policy and receives a very nice markup on it, and who gets the customer walking back thru the door with their cash from the insurance company ready to spend it on a new car, and another gap policy.

win-win

Hello Simon  Firstly the GAP makes no difference

1. Do you want to pay the Final Payment and keep the car. The car may be worth £8000
but it could cost £10500 to buy your car back ... If a dealer were to sell it. if you know what I mean.

You could always refinance the Balloon payment and keep the car if you did not want to pay a lump sum. I'd choose lease purchase and make sure the loan is against the car. Since Late 2007 (I think) All finance agreements (Used to be capped £24999) are now regulated which means once half the amount has been paid including interest you can voluntarily terminate the agreement and hand the car back.

Going forward lease purchase is the way to go. You will get a better rate than PCP in most cases and make sure the car is financed. Some Garages try and push it through as personal loan and not against the car.  

This is how I have brought the Mrs car.

Regards

M

If you had GAP insurance you would also have another option but its not for the feint hearted

d) Do a handbrake while travelling at 100mph down a busy motorway. Reclaim original value of car from your hospital bed.

you are missing the point.

you are insuring something you don't own, namely the invoice value of the car. Interestingly enough the number of cars 'written off' by insurance companies has fallen quite dramatically since this GAP insurance was introduced. Obviously it is often different insurance companies that will underwrite the car policy and the gap policy but in insurance very little happens in isolation.

of course the real winner here is the dealer who sold the policy and receives a very nice markup on it, and who gets the customer walking back thru the door with their cash from the insurance company ready to spend it on a new car, and another gap policy.

win-win
[/quote]


Where has this been published please?.

I can't see how this has changed. If an insurance company knows their client has GAP
they will lowball the claim hoping the GAP company bites more of the bullet  

Regards

M

Where has this been published please?.

I can't see how this has changed. If an insurance company knows their client has GAP
they will lowball the claim hoping the GAP company bites more of the bullet  

Regards

M

[/quote]

that is of course based on the assumption that insurance companies act in isolation, but in reality they dont, since many companies are underwritten by the same syndicates at lloyds of london.

the figures are quite widely available. a quick search of the internet tells me that in 2003 around 3000 cars a day were written off (over 1 million a year), whereas in 2008 that figure was around 500,000.

Look at it this way:

In my own case:

Insurance = £640
GAP = £380

So my total insurance is £1020

Payout from insurance = £17k
Payout from GAP = £10k

So total cost of insurance is 1020/27000 = 3.8p/£ of cover

Standard insurance is 640/17000 = 3.8p/£ of cover
GAP insurance is 380/10000 = 3.8p/£ of cover

So in my case the GAP isn't bad value. However if we look at it again back in year 1 when the insurance costs were the same but the payouts based on the car's value would've been different.

Payout from insurance = 22k
Payout from GAP = £5k

So total cost of insurance is 1020/27000 = 3.8p/£ of cover. Same as before.

Standard insurance is 640/22000 = 2.9p/£ of cover
GAP insurance is 380/5000 = 7.6p/£ of cover

So in year 1 my GAP cover was very high and probably not worth having. It year 2 it is worth exactly the same as my insurance so is worth it. However if I'd not taken it 'til year 2 I'm certain that it would've cost a lot more anyway.

I don't know what the relevance of this is but I wanted to work it out for myself so thought I might as well put it here.

Basically you're over insuring your car. If you crash it you get paid more than the car's worth. Whether or not the cover is good value depends on how likely you are to crash.

I guess for bad drivers or drivers with bad records the GAP becomes better value as it costs comparitively less than their main insurance and they are more likely to crash.

that is of course based on the assumption that insurance companies act in isolation, but in reality they dont, since many companies are underwritten by the same syndicates at lloyds of london.

the figures are quite widely available. a quick search of the internet tells me that in 2003 around 3000 cars a day were written off (over 1 million a year), whereas in 2008 that figure was around 500,000.


[/quote]

I think you will find this is more to do with technology.

Security/ABS/DSC Etc and nothing at all to do with GAP Insurance

Regards

M

you ever wonder why a gap policy (which may in the end pay out more than your car insurance policy) doesnt ask for any of your driving history or convictions ?

I think you will find this is more to do with technology.

Security/ABS/DSC Etc and nothing at all to do with GAP Insurance

Regards

M

[/quote]

that may be it, but is still think the equation that

insurance companies offer GAP policies for write off = insurance companies write off less cars

can only really be proved one way.

but i am hardly going to convince someone who sells the things am i ? :)

In our T&C's If your car is written off due to Booze/drugs. NO payout

They also want to know of any Insurance related convictions.

Read the small print folkes

Regards

M  

Because it's not relevant. It doesn't insure against the car being written off it just gives you money for free if you happen to crash.

Like you said previously it doesn't actually insure anything. It just pays out a sum of money in the event of you crashing your car.

I guess you could ask an insurance company to provide similar cover for anything.

"Hey Mr insurance company. If I give you £500 per year will you give me £10k if my David Beckham crashes his car within the next 12 months?"

"What are the chances of him crashing his car?"

"Statistically about 100 to 1"

"Fuck yeah!!"

GAP insurance is basically a gamble. And I guess the payout odds are pretty tez. I'll keep getting it though.

Epic fail of a sentance

Sigh,
20 years ago I might have had e) and f) to consider too.

Epic fail of spelling.

Looooooool
GG Stu
Sure had time to be on blonde today.

If your car's stolen or damaged beyond repair, Return to Invoice Gap Insurance (RTI) pays the difference between your motor insurers' settlement and your motor dealers invoice price.

RTV pays the difference between the Motor Insurer's settlement and the value of your car today.

VRI will pay to you the difference between the settlement you receive from the Comprehensive Motor Insurance Policy and the cost of a replacement new vehicle, even if the retail price has increased!

Sandy

Hi Simon,

Don't be too harsh on option b) if you want a new car, Leasing companies are using more and more stock vehicles today with huge discounts and rebates. I think whilst consumer uncertainty is about it will keep going this way.  You can get more bang for your buck today than you could 3 years ago and it's likely that the settlement payment will be the better side of the market value 3 years from now.

google is saying it can be 105% of it's current glass' guide retail value. small print etc

Insurance is always about the small print. I doubt there is any insurance product that you can imagine (and some you will never imagine) that you can't find people on the net who have had their lives ruined because an insurance firm played hardball. It's a bigger problem now after quite a few years of people deciding to get "value" from insurance.

The biggest trouble with insurance is that you never know how good/bad it is until you need it. At this time you're knackered if it's bad.

Sandy

so, lots of views and debate here... thanks for replying.  The question still remains - do i get this fucking GAP insurance or what?

i am leaning on the side of leaving it.  Apparently the insurance policy the Mrs has arranged through Tesco provides a like for like replaceemnt vehicle if this one is written off within 12 months of owning it.  I think i'll be checking the small print on that too!

But a gap policy will gain value over time.

Up to you mate but I'd consider it for 10k+ worth of car in this market.