I am just about to purchase a new car this weekend and wondered if anyone has a view on GAP insurance as this is not a product I have bought before.
Any words of advice or warning before I commit myself would be gratefully received.
Thanks.
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It's a con !
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Buy it independently if you want it, rather than through the dealer, as he is likely to charge twice or three times the price for the same product. Google will reveal a number of companies.
For comparison, I was offered it in April for my new car at about £300, whilst two minutes with Google reduced that to well under £100 via an independent.
I still didn't take it though.
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Thanks for your reply.
I am puzzled as to why you didn't take it given the cost you were asked to pay was not a lot taken against the cost of your new car?
It sounds like a worthwhile thing to do - even 'though you may never need it but that's insurance for you.
Am I missing something that you clearly know that I don't?
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"I am puzzled as to why you didn't take it given the cost you were asked to pay was not a lot taken against the cost of your new car?"
Because when I bought the car I thought my insurance company would pay out if it was written off in year one, I intend to sell at the end of year two, it's not on finance and as others have said the chance of a claim is low. So decided to save the money that would cover me for really only one year. Insurance is always a trade off between perceived risk and premium, and usually I insure most things, but this one didn't quite get over my threshold.
However, I have since read the small print and my policy makes absolutely no mention of paying out in those circumstances at all at any point, so the balance tips the other way slightly. (I also note it insists they will choose any repairer, and that they will use third party parts if they want to which is rather off putting).
I will however be changing the policy in August, so I'll see if I can get one that covers me more suitably at that point. If not, I'll reconsider GAP then, as you have up to 180 days to do it.
Edited by Dipstick on 28/05/2008 at 11:12
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You may be correct but why do you say it's a con?
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It's not a con if you happen to write the car off! I know it's unlikely, but if you couldn't afford to replace your car with another brand new vehicle then it can be very worthwhile.
They do make it a bit of a mess about to claim on the policy, but it's still worth having, especially if the car is on finance.
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I don't generally think things are a "con" or "rip-off" but the fact is that you can buy GAP for about a third of what a dealer will charge.
If the car's new then most insurance policies will replace with new for the first year (sometimes 2) if it's written off.
The fact that GAP (not bought from a dealer) is relatively cheap indicates how unlikely it is that a claim will be made.
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I got £10,000 "return to invoice" over 5 years for £130 via an online outfit, whereas the (Hyundai) dealer wanted about £450. I can't recall which outfit but the documents turned up from Hitachi Capital. There were several, near identical quotes but this was very slightly the cheapest.
As the whether it is worth it I don't know what the insurance stats show, but I woud guess that write-offs are becoming more frequent. I have only written one car off in 55 years, my first, but that was probably long before GAP insurance had been invented.
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I got £10 000 "return to invoice" over 5 years for £130 via an online outfit
I do wonder whether this might lead to an increased incidence of cars mysteriously dissapearing at 4yrs 9mths! The loss of NCB would be nothing compared to the financial gain of the RTI payout.
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but if you couldn't afford to replace your car with another brand new vehicle then it can be very worthwhile.
Doesn't "normal" plain vanilla insurance should cover you for replacing/repairing your car with like for like?
Why would anyone want to pay for cover for replacing with a higher value car in case you write off your older lower value car? Why don't people buy insurance to provide for "betterment" with other products in other areas of their life?
;-) Perhaps there is a "GAP" in the market for medical "GAP" insurance so that when have to you go in for treatment, you can ask to be repaired to be as you were when you born. ;-)
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>>Why would anyone want to pay for cover for replacing with a higher value car in case
>>you write off your older lower value car?
Because some people like driving new cars. Apparently. Ask Avant.
Some people, however, like driving new cars but cannot really afford them... hence GAP.
The other reason is if your car is on finance - where I think it is worthwhile (the GAP, not the finance - you should live according to your means). Your costs over three years are treated as straight line; in reality 50% of the depreciation happens the moment you take hold of the car key (that's an expensive moment...).
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Why don't people buy insurance to provide for "betterment" with other products in other areas of their life?
I guess they do - most household contents is "new for old".
Also, there are frequent posts about insurance companies write off valuations - if you have RTI GAP then you don't have to worry about that.
Although it does occur to me that you could get stuck in the middle of an argument between your insurer and the GAP provider about the valuation of the car, as both will be looking to minimise their share.
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>>why do you say it's a con?
It's a "con" - or at least hugely overpriced when provided through a dealer.
Secondly it's a con because if your car is written off when 9 months old, all you really need is for it to be replaced by a 9 month old car, surely? You are paying extra to insure something you never had in the first place.
Except I suppose you would argue that you would have bought a second hand car in the first place. I guess GAP insurance is a way of proving to you just exactly how much extra you pay for the privilege of driving a brand new car!
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There are also different types of GAP, so if you want to be fully insured shouldn't you buy them all!
Borrowing a high percentage of the car's value at high APR over a long period - finance GAP
Have a hefty deposit, low APR and paying loan off quickly (or cash purchase)- return to invoice GAP.
I've never bothered with either.
The sales board I saw in a main dealer shows why these are sold. Long list of sales staff with cars they had sold. Two columns headed "GAP" and "Supaguard" - lots of ticks equals lots of bonus!
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Spot on.
I had a look at my policy and it covers a new for new replacement if the car's written off in its first 12 months.
If you want peace of mind, buy but not from the dealer unless you can make him discount the policy as part of the deal.
Be interested to know what you do, OP.
Good luck.
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Good point - Supaguard.
I turned that down too. Jokingly I said to the saleswoman "Three hundred quid! I can get the bits online for fifty!" I knew I was exaggerating and so did she, but we smilingly crossed it off the list.
I then actually looked at eBay and found I could get the bits for twenty five. I could apply it myself or pay someone and still come out in profit. In fact I'm lazy enough not to want it anyway but you get the point.
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Notahope, before you pay out, get details from your insurance co of exactly what they cover.
NFU will replace your car with a new one if its written off etc within 2 years, i'm sure other reputable ins co's do similar.
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Thanks, gordonbennet
I had come to that conclusion after reading the various comments on here and will do just that.
I have a friend who wrote off his Toyota (not sure how long he'd owned it mind) and he had GAP insurance and they replaced his car with a new one.
I reckon it might be worth taking out "return to invoice" cover but I'll check it out further now.
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