Gap insurance

littlemoney

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I am buying a new car and a friend has told me about gap insurance. I didn't even know that such a thing exists.

I have been reading my policy which states:-
New vehicle benefit
If your vehicle is stolen and not recovered or is damaged and the cost involved in the repair will be more than 60% of the manufacturer’s list price (including vehicle tax and VAT) at the time of the loss or damage we will replace your vehicle with a new vehicle of the same make and model.
We will only do this if a replacement vehicle is available.
We will only replace your vehicle if you and any other known interested parties agree. The vehicle being replaced will become our property.
If we cannot obtain a replacement vehicle of the same make and model we will pay you the market value of your vehicle and its fitted accessories and spare parts at the time of the loss or damage

The car I am buying (Kia Venga) will be replaced by a new model in 2015. Does this mean that my insurance company will not be able to provide a replacement and so will only pay me market value.

If that is the case would gap insurance help should the worst happen to my new car as I know new cars depreciate a lot in the first year.

Can anyone offer me advice please as this is my first new car for over 20 years. Thank you.

stator

Basically if your car is written offer GAP insurance covers you to repay the outstanding finance in full. eg £10k car your finance is £15k over 5 years. If your car is written off after year 1, the car insurance company would normally only pay you £8k (aprox market value of nearly new car) but the car finance company would demand say £12k (£10k + £2k interest already payable). The GAP insurance would pay out the £4k difference between £8k and £12k.

I don't know what insurance policy you have quoted there, but it does seem that there is a potential GAP issue if they can't get the same make and model.

GAP insurance is quite expensive, so if you can make other plans, eg a savings account, it might be better value for money.

InsideInsurance

GAP comes in three flavours:

Pure/ Financial/ Traditional GAP - is what Stator is talking about, deals with the gap between insurance settlement and the outstanding debt

Return to Invoice (RTI) GAP - is the "middle level" where they instead pay the difference between the insurance settlement and the original price you paid for the car

Replacement Vehicle (RV) GAP - is the one you are talking about where the difference covered is effectively the insurance settlement and the price of buying the same car again "new" today. So if you buy it brand new the then "new" means brand new. If you buy it as a 2 year old car then "new" means another 2 year old one even if yours is 5 years old when the accident happens.


Sometimes the financial gap is bigger than the RTI or RV gap and so many better policies of the later two types actually cover the greater of the traditional gap and the non-traditional



Its been a long time since I dealt with GAP from a professional point of view but certainly the last bullet that you quote suggests that if they cannot do a new replacement vehicle then effectively you only have cover for your policy excess as your normal Motor policy would pay out the preaccident value. It does sound as if you are quoting the marketing copy rather than the full terms though so I would double check the proper wording.

firefox1956

littlemoney wrote: »

I am buying a new car and a friend has told me about gap insurance. I didn't even know that such a thing exists.

I have been reading my policy which states:-
New vehicle benefit
If your vehicle is stolen and not recovered or is damaged and the cost involved in the repair will be more than 60% of the manufacturer’s list price (including vehicle tax and VAT) at the time of the loss or damage we will replace your vehicle with a new vehicle of the same make and model.
We will only do this if a replacement vehicle is available.
We will only replace your vehicle if you and any other known interested parties agree. The vehicle being replaced will become our property.
If we cannot obtain a replacement vehicle of the same make and model we will pay you the market value of your vehicle and its fitted accessories and spare parts at the time of the loss or damage

The car I am buying (Kia Venga) will be replaced by a new model in 2015. Does this mean that my insurance company will not be able to provide a replacement and so will only pay me market value.

If that is the case would gap insurance help should the worst happen to my new car as I know new cars depreciate a lot in the first year.

Can anyone offer me advice please as this is my first new car for over 20 years. Thank you.

Blimey how weird is this !!!!!
I signed up for a Kia Venga 2 petrol automatic last night.
I am looking at the same thing as you.
The words 'market value' on my insurance policy mean that I could be looking at a big loss if the car was written off ( god forbid )
Some insurance companies do offer a new for old in the first year but not Direct Line.
I was offered GAP/ RTI insurance by my Kia dealer for £368.
I will be buying my 4 year Replacement GAP Insurance here at a cost of £138.00 on the full repalcement value of the car. Good value I think..........
http://www.gapinsurance.co.uk
I part exchanged a 6 year & 11 month old Kia Sportage diesel auto which has been the best value car I have ever had in 30 odd years of motoring.
HTH

rs65

firefox1956 wrote: »

Some insurance companies do offer a new for old in the first year but not Direct Line.

Direct Line do provide it. Section F 4 - page 15.


http://www.directline.com/content/dam/dlg/Direct-Line/Products/Car-insurance/Product-pages/PDF/dl-car-policy-document.pdf

firefox1956

Thank you for finding that out for me !!
Missed it way down in the 'other benefits'
Appreciated...........

rs65

In the dim and distant past I recall taking great pleasure in settling replacement vehicle claims.

‘Mrs Smith, I have just heard back from the engineer and I’m afraid to say your car is beyond economic repair. I’m just about to order your new car – would you like the same colour again?'

A surprising number of people didn’t realise they would get a new car and you usually ended up with a customer for life.

I don’t recall not being able to get a direct replacement, perhaps a facelifted model. The chance of a real new model coming out in the first 12 months of ownership was slim. Even then, you could probably get an older generation for a few months. A Focus for example has been facelifted several times but it’s still a Focus. It’s a long time since the Escort became a Focus.

OP, check with your insurer how they would deal with the exact circumstances, in writing/email if possible.

dacouch

rs65 wrote: »

In the dim and distant past I recall taking great pleasure in settling replacement vehicle claims.

‘Mrs Smith, I have just heard back from the engineer and I’m afraid to say your car is beyond economic repair. I’m just about to order your new car – would you like the same colour again?'

A surprising number of people didn’t realise they would get a new car and you usually ended up with a customer for life.

I don’t recall not being able to get a direct replacement, perhaps a facelifted model. The chance of a real new model coming out in the first 12 months of ownership was slim. Even then, you could probably get an older generation for a few months. A Focus for example has been facelifted several times but it’s still a Focus. It’s a long time since the Escort became a Focus.

OP, check with your insurer how they would deal with the exact circumstances, in writing/email if possible.

Agreed, it's a little known part of a policy that most Insurers include.

Very satisfying informing a customer their car is being written off but they get a brand new replacement.

One of the MSE mods had her son's brand new car written off, unfortunately he was with Admiral (Who are one of the few companies not to include it) so he lost about £4k

perfect10

Several year ago my car - which was not brand new but new to me was written off a couple of months after purchase. It was not my fault and I was injured in the accident. I lost about £1500 in the settlement as could only get market value, although I appealed it got me nowhere. I have had gap insurance ever since just for peace of mind - can't afford this sort of loss!
My injury claim covered the difference which is wrong really as I had been hurt and spent several weeks recovering.

Nasqueron

I'm with More Than and they told me on the phone that anything over 60% of value in damage (up to write off) will be a new car in the first year - have got the GAP on my new car but need to get around to cancelling the garage one (£495) as I can get the same cover for 4 years (with a year deferred) for about £230 elsewhere

Nasqueron

lostinheaven wrote: »

£495?! Ouch!

Are you still within their cooling off period or are they gonna hit you with a cancellation fee for being outside of it?

Still inside 30 days, think I need to stick it in a letter formally to make it easier, salesman got a bit funny about re-doing the finance quote so figured I'd do it after, got the quotes already - cancel fee is only £50 but yes would be annoying