Gap insurance types

System

If I bought a VW FOR about £17,500 and it’ll be worth about £15,000 and the outstanding balance on my personal loan is about £13,500 (as about £4000 was my deposit (most of it from my previous car and a little extra to make it up to £4000), so it might be worth it for the first year but as you say depends how much your willing to risk it.

srisport

lostinheaven wrote: »

Respectfully, that's a short sighted view.


There's Finance GAP insurance - which aims to cover the difference between your motor insurance payout and the amount outstanding on finance at the time of claim.


Then there's Invoice GAP insurance - which aims to cover the difference between your motor insurance payout and the original invoice price that you paid for your vehicle when you first bought it.


Finance GAP insurance is the most inferior type of GAP insurance because there comes a point during a Finance GAP insurance policy term, when it will no longer be of any benefit (the amount outstanding in finance is less than your car is worth) and because of this, it's no longer sold as a standalone product by most companies that used to sell it. In simple terms... with a Finance GAP Insurance policy the "gap" (the potential payout) gets smaller with the passing of time.


Invoice GAP insurance is quite the opposite. In the considerable majority of cases your vehicle value will continue to fall (depreciate) away from that original vehicle invoice price thus, the "gap" gets bigger with the passing of time.


The problem with a "traditional" Invoice GAP insurance policy though is that if you finance most/all of the vehicle invoice price there's a period of time when the amount owed to the finance company is greater than the original invoice price which means that for a short period of time a Finance GAP insurance policy would actually stand to pay you more money than an Invoice GAP insurance policy.


This... is why most motor dealers and specialist providers' "Invoice GAP insurance" policies are now combinations of both Finance & Invoice GAP insurance.


This means that the policy would aim to pay out the difference between your motor insurance payout and THE GREATER OF either the amount outstanding on finance at the time of claim OR the original invoice price.


The difference in price between a standard Finance GAP insurance policy and the combined Finance/Invoice GAP insurance policies is often negligible. Further, the difference in cost between a 1, 2 & 3 year policy is also not usually great either.


If you bought just a one-year policy duration and then your car was written off in the second or even third year, would you not kick yourself for not having a paid a fairly nominal sum extra to have that 2nd / 3rd year covered and then be getting paid back up to the original price you bought your car for?

Hope you don't mind me jumping in on this thread.

I have just bought a pre owned car for around the 24K mark and GAP insurance has been mentioned (the sales person called it asset protection as it covers the invoice price rather than the finance owed).

In the past i have simply ignored this option and just paid for the car but this time i am having second thoughts because of the cost of the car I'm buying and the fact that i am fully funding the purchase with substantial savings along with a small credit card transaction which will be paid off within 2 years.

Silly question but do you think it would be sensible to take out the Asset protection (which will cost £500 for 4 years) because it is a lot of money which i could quite easily loose if the car was written off within the first couple of years, the car is only 12 months old.

The sales person has told me that i have 14 days from the day of purchase to buy it otherwise it can't be done, and can this product only be bought through the dealership or can i find a better deal elsewhere?
I have also be given the option to spread the cost of the insurance over 10 months interest free which could benefit me financially.

Any help much appreciated.

Regards.

srisport

lostinheaven wrote: »

What the dealer has offered you is otherwise known by its more common name of "Invoice GAP insurance". They call it "Asset Protection" instead because if you search for "Invoice GAP insurance" online you'll find various providers that are much cheaper than they are. Search for "Asset Protection" and you won't find as many - you'll find mostly motor dealers!


Since September 2015 motor dealers have been legally obliged to make it clear to you that GAP insurance is an optional insurance policy that is available from various sources, not just from them. If they've told you that you won't be able to buy it at all, anywhere, more than 14 days after taking delivery of the vehicle, they're lying to you (and breaking the law in the process) - though I suspect they're referring to their own specific policy with that 14-day restriction and leaving the seed of doubt/fear in your mind to infer the rest.



Is it sensible to buy GAP insurance? Possibly. Probably! But not remotely sensible to buy it from the dealer and particularly not at an eye-watering £500!


A quick check with gapinsurance.co.uk shows them quoting £191.61 and/or ALA.co.uk quoting £195 for 4-year policies. Both with policies underwritten by syndicates of Lloyd's and both with policies that you can buy considerably more than 14 days after buying the car should you so wish.


Save your money, avoid the rip-off motor stealer.

Thank you for your response,

Your right the sales person was probably referring to their particular policy when he mentioned the 14 day window but not once did he mention that i can buy it else where (probably because he doesn't want to lose his insurance commission). But the more i thought about it the more i realised that if its insurance then i bet i could buy it cheaper elsewhere.

And just as you stated, i did a quick google for gap insurance and found quotes very similar to the ones you found.

I pick the car up in 1 week so will see if they can beat my quotes but i highly doubt it, but as the saying goes - you don't get what you don't ask for.

Thanks again for your help.

Regards.