GAP Insurance

iolanthe07

Dealerships rely on selling extras like Gap Insurance so as to keep the sticker price of new cars as low as possible. You can save a lot of money by shopping around. The same applies to other extras like paint protection and Scotchguarding the upholstery.

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DrEskimo wrote: »

I found TotalGapLoss to provide one of the cheapest premiums with a simple single policy that is comprehensive. It combines finance, return to invoice and vehicle replacement all in one, so you will always get the highest amount of any of those three (this will typically be vehicle replacement). It also has no mileage limitations, and no limit on the shortfall it covers (other providers will ask you how much GAP cover you want to be covered for).

They also were the only provider to provide vehicle replacement cover on a used car for up to 5yrs.

Thanks for this, I have taken the plunge and bought 5 years of cover for £267. I actually do have 1 year replacement cover on my own insurance, but playing around with the sliders, 5 years cover starting today gives me 3 months extra cover for slightly less than the cost of 4 years cover, deferred for 9 months. (My car is 3 months old)

Supersonos

DrEskimo wrote: »

Correct. What swayed me was that it's quite common that your insurance company will only likely offer you about £8k, meaning you still have a shortfall to cover even just to replace your car like-for-like...! GAP insurance will also deal with the valuation negotiations for you (so they can minimise their losses), so it has a couple of other perks, as well as covering the cost of depreciation.

So this is what I don't get. One thing we all know about cars is that they depreciate. Why would you insure against that?!

uknick

Supersonos wrote: »

So this is what I don't get. One thing we all know about cars is that they depreciate. Why would you insure against that?!

Look at it another way. You enter into a five year lease agreement for the car. Car is written off after 2 years but you still have three years to pay on the agreement and the insurance write off value is only half of what you need to clear the finance. GAP insurance can give you enough to clear the finance. Otherwise you could up paying for a car that no longer exists.

Supersonos

uknick wrote: »

Look at it another way. You enter into a five year lease agreement for the car. Car is written off after 2 years but you still have three years to pay on the agreement and the insurance write off value is only half of what you need to clear the finance. GAP insurance can give you enough to clear the finance. Otherwise you could up paying for a car that no longer exists.

The same would be true if I didn't have finance and paid cash up-front. Cars will cost you money, why on Earth would you pay out more money in order to insure against it? Sounds like insurance companies creating an unnecessary insurance and convincing people they need it.

neilmcl

Supersonos wrote: »

The same would be true if I didn't have finance and paid cash up-front. Cars will cost you money, why on Earth would you pay out more money in order to insure against it? Sounds like insurance companies creating an unnecessary insurance and convincing people they need it.

Unnecessary? OK, lets put it like this using your earlier example. You get a £20K on finance and 2 years later it's written off. Your insurer values and pays out £8K, you actually owe the finance co. £12K, so without GAP you now have no car and you're having to pay out £4K to cover the shortfall. All for not much more than £100 you would have been completely covered and have enough to be back in another car. Does this still sound unnecessary?

Supersonos

neilmcl wrote: »

Does this still sound unnecessary?

So it's just another way for people who can't afford to buy a car to buy a car they can't afford.

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Supersonos wrote: »

The same would be true if I didn't have finance and paid cash up-front. Cars will cost you money, why on Earth would you pay out more money in order to insure against it? Sounds like insurance companies creating an unnecessary insurance and convincing people they need it.

The general rule with insurance (when it isn't a legal requirement) is only insure what you can't afford to replace.


I don't insure my 'phone. If I'm stupid enough to drop it down the toilet, it's my own fault, and I can easily buy another, using my disposable income (so no sweets/beer that month)



I saved up for years to buy a new car. Should I write it off in the next 5 years, I could never afford another, so I'm insuring the 50% that I could lose for just over 1% of the price of the car. Worse, if someone else writes it off, say one of the stolen cars being joyridden around loses it and lands on top of my car parked "safely" on my drive I'd feel gutted.


True, in La-La land I can buy an identical aged replacement for what the insurance pay out, but in the Real World, I could never buy a car that has been cared for like mine.




Seems a good deal to me, I'm betting £260 that I can manage to get another brand new car within the next 5 years, (given that I can't deliberately crash this one or set fire to it myself ) It is certainly better odds than the Lottery, and only a fraction of what the Lottery costs

neilmcl

Supersonos wrote: »

So it's just another way for people who can't afford to buy a car to buy a car they can't afford.

It's nothing to do with the "affordability" to buy a car. It's about limiting your risk, as is the case for all insurance.

DrEskimo

Supersonos wrote: »

The same would be true if I didn't have finance and paid cash up-front. Cars will cost you money, why on Earth would you pay out more money in order to insure against it? Sounds like insurance companies creating an unnecessary insurance and convincing people they need it.

I do tend to agree, but since the cost is so low I don't really mind. For me, with an EV where the prices are appreciating and the fact that writing off an EV in even a small collision is easily done, I felt it was probably worth it.

I would struggle to justify it on a standard ICE car, but again, since the cost is so low I might be persuaded to anyway. My insurance for the Zoe was only £288 for the year, so paying £330 in total is still a reasonable price given out how much value I could get from the policy.

Completely understand why you might not bother though.