When placing an order for a new Honda CRV recently (No HP involved) , the salesman offered my son-in-law Gap Insurance to cover a period of 3 years from new for about £325.
I really know little about this type of insurance, except that it can be useful if a car purchased on HP is written off following an accident and the amount paid by
the insuring company is less then the total amount due to the HP Company.
Any advice regarding the usefulness of this type of insurance would be much appreciated, please.
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It can be had for much less trhan £325 - do a web search. I looked for my wife's Aygo and £150 for return to invoice or gap to outstanding finance seemed about the norm.
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This insurance can still be useful to your son-in-law. For example, he pays £15K cash for a car which he writes off in two years time, the insurance company give him £10K as settlement, the GAP insurers then give him the extra £5K so that he can replace it with a brand new one again. I think a lot of people with this insurance pray for their cars to burst into flames at 2 years and 11 months old! ;-)
Blue
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Consider the risk of a new or nearly new car being written off - not only the pure risk but also the likelihood of the insurer declaring the repair to be uneconomic. It's pretty low.
Gap insurance - certainly from a dealer - is a rip-off. In fact, dealer-offered insurance of any kind is poor VFM in my experience.
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When placing an order for a new Honda CRV recently (No HP involved) , the salesman offered my son-in-law Gap Insurance to cover a period of 3 years from new for about £325.
I take it he was also offered
1) Super Polish @ £400
2) Extended Warranty to 5 years
3) Servicing & reapirs @ £30/month
etcetc
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Salesmen at the main dealers all appear to push this. I suspect there is a very high commission to be had for them. From the viewpoint of the company issuing the policy they virtually know the extent of any risk, as any public liability or third party risks would be covered by the legally required other policy held by the driver/owner.
I have never purchased such a policy and never will.
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I'm surprised that Gap is being offered in this context and would want to see the small print. Surely it only fills the "gap" between an insurance settlement and the HP outstanding in the event of a write off and not providing a cushion, and predicting market prices, in the future?
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There are 2 types, (at least!), the outstanding HP one and as mentioned above, the back to invoice price. For all those who knock it, I used to aswell. Then had a mishap in the snow, and I would have been around £9k better off had I taken it out when offered it. I did take it out on the replacement, but not from dealer, shopped around and got it for considerably less.
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Ive recently bought a new Mercedes in Portsmouth and the salesman insisted I listened to him telling me about Gap Insurance. He said it was Government legislation and he had to by law tell me about it. He got quite upset when I told him that if I had to listen to him I would buy my next car somewhere else. Sinking to the level of Currys just to get a few extra £s
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He said it was Government legislation and he had to by law tell me about it.
What he meant was that anything connected with finance, insurance, etc on a car is reglated under the Financial Services Act. So they have to follow strict procedures and give you good 'advice' - and have documentation to prove they've done so. That's partly justification and partly an opportunity to tell you about every expensive, rubbish, commission-laden product they've got.
Note that you have to see the 'business manager' to undergo this ordeal. He/she is the person regulated under the FSA.
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Exactly the same happened to me last time I picked up a car - it started to get ridiculous, but I had to sign document after document confirming that I'd understood and refused thing like GAP etc.
We did have a particularly awkward moment when I refused the paint proptection guarantee as I didn't want that, even though it had already been done and I was being given it 'free' (although it was itemised out at £299 on the invoice). I was hoping by refused they'd give me the money, but he firmly told me unless I signed they couldn't complete the deal!
I wonder if refusing to sign all this stuff is a way of getting out of a car purchase?
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Truly a rip off, although 'relatively' little absolute money compared to purchase cost - which is what they rely on you thinking at the time. When you sell a car, you accept then the realised loss. Why pay a vast proportionate sum not to have it realised in 1 or 2 years due to a write off? The profit margin on extended warranties/GAP et al (even trying it on mobiles/ipods now) is fabulous. IGNORE!
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I agree with what others have said, the sales staff have no choice but to offer the GAP insurance etc. and then get you to sign paperwork to say you had turned it down. The reason being that now the business is regulated by the FSA, if the garage DON'T offer the insurance and then a customer has a bump, they can claim they were not offered good advice as required by the FSA and then sue the dealership for their losses.
Oldbuffer - If I was the salesman I would have allowed you to buy your car elsewhere :-)
Blue
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We paid £400 for it on an A2 three years ago - thought it was expensive at the time and wife wanted it then so didn't have time to check around. Could have got it for less but was still the best £400 we spent as the car was written off last July!
Was the difference between buying the new car she wanted as a replacement and (not quite) a banger.
Gap on the new car 15k max payout over three years was just over £200 - Google gap insurance.
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It's all getting quite daft. People should take responsibility for their own actions and not have to suffer this rehearsed regulated drivel. I had a crazy experience only in the last week buying a new top-handle chainsaw, wouldn't let me have it since now you have to have a certificate proving 'competence'. I was livid, I've used chainsaws since I was 12.
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