GAP insurance questions

madsaintuden

Hello,

I have read the gap insurance thread & am confused. THe websites also confuse me & I was wondering if a helpful soul could explain to me differently so I 'get' it & know which I need to buy.

I am buying a secondhand car from the dealership.

car = 4750, with the interest etc the finance agreement is for £6500 aproximately.

lets say my car gets written off in one years time and I get £3k from the insurance but I have paid only £1560 off my total so still owe about £4940 what type of GAP will pa off the £4940 so that I am basically free to start again?

or is there a GAP that will pay that & also also pay me my deposit back so that I can put a deposit down & start again?

Thank you for your paitents.

Anita.

Buzby

GAP insurance can be good value for new cars, but s/h? There may be additional terms that make taking out the policy ill advised. For starters, it all hinges on how the settlement is calculated, a car that is new has a confirmed price.

Any replacement vehicle will have a variable price depending on usage, so check what the cover is before parting with any money.

InsideInsurance

madsaintuden wrote: »

car = 4750, with the interest etc the finance agreement is for £6500 aproximately.

lets say my car gets written off in one years time and I get £3k from the insurance but I have paid only £1560 off my total so still owe about £4940 what type of GAP will pa off the £4940 so that I am basically free to start again?

No GAP pays you £4,940

Your insurers pay the £3k to your finance company meaning you owe £1,940 and the Financial GAP insurance will pay that off for you - the reality is the number is lower than that because an early settlement will be less than paying to term, lets say £1,000.

In addition to Financial GAP you also get Return to Invoice and Replacement Vehicle which may or may not be combined with Financial GAP

So, with RtI you get the GAP between the insurance settlement and the price you paid (the invoice price) so £1,750. If it was a combined RtI and Fin GAP then they'd see that the early settlement figure is £1k and the Invoice gap is £1.75k so they'd pay the higher of the two.

With Replacement Vehicle you get the GAP between the insurance settlement and the price you'd have to pay today for the same vehicle as you bought 1 year ago. So if you bought a 3 year old Focus 1.6 then they'd price a 3 year old Focus today and say they'd now be £5,000 then as above the GAP this time would be £2k

With RV you can obviously win or lose depending on which way the market for secondhand cars moves -v- RtI.

RV and RtI can be bought even on a cash purchase where as Financial GAP is only relevant for a car bought with finance.



As has been said, whilst this is how things work at a headline level the reality is the quality of product varies massively and exactly what is and isnt included in the calculations can vary (eg RtI may or may not include the delivery costs) significantly.

BJV

Was going to post but Inside Insurance has explained it perfectly! Although I would add that you also need to check for things like....

Does the policy cover warranties or paint protection?
Can you transfer your gap insurance if you change your car mid way through?
Can you cancel and if you do, do you get any money back?
Is the price you have paid for your car limited to a guide price. this is because some will cap the value of your car inline with a guide price and some will not?
Do you have to pay any excess?

This might help http://www.which.co.uk/money/insurance/guides/gap-insurance/

madsaintuden

thank you all for your replies.

I am still undecided on which company to go with but I think I want VR cover as even that is £200 less that the dealer is offering me when i go online.

parabox

I was just offered GAP insurance by Evans Halshaw for 8.13/m for a 13k car. Its definately not a good deal to get this from a dealer. The first company I tried online was 60% less than Evans Halshaw.

BJV

price is important but they should never be as important as what your policy does and how it covers you.

That said you can save a lot of money buying online.

1 - Insurance Premium Tax - Your dealer must charge you 20%, independent brokers like Easy Gap only have to charge 6%

2 - Volume of Sales - Your motor dealer can only sell a Gap Insurance policy to a customer it sells a vehicle to. XXX can sell a policy to any of the 30,000,000 vehicle owners in the UK who qualify for cover. The volume of business produced by xxx means we can drive competitive wholesale premium prices with insurers.

3 - Cut out the middle man - All business' exist by making a profit, and XXX is not different. However, car dealerships are expensive places to run, and often commissions are earned by the salesperson, the business manager and other dealership staff when additional products such as Gap Insurance are sold.

http://easygap.co.uk/414/gap-insurance-cost/
Taken from

Which money have also done a review the link is above.