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  • FIRST POST
    • Frozen_up_north
    • By Frozen_up_north 27th Sep 17, 6:08 PM
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    Frozen_up_north
    GAP insurance sales nonsense
    • #1
    • 27th Sep 17, 6:08 PM
    GAP insurance sales nonsense 27th Sep 17 at 6:08 PM
    This month I replaced my car using outright purchase (no finance involved).

    The salesman introduced his colleague, who informed me that it was a legal requirement of the Financial Conduct Authority that he talk me through GAP insurance. When I said I wasn’t interested and that I wasn’t prepared to listen, he then asked me to sign to say I refused to listen, which I also refused to sign. It appeared to be nothing more than a sales pitch.

    Today I emailed the FCA to enquire about this “legal requirement” to cover GAP insurance when buying a car... no surprise at their answer, it’s not a requirement and they will be looking into the practice.
Page 2
    • Tarambor
    • By Tarambor 28th Sep 17, 3:59 PM
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    Tarambor
    The sales pitch about an FCA requirement is nonesense but the dealership is covering their own back.

    If you later had a write off, and you could have benefitted from Gap Insurance, then that bit of paper saying you refused to discus it means you can't pull them for not telling you about is when they offer it for sale.
    Originally posted by CB1878
    That is completely asinine but it comes as no surprise that someone who has been in the industry is saying that what they did was a good thing. If you take that to its logical extent for any purchase it becomes ridiculous given the vast range of things and events you can get insurance to cover.
    • IanMSpencer
    • By IanMSpencer 28th Sep 17, 5:26 PM
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    IanMSpencer
    The other thing to consider about GAP insurance is the gap it is actually covering is a rare event, and covering nothing for the first year (assuming you have a typical new car replacement insurance policy). It does not cover loss of value of having a repaired car when it is not written off. It's a long time since I've had an accident, and when I've had accidents, the repair has been fairly low value, bumpers, lights and and trim. So in 40 years of driving, GAP insurance wouldn't have paid out a penny to me.

    Also, something I just picked up - they are not now allowed to sell GAP insurance at the same time they sell the car, there has to be a 2 day gap (according to MSE!).

    Really, GAP insurance is part of the PCP scam about getting people to buy cars they can't afford and then scaring them into paying even more money because the buyer is stuffed if they do have an accident because of the finance payment timing doesn't reflect the value of the vehicle. If you weren't financed, the normal insurance should allow you to continue driving a car of the same quality as at the time of the accident and be no worse off.
    • dacouch
    • By dacouch 28th Sep 17, 5:51 PM
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    dacouch
    They should not be stating it's a legal requirement, they are creating a paper trail to cover themselves against a customer who does not take the cover coming back after a qualify motor claim who sues them for not offering it.

    The chances of a successful court case are relatively low.

    Anyone who works in the Insurance industry will have numerous stories of customers where they have given them specific advise to take out a certain product or level of cover. The same customers then comes back blaming the salesman.

    The FCA do require that Insurance products are sold in a certain way and the sales process is documented. But they would not insist you sign a waiver.

    The two day rule for the sale of GAP only applies to the motortrader selling you the vehicle. You are free to buy the cover from any other source without the two day rule
    • daveyjp
    • By daveyjp 28th Sep 17, 6:37 PM
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    daveyjp
    When we purchased a car in March the GAP stuff was done as cover for us meeting the Head of Sales at handover.

    Still didn't buy it.
    • zooks
    • By zooks 28th Sep 17, 6:40 PM
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    zooks
    Dealer GAP seems to be another way to screw money out of the customer.
    If it was priced sensibly I would have bought it from them but the GAP insurance offered by the dealer I've recently bought a new car from was £499 on a £32k purchase and I can get a policy for £150 ish so pretty expensive.

    Not overly surprising though considering they wanted £600 for paint and upholstery protection.
    • AnotherJoe
    • By AnotherJoe 29th Sep 17, 5:15 AM
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    AnotherJoe
    The other thing to consider about GAP insurance is the gap it is actually covering is a rare event, and covering nothing for the first year (assuming you have a typical new car replacement insurance policy). It does not cover loss of value of having a repaired car when it is not written off. It's a long time since I've had an accident, and when I've had accidents, the repair has been fairly low value, bumpers, lights and and trim. So in 40 years of driving, GAP insurance wouldn't have paid out a penny to me.

    Also, something I just picked up - they are not now allowed to sell GAP insurance at the same time they sell the car, there has to be a 2 day gap (according to MSE!).

    Really, GAP insurance is part of the PCP scam about getting people to buy cars they can't afford and then scaring them into paying even more money because the buyer is stuffed if they do have an accident because of the finance payment timing doesn't reflect the value of the vehicle. If you weren't financed, the normal insurance should allow you to continue driving a car of the same quality as at the time of the accident and be no worse off.
    Originally posted by IanMSpencer
    Presumably the same applies to the fire insurance you buy for your house?
    The fact you haven't had to claim on it says nothing about its value.
    • TheMoonandBack
    • By TheMoonandBack 29th Sep 17, 9:33 AM
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    TheMoonandBack
    The difference in fire insurance for your house is that the house will probably not be worth less than you paid for it.
    I think GAP insurance shows up all the flaws of car ownership.
    In my opinion, if you have bought a new car you know it is going to be worth less and less each year. That loss is the cost of ownership and is the amount of money you are prepared to pay to drive that particular car.
    If you can't afford to face that loss in the event of the car being written off, then you probably should look at buying a cheaper or older car.
    If you are buying on finance, particularly PCP, then a £150 GAP policy probably is a good idea as you may end up owing more money to the finance company if your car is written off during the finance period.
    Last edited by TheMoonandBack; 29-09-2017 at 9:36 AM. Reason: Grammar
    When you get to the end of your rope, tie a knot and hang on

    Proud to be dealing with my debts
    • takman
    • By takman 29th Sep 17, 9:56 AM
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    takman
    Presumably the same applies to the fire insurance you buy for your house?
    The fact you haven't had to claim on it says nothing about its value.
    Originally posted by AnotherJoe
    That's not a fair comparison. The insurance you buy for your house covers so in the event of a fire you get the house rebuilt to how it was before. Just like car insurance in the event of a car fire you get the money to buy a replacement car of the same condition/specification/age as the one you had before the car was destroyed in a fire.

    GAP insurance is extra insurance on top to allow you to get a better and newer car than the one you had before. So the equivalent in your example would be buying extra insurance on top of your home insurance that would payout to give you a better house in the event of destruction... which certainly does not exist!.
    • neilmcl
    • By neilmcl 29th Sep 17, 10:08 AM
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    neilmcl
    That's not a fair comparison. The insurance you buy for your house covers so in the event of a fire you get the house rebuilt to how it was before. Just like car insurance in the event of a car fire you get the money to buy a replacement car of the same condition/specification/age as the one you had before the car was destroyed in a fire.

    GAP insurance is extra insurance on top to allow you to get a better and newer car than the one you had before. So the equivalent in your example would be buying extra insurance on top of your home insurance that would payout to give you a better house in the event of destruction... which certainly does not exist!.
    Originally posted by takman
    No, the equivalent would be taking extra "new for old" cover on your house insurance - something that most definitely does exist.

    The fact is all insurance, including things like extended warranties, are a type of gamble which for the most part the odds are they're unlikely ever need to pay out but for some that's a risk worth paying for.
    • TheMoonandBack
    • By TheMoonandBack 29th Sep 17, 10:17 AM
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    TheMoonandBack
    The point with GAP insurance is that the salesperson has described to the buyer how much money they are going to lose buying the car even if it survives in perfect condition. Despite that knowledge the buyer decides to continue with the purchase. The GAP salesperson then tells the buyer the car is going to be worth even less than that, if it is written off in the first three years. But for a mere fraction of what the buyer has already committed to they can cover that difference - phew, what a relief, they could have lost money !
    Last edited by TheMoonandBack; 29-09-2017 at 10:24 AM.
    When you get to the end of your rope, tie a knot and hang on

    Proud to be dealing with my debts
    • lostinheaven
    • By lostinheaven 29th Sep 17, 12:37 PM
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    lostinheaven
    The waiver/disclaimer you were asked to sign confirminig that you declined the option to take out GAP insurance, serves two purposes:
    1. As others have mentioned, it denies you the ability of going back to the dealer at some point in the future after having your car written off and claiming that "if they'd have offered you GAP insurance, you'd have taken it out" and therefore would prevent you from suing them for the "loss" (debatable) that you suffered because they never offered it.

      and (arguably, with more "weight")
    2. It's proof to the saleperson's management that the salesperson is doing their job and at least attempting to maximise the profit in every single deal by offering every single cash-cow product they can.
    Circa 20yrs ago I was a car salesman myself and although it wasn't as documented then as it is now, for all three different marques that I sold for, I was not permitted to hand the customer over to the "Business Manager" until I could prove that I'd at least planted the seed for all the additional F&I products he/she was going to discuss further with them.


    The fact that MANY car salespeople claim that this is now somehow a legal / regulatory requirement is utter nonsense though sadly, it's a belief that's been pushed so much within the industry for so long, that it's very likely even the people training the salespeople believe it's the case.

    What's the saying? If you tell a lie often enough, you'll believe it? - yeah, that!
    • CB1878
    • By CB1878 29th Sep 17, 6:48 PM
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    CB1878
    That is completely asinine but it comes as no surprise that someone who has been in the industry is saying that what they did was a good thing. If you take that to its logical extent for any purchase it becomes ridiculous given the vast range of things and events you can get insurance to cover.
    Originally posted by Tarambor
    I am not sure I said it was a good thing did I? If someone does not want the insurance what would be the big deal in signing to say so? I agree the dealers should be more upfront about why they need a signature, no excuse for not telling the truth.

    Sadly we live in a society where some individuals are quite happy to sue anybody at the drop of a hat. I know for a fact that dealers have been pursued by customers when they have not been offered Gap Insurance (and the dealer was able to sell it to them) and then suffered financially when the vehicle was subseqently written off.

    Not every customer is as honest and trustworthy as you are.
    • neilmcl
    • By neilmcl 29th Sep 17, 7:44 PM
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    neilmcl
    The thing is, basically the FCA have told Car dealers that if you're going to also sell financial products, such as GAP insurance, you're now under a legal duty to give your customers full disclosure of all the relevant facts from the outset, which is no bad thing. This, however has led some dealers, whether by ignorance or not, to believe they have a legal duty to tell you about their products whether you want them or not, and if not to cover themselves to make sure they've at least given you the relevant information.

    I agree with the above, the customer is more than free to state they're not interested and I don't see it as a big deal for them to sign to say so.
    • BJV
    • By BJV 3rd Oct 17, 2:34 PM
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    BJV
    Personally I think Gap Insurance is just like any other insurance. I do have gap on my car as I could not afford to buy another or be left paying for something I don't have any more. I have always had it.

    I have two cats and a dog but don't have pet insurance.

    I have home insurance and life insurance. But don't have mobile phone insurance. It is about risk and if you want to take it or pay and let someone else take it for you. For me for the sake of a couple of pounds I would rather not bother worrying about what would happen if something happened and i did not have it.

    The dealership should have just been more open and then left you to it. I am sure any reasonable person would not have a problem signing if they knew that really all they where doing is to take away the possibility of accusing them of not offering it. The four day window is to encourage you to shop around and make informed choices.
    Happiness, Health and Wealth in that order please!
    • BJV
    • By BJV 3rd Oct 17, 2:37 PM
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    BJV
    Sadly we live in a society where some individuals are quite happy to sue anybody at the drop of a hat. I know for a fact that dealers have been pursued by customers when they have not been offered Gap Insurance (and the dealer was able to sell it to them) and then suffered financially when the vehicle was subseqently written off.

    Not every customer is as honest and trustworthy as you are.
    Originally posted by CB1878
    Where there is blame???? ha ha.

    God we are turning into America where litigation follows everything.
    Happiness, Health and Wealth in that order please!
    • Penelopa.Pitstop
    • By Penelopa.Pitstop 3rd Oct 17, 7:09 PM
    • 238 Posts
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    Penelopa.Pitstop
    I had it with Mercedes last year (cash purchase) and with Audi on Saturday (lease - PCH). Mercedes guy did it on tablet and I just signed that I'm not interested.

    Audi guy wanted his business manager to do this but he was busy so did it himself. They had pre-clicked, printed forms and I signed that I'm not interested. Forms included: Asset Protector (gap), Smart Insurance (minor damages), Alloy Wheels Insurance, Tyre Insurance.

    Judging by the posts on this forum and others, some people buy these additional products and are even happy with them. Definitely read comments about Alloy Wheels insurance being good product for some.

    Audi price for Gap was £499, I bought finance gap for £122 for 3 years even before car collection. 2 years ago, Audi dealer sent me by accident internal documents and for selling £499 policy, salesman was getting £280 commission. Actually, 2 years ago Audi dealer sent me all these forms by email and asked to sign if I'm not interested. That's how I got internal documents by accident. So it's not a new practice.

    I have no problem signing that I refuse, why make salesman life difficult for no reason.

    Another thing is pushing paint protection. Mercedes pushed it at me for around £500, I said I'm not interested so I was told I will get it for free anyway. I spent the weekend cleaning the car because it was applied on 2 years old dirt. Then I found documents that it was applied when car was new as well, the same dealership.

    With Audi, it was already on the invoice with discounted price for the whole car, no one even asked me if I wanted it. Dealership applied discount but squeezed it in as well to make some commission. I didn't protest, because I didn't really care. VWFS paid for most of it anyway and I knew what's my lease price upfront, however they came to it.

    • IanMSpencer
    • By IanMSpencer 3rd Oct 17, 10:52 PM
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    IanMSpencer
    Presumably the same applies to the fire insurance you buy for your house?
    The fact you haven't had to claim on it says nothing about its value.
    Originally posted by AnotherJoe
    No, it is different. I insure my house as I could not afford to rebuild it. I wouldn't get GAP insurance because:
    a) The value for money is very low (not sure off the top of my head, but the ratio for home insurance is say £100 for £100k of cover) but the GAP is something like £100 for £3k of cover.

    b) If I did have a write off, I could afford the difference to get me back on the road (assuming I was buying like for like) with the insurance payout.

    So both rare events, but the value covered is so high on the house that it is worth it at the price.
    • AnotherJoe
    • By AnotherJoe 3rd Oct 17, 11:05 PM
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    AnotherJoe
    No, it is different. I insure my house as I could not afford to rebuild it. I wouldn't get GAP insurance because:
    a) The value for money is very low (not sure off the top of my head, but the ratio for home insurance is say £100 for £100k of cover) but the GAP is something like £100 for £3k of cover.

    b) If I did have a write off, I could afford the difference to get me back on the road (assuming I was buying like for like) with the insurance payout.

    So both rare events, but the value covered is so high on the house that it is worth it at the price.
    Originally posted by IanMSpencer
    You've missed the point. As you'll see if you read again,My point was, someone (was that you ? ) said it was of no value because they hadn't had to claim on it. WHich is obviously ridiculous. It may indeed be of poor value but that's a different point entirely.
    • bris
    • By bris 4th Oct 17, 12:11 AM
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    bris
    But if you'd sold the car after 4 years you'd still only get back the value at that time? I weigh up the risk vs cost to decide if insurance is worthwhile
    Originally posted by jimjames
    I think your missing the point of GAP insurance. It has nothing to do with accident free ownership, it covers insurance loss shortfall.


    Believe me there will the thousands of people every year who now kick themselves for not taking out that GAP insurance they berated the poor salesman for trying to sell them it.


    It also seems to me there is some confusion over what gap insurance covers.


    When you take out finance on a new car for say 25k then 6 months later you write it off, well that car is now in massive negative equity. So the insurers offer 17k for the car but you still have 23k left on the finance the GAP insurance covers the 6k shortfall as in GAP.


    I have never seen GAP insurance offer new for old 2.5 years down the line that is just wishful thinking. If this was the case there would be thousands of 2 year old cars in flames every year
    Last edited by bris; 04-10-2017 at 12:24 AM.
    • dacouch
    • By dacouch 4th Oct 17, 12:29 AM
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    dacouch
    I have never seen GAP insurance offer new for old 2.5 years down the line that is just wishful thinking. If this was the case there would be thousands of 2 year old cars in flames every year
    Originally posted by bris
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