GAP Insurance

snake16

I bought a vehicle (commercial use in haulage) last May. Today my insurers, who I have just renewed my normal policy with, have contacted me offering GAP insurance.

I explained that I paid cash for the vehicle & therefore there would be no finance/insurance pay out difference in the event of a write off.

The salesman then pushed the fact that in the event of a write off (regardless of blame/reasons), the insurance will pay out the FULL INVOICED PRICE (£13,000 + VAT) I paid for the vehicle less the accident insurance pay out, up to 3 years after purchase. Bearing in mind I do 60,000 plus miles per year, the vehicle will be, in 3 years time, worth less than £4,000. So, he is saying, that if, in 2 years 11 months time, I drive into a tree, assuming my insurers offer me £3,000 loss for the van, the GAP will send me a cheque for £10,000!!!!!.

I find that very attractive & as such probably unlikely!! (the cynic in me). The cost offered is £240ish per annum. What, if anything, am I missing?. Any comments appreciated, Thanks

Astaroth

They are offering you an alternate form of financial short fall insurance called Return to Invoice.

The main things to look at in the small print is firstly what they define as "invoice" price (assuming you are VAT registered then it will exclude VAT but normally also excludes things like delivery or tax disc etc) and secondly what they will pay the difference from.... whilst the sales pattern they typically say the difference between the settlement and the invoice the small print will often say that its the difference between what they think the settlement should have been and what their definition of the invoice price is. So if you paid £14,950 and receive a settlement cheque for £8,000 from your insurers they can say that they think the vehicle was £10,000 and net the delivery etc off the vehicle and so the invoice is actually only £12,000 so the RTI pays you £2,000 rather than the £6,950 you were expecting.

dacouch

There is also a limit on the amount they will pay you often between £5000 and £7000

Cazza

dacouch wrote: »

There is also a limit on the amount they will pay you often between £5000 and £7000

Depends on the policy you take out, different insurers have different limits. I used to work for a Volvo main dealer around 5 years ago, we had two back to invoice policies, one with a limit of £25,000 the other was £35,000, we sold these for £299 or £399. A policy with a limit of £7,000 would have been pointless for a brand new Volvo!

OP, read the T&Cs very carefully, but essentially, yes you have got the gist of the policy correct.

Astaroth

There are typically 2 limits.... 1 for the value of the vehicle insured and the second for the maximum payout.

So you can have a policy for a vehicle valued between £25k->£35k but the max payout is £7k

Cazza

Nope, definitely not when I used to sell it, although as I said that was 5 year ago. x2 types of policies, one was invoice GAP, the other was finance GAP. There were two claim limits on each policy, so a choice of 4 in total.

snake16

Many thanks for your very informative replies.

I have taken out the insurance knowing that I have the requisite 14 days "cooling off" so I will be reading the all the T & C's especially the smallest print I can find before deciding to continue.

Thanks again.