Gap insurance - new lease car - do I need it?

paulfoel

Obviously, I'll be moving my insurance over BUT what happens if it gets wrecked/stolen a week later.

I've heard there may be an issue with insurer not paying out full amount. Is this the case?

Seems a bit off to insure something and then be out of pocket? Surely insurance is there to restore you to the previous position?

Carrot007

Yes, pretty much the only time it is required is on a new car.


The car will depriciate faster than the "finance". The insurance puts you back in the same place with regards to a car of that age, not with regards to the "finance".


Anything other than a new car is ridiculous though. They tried it on me with a couple of year old car once! I did write it off within a couple of months and the insurance paid out more than I paid for it (it was a good deal).

martinthebandit

Just a heads up, if you do decide to buy gap insurance don't buy it from the garage, do an online search/comparison thingy.

AdrianC

paulfoel wrote: »

I've heard there may be an issue with insurer not paying out full amount. Is this the case?

Seems a bit off to insure something and then be out of pocket? Surely insurance is there to restore you to the previous position?

Insurance does restore you to the previous position...

Illustration:
You drive off the forecourt in a £20k brand new car.
After nine months, you are driving around in a 9mo car worth £15k.
It gets written off. So what do insurance pay?
They pay the £15k value at the time of the incident.
What else would you expect them to pay?

The problem comes because many people forget that it's simply not the insurer's problem that they still owed £18k on the finance... They were in £3k -ve equity on it, and they still are. It's just that that negative equity has been crystallised. That's what gap insurance covers.

For many insurers, the first year is covered with new-for-old if you own the car. But with a lease, you don't ever own it. Does the new-for-old apply? How much would you owe the lease company in such an example?

Scrapit

You probbably don't need it but for the price get it. If you do need it you'll be very grateful

Tokk

You only need it if you write it off (or someone else writes it off for you).

Basically it's a gamble - if you wind up not needing it then paying for it seems silly... But if you wind up needing it you'll be very, very glad of it.
A bit like comprehensive cover in some ways - it's above and beyond the minimum required, but if you end up needing to make a claim where you can't recover everything from the other party's insurers then you're still covered.

paulfoel

Apparently, because its a lease, in the even of a total loss, the lease company will want their 48 payments PLUS whatever they value it after 4 years (i.e. the total they plan to get for leasing then selling the car).

Obviously, this is a fair amount more than the insurance would pay up.

AdrianC

paulfoel wrote: »

Apparently, because its a lease, in the even of a total loss, the lease company will want their 48 payments PLUS whatever they value it after 4 years (i.e. the total they plan to get for leasing then selling the car).

Doesn't seem unfair, does it? You've contracted to pay them 48 x monthly + return their car.

Obviously, this is a fair amount more than the insurance would pay up.

There's yer answer, then.

castle96

Garage £399
Own (internet search/same cover) £184