Guaranteed Asset Protection (GAP) insurance

Peloton

Any tips or recommendations regarding GAP or RTI (Return To Invoice) insurance when buying a car? I gather this insurance will cover the inevitable difference between what you pay for a car and what your insurer pays out if the car is written off or stolen and not recovered. I can find nothing on Martin's site about GAP insurance, but we were offered it by the car salesman and, since I know it will be much cheaper to get direct, I would welcome some advice!

Altarf

There are two main sorts of GAP insurance -

The first pays you the difference between what you owe on finance and what you get paid out by the insurers. If you have a new car on finance this may be a good idea, as the car will depreciate faster than you pay off the loan.

The second pays you the difference between the price you paid for the new car and what you get paid out by the insurers. Therefore if you wrote your car off after a couple of years you would get a brand new one. Check your insurance policy as a lot of policies will replace a brand new first owner car with a new one if it is written off within the first 12 months. Therefore if you are sold a 3 year policy, you may only be getting 2 years of benefit.

If your car is written off the insurer *should* pay you the amount you would need to spend to buy a car of the same sort, age, description, condition, etc that was written off. NOT what you would have got if you sold the car that was written off. In other words, the insurer must put you back in the position you were before the incident. Inevitably the insurers try to wriggle off the hook, and some arm twisting may be required to make them meet their obligations.