GAP Insurance - Is it worth it?

[lazaroonie]

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

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.

[EvilPie]

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.

[MPOWER]

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

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

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

[lazaroonie]

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.

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 ?

[lazaroonie]

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

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

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.

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 ?

[MPOWER]

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  

[EvilPie]

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 ?

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.

[StuartHopkin]

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 ?

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.

Epic fail of a sentance

[Simon Galloway]

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.

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

[kinboshi]

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 ?

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.

Epic fail of a sentance

Epic fail of spelling.

[StuartHopkin]

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 ?

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.

Epic fail of a sentance

Epic fail of spelling.

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

[henrik777]

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
 

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

[The Baron]

It is even more important to get gap insurance if your car is leased.

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!

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.

[byronkincaid]

Return to Invoice Gap Insurance (RTI) pays the difference between your motor insurers' settlement and your motor dealers invoice price.

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

[henrik777]

Return to Invoice Gap Insurance (RTI) pays the difference between your motor insurers' settlement and your motor dealers invoice price.

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