Anybody Had Gap Car Insurance....

[trt]

This is for my son who lives in London.

He is buying a car this w/end about £8,000, and apparently if his car got stolen he would get the full price back, but they want about £20 a month for 2 years, plus he still has to pay normal insurance. Seems a lot to me.

https://www.moneyadviceservice.org.uk/en/articles/do-you-need-gap-insurance

[tonyav]

Tell him to have a look on the comparison sites, if he wants GAP insurance I'm sure that he can do better than £20 a month.

[trt]

Thanks Tony.

Have told him what u said, but the one hes looking at, includes his tyres & alloys protection, because its London.

[hc4361]

Unless the car is brand new there is very little point in paying for GAP insurance.

[tonyav]

hes looking at, includes his tyres & alloys protection, because its London.


Ah right, I haven't come across that before ( all part of the joy's of living in London I suppose ).

[trt]

## Unless the car is brand new there is very little point in paying for GAP insurance. ##

Can you tell me why there is little point HC? Ta.

[hc4361]

I can, trt.

Buy a brand new car for £20k, drive it off the forecourt and it has literally lost thousands. This is when GAP insurance can be beneficial - your car gets stolen a week later and the insurance will pay out the value of a used car (it is, it is no longer brand new).

Buy a used car and you don't have that very sharp drop in value. It is likely that 12 months later you could buy the same car, same age, same mileage with the insurance payout.

[Zacs-Master]

You need to read the small print of any GAP insurance VERY carefully to see what it covers / excludes.

[bhg481]

Bear in mind that most insurance companies will replace with new for cars less than 1 year old, so the first year of GAP insurance is wasted.

[bhg481]

I was talked into GAP insurance last time I bought a new car and then, after a llittle thought, I cancelled it. The GAP insurance only covers you for the difference between the cost of replacing the car and what the insurance company pays you. It's going to cost your son £480; if it covered the whole £8000 cost of the car, rather than the few hundred pounds difference in cost, it may be worth it but, in the unlikely event of a claim, he'll only be getting roughly the cost of his premiums. In reality he's better off putting the £480 into a savings account.

[EDRIAT]

There are no comparison engines/aggregators for GAP insurance policies, yet.

"Unless the car is brand new there is very little point in paying for GAP insurance" is misleading. Granted there is sharper depreciation of a brand new vehicle compared to a used vehicle but, ALL vehicles depreciate in value.

If you buy a brand new car for £20k and then it's written off after a year, your Motor Insurer's payout is supposed to be able to facilitate you buying a 1yr old version of the same car, spec and (similar) mileage as the one that was just written off.

Using exactly the same principle, if you buy a 1yr old used car for £8k and it's written off after a year, your Motor Insurer's payout is supposed to facilitate you buying a 2yr old (because your car was (in this example) 2yrs old at the time of loss) version of the same car, spec and (similar) mileage as the one that was just written off.

Of course it gets a little more complicated if you financed the original vehicle purchase because depending on the structure of the finance agreement it's possible that the settlement figure of your finance may exceed the amount paid out by your Motor Insurer (or at least account for a good chunk of it) in which case, the amount of money you have available to buy your next car may be considerably reduced - indeed you might actually have a debt to pay (negative equity) before you can consider buying another car.

Put the finance aside for the time being though.

There's no difference in the basic principle of new/used car except that the sums involved in the first example are likely to be greater (e.g. a brand new vehicle will have depreciated by a greater amount).

In either of the above examples GAP insurance steps in to pay the difference between your Motor Insurer payout and either the original invoice price you bought the vehicle for (Invoice GAP) or the cost of replacing your vehicle with one equivalent (E.g. same or nearest equivalent Make, Model, Specification, Age and Mileage) to what you bought first time around at the time you bought it (Replacement GAP).

If you DID have finance outstanding, your CAR and GAP insurance payouts would be used to clear some or all of that finance & you'd put the remaining funds towards the cost of your next vehicle. Of course with no finance outstanding you'd have the whole sum of your CAR & GAP insurance payouts to put towards the cost of your next car.

bhg481 claims that GAP insurance in the first year is wasted. Whilst they *might* be right in this (some motor insurers do indeed provide new-for-old cover in the first year, but some of them have such stringent eligibility criteria that it would be all but impossible to qualify for a new-for-old replacement and you'd likely end up with a market-value payout instead - in which case GAP insurance in the first year would likely be very welcome!) you can normally only buy GAP insurance within a limited period of time after taking delivery of the vehicle and the better GAP insurance providers offer the ability to defer the start date of the GAP insurance policy (at no extra cost) by as much as 12 months from when the vehicle was first registered - allowing you to avoid "duplicate" cover in the first year, but still benefit from GAP insurance cover in later years.

Forgoing GAP insurance solely because you have alternative cover only in the first year, could be an extremely expensive mistake in the event of a write off in the 2nd, 3rd or 4th etc year.

I've just checked and GapInsurance.co.uk are currently quoting £69.12 all inclusive, for a 3yr Invoice GAP insurance policy on a vehicle bought for £8000. They also publish claim details (http://www.gapinsurance.co.uk/invoice-gap-insurance.asp) which shows people receiving far more than their GAP insurance premium back.

Note - I've no affiliation with them. But I have sold GAP in a previous employment (so I know my stuff) and I chose to buy GAP from these guys when I recently bought my car.

HTH

[trt]

Thanks folks,
Have passed your info on to him.