Gap Insurance....

Glitterari

I bought a new car last week for a VW dealer. I have also taken out the 'Gap' insurance they recommended - which is for 3 years and if your car is a total write off within that time, as your regular car insurance will only payout your cars value at the time of accident and not how much you paid when you purchased the car, the GAP insurance will pay the difference. So, if you purchased your car for £10,000 and in year two you have an accident and it's a write off - your regular car insurance will pay say £7,000 for it - the GAP insurance will pay the extra £3k so in total you get back how much you paid for the car (that's the theory anyway)

I have a 14 day cooling off period and was just wondering if these gap insurance policies are worth the paper they're written on? Any advice would be good - basically is it a good thing to have or is there lots of loopholes which they'll use to wriggle out of paying?

It's also known as 'retail price protection' and is underwritten by igi insurance.

Thanks in anticipation!

dacouch

You have taken out a "Return to Invoive" Gap Policy, they are good policies.

Have you looked at how much the VW dealer has charged you as their prices are normally two or three times the market rate plus they add the premium which I'm guessing is about £340 to your finance so you are paying the finance charge on the £340 for three years, so are paying even more.

You can cancel under the cooling off period and take out cover for around £160 which you can just pay in one go. Have a search for "Gap + Return to Invoice" in google or do a search of MSE forums.

The only problems you oaccasionally see on GAP policies are if your car insurer value your written off car less for an amount your Gap Insurer believes is the true market value. In these cases the GAP Insurer will pay the difference between what they think was the true market value and the invoice price.

P.S In the first year of ownership of a brand new car eg no previous owners on the log book, most car Insurers will buy you a replacement vehicle if the cost of repairs are more than typically 60% of the new list price of the vehicle.

shelly

My Dad had a RTI Gap policy. For him it wasnt worth the paper it was written on.
He paid £5000 for his car and unfortunately it was written off a month later through no fault of his own.
He settled on a figure of £4700 with his ins co so we thought the RTI policy would pay out the remaining £300.
No chance! They used the Glasses Guide to value his car and valued it at something like £5300 so they said as it was worth more at the time of the accident than when he bought it there was no shortfall for them to pay.
We took advice from a solicitor and was told there was nothing we could do.
Another kicker is that as Dad bought it at the same time as the car he was charged £300 for the policy. Had I known he wanted such a policy I could have got it online for him for £100.

Lesson learnt and he didn't bother with such a policy when he eventually replaced the write off.

I'm sure someone has had better experience of these type of polices than us but this is our/my first (and last) experience of them and it wasn't a good one.

Glitterari

dacouch wrote: »

You have taken out a "Return to Invoive" Gap Policy, they are good policies.

Have you looked at how much the VW dealer has charged you as their prices are normally two or three times the market rate plus they add the premium which I'm guessing is about £340 to your finance so you are paying the finance charge on the £340 for three years, so are paying even more.

You can cancel under the cooling off period and take out cover for around £160 which you can just pay in one go. Have a search for "Gap + Return to Invoice" in google or do a search of MSE forums.

The only problems you oaccasionally see on GAP policies are if your car insurer value your written off car less for an amount your Gap Insurer believes is the true market value. In these cases the GAP Insurer will pay the difference between what they think was the true market value and the invoice price.

P.S In the first year of ownership of a brand new car eg no previous owners on the log book, most car Insurers will buy you a replacement vehicle if the cost of repairs are more than typically 60% of the new list price of the vehicle.

Is that £160 for the three years or per year? I did supsect I may have been hideously overcharged - it's cost me £396 for the 3 years....so I think I'll be cancelling and picking up a cheaper policy. Good to know it's worth it though.

slipp_digby

you have probably paid some commission to the dealer to buy it from them. they are usually signicantly more expensive.

there are good deals to be had buying directly from the internet. it may be the case that you can cancel and buy the same policy underwriten by the same e.g. Hitachi finance and save the commission.

dacouch

It would be between £100 and £180ish as a one off payment for three years cover which you can pay off in one go.

Like slipp said the price you paid includes commission for the salesman, dealership, finance company etc etc.

Shelly has confirmed one of the possible drawbacks of RTI cover, its is fairly rare for this to happen but is caused when the gap company do not agree with the valuation your car insurer placed on the vehicle. I suspect the car involved in Shellys post was a used car where the depreciation can be less (In fact a lot of second hand cars are going up in value). With a new car as you will no doubt know the depreciation is pretty big so if there was a discrepency it might be a few hundred pounds but you could still end up getting thousands.

GAP cover is a great product when it does what it says on the tin, there have been a few posters on MSE recently who did not take it and are seriously out of pocket as they still have to pay their finance after their car was written off.

Like I said your car policy almost certainly has protection in it for the first year of ownership from brand new, so if your car was written off in the first year your car Insurer will probably pay the new list price

slipp_digby

shelly wrote: »

My Dad had a RTI Gap policy. For him it wasnt worth the paper it was written on.
He paid £5000 for his car and unfortunately it was written off a month later through no fault of his own.
He settled on a figure of £4700 with his ins co so we thought the RTI policy would pay out the remaining £300.
No chance! They used the Glasses Guide to value his car and valued it at something like £5300 so they said as it was worth more at the time of the accident than when he bought it there was no shortfall for them to pay.
We took advice from a solicitor and was told there was nothing we could do.
Another kicker is that as Dad bought it at the same time as the car he was charged £300 for the policy. Had I known he wanted such a policy I could have got it online for him for £100.

Lesson learnt and he didn't bother with such a policy when he eventually replaced the write off.

I'm sure someone has had better experience of these type of polices than us but this is our/my first (and last) experience of them and it wasn't a good one.

I might be being thick here but is it not a possibility that the GAP insurer didnt payout because there wasnt a GAP to pay?

insurance company settlement = £4,700
invoice price at garage = £5,000 minus extras bought with car (GAP @ £300) = £4,700.

was the purchase price of the car only £4,700 or £5,000?

as with all insurance products the lesson for the OP is to read the terms very carefully and understand the exclusions of the GAP policy before you purchase.

typically on RTI they wont payout for extras bought with the car e.g tax, insurance, GAP

they also exclude certain types of claims e.g. a total loss where the theif had access to the keys.

Glitterari

Sorry I wasn't clear in my original post - I got a new second hand car (it was new to me lol!)

I'm just glad it seems like a good thing to have - was worried it might be something similar to PPI - seems a good idea but rarely pays out!

Off to cancel this policy and get a far cheaper one.

shelly

slipp_digby wrote: »

I might be being thick here but is it not a possibility that the GAP insurer didnt payout because there wasnt a GAP to pay?

insurance company settlement = £4,700
invoice price at garage = £5,000 minus extras bought with car (GAP @ £300) = £4,700.

was the purchase price of the car only £4,700 or £5,000?

The purchase price was £5000. The GAP policy was £300 on top of that.

dacouch

Well done Glitterari thats very MSE, if you need more info on Gap Cover or links to companies MSE members have used / recommend do a search of Forums for "Gap Insurance" or "RTI"

slipp_digby

shelly wrote: »

The purchase price was £5000. The GAP policy was £300 on top of that.

ok so a £300 loss.

usually the GAP insurers require you to not accept any offer from your insurer until they have approved it (for obvious reasons)

bearing in mind the car was worth £5,300 was the answer not to push the insurers to settle for a higher value than £4,700 rather than blaming the GAP company?

*dons flak helmet*