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    • Frozen_up_north
    • By Frozen_up_north 27th Sep 17, 6:08 PM
    • 1,296Posts
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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 3
    • IanMSpencer
    • By IanMSpencer 4th Oct 17, 7:22 AM
    • 1,097 Posts
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    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.
    Originally posted by AnotherJoe
    The point I was making (though I see why you read it that way) was underlining the rarity of a write off.

    Same as all the white goods repair policies really. They are such poor value, often costing 25% of the good for often 3 years actual cover, that compared with the likelihood of claiming you have to be in a very poor financial position to need to spend so much because you could not afford a repair - and of course setting aside the cost of the policies would provide the self-insurance.

    Put it this way, the insurers are profiting on these policies and that applies at the cheapest.

    Interesting to compare to the car hire excess insurance policies which give a year's cover for about £35. You've got a pretty high chance of putting a dent in a hire car in Spain (very narrow village streets) and the amount they risk paying out is similar and they cover multiple hires..
    • IanMSpencer
    • By IanMSpencer 4th Oct 17, 7:40 AM
    • 1,097 Posts
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    IanMSpencer
    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
    Originally posted by bris
    But the 6 month example doesn't quite make the point as it is likely that you will have new for old, it is the 12-24 month gap which is the worst point in the loan for risk. It strikes me that it is not up to the original insurers to cover a system of purchase that leaves the buyer exposed though you'd think that they'd be interested in it as an add on like legal and breakdown cover.

    If it wasn't for the finance being secured on the original vehicle you are still not really worse off. If you could transfer the PCP loan to the replacement car (like for like) then your original insurance would replace what you had lost. If you had taken out a bank loan rather than PCP there would not be a gap to insure, you'd be paying the loan and have a similar car to drive..
    • jimjames
    • By jimjames 4th Oct 17, 1:25 PM
    • 12,238 Posts
    • 10,765 Thanks
    jimjames
    I think your missing the point of GAP insurance. It has nothing to do with accident free ownership, it covers insurance loss shortfall.
    Originally posted by bris
    I think others have also posted on the same point, I know it covers shortfall. To me it just seems a complete waste of money, why pay for something that on day X pays out but if you sell the car you get the lower value. Depreciation is a fact of life for new cars so personally I factor it into the calculations rather than throwing money away for an extremely rare event.

    The point I was making (though I see why you read it that way) was underlining the rarity of a write off.
    Originally posted by IanMSpencer
    That's exactly my point, it only pays out in very limited circumstances and in other situations you are just left with a car worth less money due to depreciation. Put the premium towards the value instead.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • JohnB47
    • By JohnB47 4th Oct 17, 1:37 PM
    • 901 Posts
    • 284 Thanks
    JohnB47
    I've just been offered GAP insurance on a second hand car I'm buying from a dealer. (Price = £9250). No hard sell, just an explanation of what it means. (Perhaps the hard sell will come when I pay the balance on the car and collect it).


    £400 ensures that if the car is written off at any time over the next 4 years, the GAP insurance tops up the amount the normal insurance policy pays out, so that I get back the full cost of the car as at the purchase date.


    I've been driving for almost 50 years and only had a minor bump (other driver bumped into me).


    Is this sort of insurance really worth it and can you get it cheaper elsewhere? If so, where?


    Never heard of GAP insurance before.


    Edit: Just searched and found a company quoting better GAP cover for half the price the dealer quoted. Still feeling I'm not likely to go for it.
    Last edited by JohnB47; 04-10-2017 at 2:06 PM.
    • Penelopa.Pitstop
    • By Penelopa.Pitstop 4th Oct 17, 6:42 PM
    • 238 Posts
    • 108 Thanks
    Penelopa.Pitstop
    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
    You don't know the product then. GAP doesn't offer new for old, it covers the difference between amount from invoice or price of new car and car insurance pay out based on value of the car.

    Gap Finance covers the negative equity if car is financed.

    You can buy both types of policies for new and old cars until certain age.

    I bought 5 years return to invoice for 2 years old car. It wasn't expensive. I never written off car before but had two stolen in past in Europe.

    • lostinheaven
    • By lostinheaven 9th Oct 17, 12:02 PM
    • 157 Posts
    • 74 Thanks
    lostinheaven
    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.
    Originally posted by bris
    You're referring to Finance GAP insurance. There are others, as follows:

    Finance GAP insurance:
    Covers the difference between motor insurance payout and amount outstanding on finance at the time of claim.

    Invoice GAP insurance:
    Covers the difference between motor insurance payout and the original invoice price you paid for the car

    Combined Finance & Invoice:
    Covers the difference between motor insurance payout and *the greater of* either the amount outstanding on finance at the time of claim OR the original invoice price you paid for the car.

    Replacement GAP insurance:
    Covers the difference between motor insurance payout and what it would cost at the time of claim to replace the vehicle with a vehicle of the same (or nearest equivalent) make, model, specification, age and mileage as your original vehicle was at the time you first bought it.

    Combined Finance, Invoice & Replacement GAP insurance:
    Covers the difference between motor insurance payout and *the greater of*... you get the picture I'm sure...

    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
    If you bought the vehicle brand new originally, that is *exactly* what Replacement GAP insurance does.

    I've just been offered GAP insurance on a second hand car I'm buying from a dealer. (Price = £9250). No hard sell, just an explanation of what it means. (Perhaps the hard sell will come when I pay the balance on the car and collect it).

    £400 ensures that if the car is written off at any time over the next 4 years, the GAP insurance tops up the amount the normal insurance policy pays out, so that I get back the full cost of the car as at the purchase date.

    I've been driving for almost 50 years and only had a minor bump (other driver bumped into me).

    Is this sort of insurance really worth it and can you get it cheaper elsewhere? If so, where?

    Never heard of GAP insurance before.

    Edit: Just searched and found a company quoting better GAP cover for half the price the dealer quoted. Still feeling I'm not likely to go for it.
    Originally posted by JohnB47
    £400 for a <£10k car is obscene. Even £200 is too high. You should be able to get a 4yr Invoice GAP insurance policy (like the dealer will have quoted you for) for circa £150 from an online provider.

    Is it worth it? Only you can answer that. Can you afford not to have it? Would you appreciate having it if the worst was to happen? etc...
    • jimjames
    • By jimjames 9th Oct 17, 1:35 PM
    • 12,238 Posts
    • 10,765 Thanks
    jimjames
    Is this sort of insurance really worth ?
    Originally posted by JohnB47
    In my opinion no. You've had 50 years driving without GAP insurance, I'm not sure why it would now be of benefit.

    If you own a car it depreciates. If you write it off at 3 years old you get paid out if you have Gap but if you sell it at 3 years you only get the reduced value after depreciation. I just factor for depreciation in my plans.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • AnotherJoe
    • By AnotherJoe 9th Oct 17, 1:44 PM
    • 7,671 Posts
    • 8,280 Thanks
    AnotherJoe
    I wouldn't get GAP on a s/h car under £10k because you arent really insuring anything.

    I will be getting it on a £30k car shortly, since the hit after say 18 months would be very high, it could at least be £10k off.

    What I dont understand is, why dont mainstream insurers provide that as an option? If I insure with Direct Line, ISTR the first year I do get GAP as part of the policy, so why dont they offer that for years 2-3 as well as an option?
    Last edited by AnotherJoe; 09-10-2017 at 7:06 PM. Reason: typo
    • HMRC100
    • By HMRC100 9th Oct 17, 11:52 PM
    • 20 Posts
    • 10 Thanks
    HMRC100
    The first time I took out GAP insurance was on a brand new Porsche Cayman GTS. Car cost me £63000... charge for tyre/alloy cover and GAP cover was only £1000 for 3 years. In my case well worth it.
    • neilmcl
    • By neilmcl 10th Oct 17, 10:13 AM
    • 10,282 Posts
    • 7,211 Thanks
    neilmcl
    The first time I took out GAP insurance was on a brand new Porsche Cayman GTS. Car cost me £63000... charge for tyre/alloy cover and GAP cover was only £1000 for 3 years. In my case well worth it.
    Originally posted by HMRC100
    Did you have to make any claims?
    • gettingtheresometime
    • By gettingtheresometime 10th Oct 17, 10:21 AM
    • 3,129 Posts
    • 7,299 Thanks
    gettingtheresometime
    I've known new vehicle being involved in accidents where they were written off a week after leaving the forecourt.
    Lloyds OD / Natwest OD / PO CC / Wescott / Argos Card cleared thanks to the 1 debt v 100 day challenge


    Next on the list - JD Williams
    • HMRC100
    • By HMRC100 13th Oct 17, 9:03 PM
    • 20 Posts
    • 10 Thanks
    HMRC100
    Did you have to make any claims?
    Originally posted by neilmcl
    Yes... in the first 9 months I replaced 2 tyres due to punctures. Each tyre costing £290.
    Also had an alloy repair due to kerbing. I have diamond cut wheels.
    My car is still covered.
    • G_M
    • By G_M 16th Oct 17, 5:36 PM
    • 42,255 Posts
    • 49,059 Thanks
    G_M
    I'm shortly buying a new audi, and was offered GAP for £600ish for 3 years cover. Declined.

    Having looked online, I can get it for around £170 for 3 years.

    But my car insurance (like most?) offers full replaement value for the first year of a new car, so GAP is just duplication.

    It looks like you can buy GAP any time in the first 365 days of ownership, so presumably the time to buy GAP is 11 months after getting the car.

    Or have I misunderstood something?

    And if that's right, how does one differentiate between the apparent plethora of online providers - none of whom I've ever heard of......?
    Last edited by G_M; 16-10-2017 at 5:40 PM.
    • IanMSpencer
    • By IanMSpencer 16th Oct 17, 5:58 PM
    • 1,097 Posts
    • 870 Thanks
    IanMSpencer
    I'm shortly buying a new audi, and was offered GAP for £600ish for 3 years cover. Declined.

    Having looked online, I can get it for around £170 for 3 years.

    But my car insurance (like most?) offers full replaement value for the first year of a new car, so GAP is just duplication.

    It looks like you can buy GAP any time in the first 365 days of ownership, so presumably the time to buy GAP is 11 months after getting the car.

    Or have I misunderstood something?

    And if that's right, how does one differentiate between the apparent plethora of online providers - none of whom I've ever heard of......?
    Originally posted by G_M
    The duplication probably is not there, the pricing is probably on the assumption that you have new for old cover - you'll probably find that 2 years GAP on a one year old car costs much the same as 3 years on a new car. Worth checking though. Also, there are a variety of schemes, and if you have a lease or PCP there may be other costs to cover which the car insurance would not cover - e.g. early termination fees.
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