Gap insurance

mikepoole

I have read so many confusing things about gap insurance and would like to gather opinions here

We are buying a VW Tiguan, 6 months old (registered Sept 2013) from a dealer for £25k (£3k px on ours and the rest as our money)

To get the servicing for 3 years and £500 off the price, we are paying through finance which we will then "pay off in full" after 3 months, so for 3 months, we will technically not own the vehicle as we have not finished the agreement and then 3 months in, we will

Do I need to take our gap insurance? And because the 3 months will be on finance, should it be replacement or RTI insurance if so?

(NOTE: I am yet to contact my insurer to find out if they do new for old on cars under 12 months old)

Many thanks

Mike

iolanthe07

(NOTE: I am yet to contact my insurer to find out if they do new for old on cars under 12 months old)

That's what you need to do then. I bought a new car last week and almost fell for gap insurance until I discovered that my insurer (Saga) covers me new for old for two years. I nearly wasted £300.

anotherbaldrick

At 6 months, providing you are buying right the vehicle will have suffered the initial drop from the tax and vat and you should not be looking at any GAP . Bearing in mind you can put an Tig Escape new on the road from £25K are you happy you are getting a deal ? Is it ex demo , what does it have on the clock. Assume you have taken the finance to get the current £2750 dealer discount

mikepoole

It is the R-Line, so closer to £35k on the road IIRC

We are happy enough with the deal, just confused about the gap insurance

anotherbaldrick

mikepoole wrote: »

It is the R-Line, so closer to £35k on the road IIRC

We are happy enough with the deal, just confused about the gap insurance

In that case I don't think you are looking at any gap to cover , have fun they are a fantastic car. Prefer driving my Tig than the BMW

CB1878

I am not sure your motor insurer will provide replacement cover unless the vehicle is brand new when you buy it, ie you are first registered keeper on the V5.

The question of Gap really comes down to if you can stand to lose money if the vehicles ends up stolen or in an accident, and 'written off' by the motor insurer.

If you keep the vehicle say 5 years, then you will inevitably lose money if something happens 4 years later. Like all insurance it is covering an unlikely event, but there is not doubt the vehicle will be worth much less in a number of years regardless of how good a deal you have got now.

anotherbaldrick

CB1878 wrote: »

I am not sure your motor insurer will provide replacement cover unless the vehicle is brand new when you buy it, ie you are first registered keeper on the V5.

The question of Gap really comes down to if you can stand to lose money if the vehicles ends up stolen or in an accident, and 'written off' by the motor insurer.

If you keep the vehicle say 5 years, then you will inevitably lose money if something happens 4 years later. Like all insurance it is covering an unlikely event, but there is not doubt the vehicle will be worth much less in a number of years regardless of how good a deal you have got now.

Comprehensive insurance will give cover for the market value of the vehicle and the price the OP has bought at he has not overpaid on market price but has a very competitive purchase .

jimjames

I would never bother with Gap insurance. It just seems like another rip off like PPI.

Perception of risk does interest me and how we consider various scenarios. Some risks can be mitigated, others are worth insuring for the loss than a certain event would cause but I think most people don't fully appreciate weighing up risk.

You are paying for a policy that will pay out

• if you have an accident
• if the car is a total write off
• if the value is less than the agreed sum

So 3 events have to happen. I'd be interested to know how many new cars get written off each year. I'd guess as a percentage of accidents it is a very small amount. Perception of risk

Also at the end of 3 years or whatever your car is now depreciated and you have an asset worth less than the value when you bought. Gap insurance is no good at this point just to help you overcome depreciation for your next vehicle.

I'd just keep the money in the bank towards any unexpected bills.

Mobeer

Some good guidance:
https://www.moneyadviceservice.org.uk/en/articles/do-you-need-gap-insurance

and the importance of shopping around is shown in the table here
http://www.which.co.uk/money/insurance/guides/gap-insurance/return-to-invoice-gap-insurance-review/

CB1878

anotherbaldrick wrote: »

Comprehensive insurance will give cover for the market value of the vehicle and the price the OP has bought at he has not overpaid on market price but has a very competitive purchase .

Of course, but will the market value settlement from the motor insurer always be £25,000? (as the OP has paid) In three, four or five years time the motor insurer will offer far less, would you not agree?

If you accept that the value will drop then of course there is a case for Gap (RTI or VRI) if the OP wants to protect the initial £25,000, or the replacement cost of another 6 month old example into the future.

You do not have to have it, but like any insurance I am sure you would be glad of it if the worst was to happen.

I have not had an accident for 15 years, but I always have fully comp insurance, why not go for 3rd party? Same basis I would always look at a Gap policy, you do not know what may happen and I have invested a large amount of my money in the vehicle.

CB1878

jimjames wrote: »

I would never bother with Gap insurance. It just seems like another rip off like PPI.

Perception of risk does interest me and how we consider various scenarios. Some risks can be mitigated, others are worth insuring for the loss than a certain event would cause but I think most people don't fully appreciate weighing up risk.

You are paying for a policy that will pay out

• if you have an accident
• if the car is a total write off
• if the value is less than the agreed sum

So 3 events have to happen. I'd be interested to know how many new cars get written off each year. I'd guess as a percentage of accidents it is a very small amount. Perception of risk

Also at the end of 3 years or whatever your car is now depreciated and you have an asset worth less than the value when you bought. Gap insurance is no good at this point just to help you overcome depreciation for your next vehicle.

I'd just keep the money in the bank towards any unexpected bills.

Your three events, perhaps with a different slant:

• Gap Insurance will cover accident, fire, theft, flood etc. ie not just accident.
• Did I see 600,000 cars written off each year somewhere? 30 million vehicles on UK roads, so is that 2% chance a year?
• The vehicle has lost value since you bought it..............

So basically you are insuring against depreciation (guaranteed, could be 50% plus in three years), in the event that your car is written off by your insurer (low occurrence at 2%).


So potentially low risk, but highish settlement if you claim.



How much more would you pay for Fully Comp Insurance above 3rd party? £50, £100 a year? If you Gap cover equated to £30 quid a year (if you go online rather that through the motor dealer) then I personally do not see it as bad value.



To label it as a 'rip off like PPI' is just too sweeping in my view. Does Gap Insurance have benefits to the policy holder? If it was free would you have it? Gap Insurance is a 'marmite' type of insurance, but if it is cheap enough then I personally would consider it.



Like any insurance you need to look at the risk against the cover provided, and take a personal view.