Gap insurance

EssexExile

Check your current insurance doesn't already cover this.

neilmcl

EssexExile said:

Check your current insurance doesn't already cover this.

Most (if not all) insurers will cover new for old in the first year only and even then they may only pay out on the invoice value.

toadhall

Thanks, seems a bit of a mine field with which type of gap insurance to get. I've never had an accident or claimed on car insurance in the past

toadhall

I went with click4gap using MSE 25% discount, happy with price and policy, thanks all

neilmcl

toadhall said:

Thanks, seems a bit of a mine field with which type of gap insurance to get. I've never had an accident or claimed on car insurance in the past

It isn't really. A full explanations of the types are here - https://www.ala.co.uk/

Grumpy_chap

AdrianC said:

There's two types of gap.

The first just covers the shortfall from a payout to what you owe the financier.
The second covers the shortfall to the price you paid, or of an equivalent new car.

Neil seems to be suggesting there is a third type:

neilmcl said:

Replacement vehicle will make sure you have the funds to get a brand new, like for like replacement should you need to make a claim. Therefore replacement vehicle insurance is likely to pay out much more than an RTI product.

I have never understood GAP insurance and never taken it, though maybe should have done for my wife's car.  I always thought GAP insurance was really a product that is either mis-sold or obviously open to being mis-claimed against.  This always seemed to be to be taking insurance against depreciation, where depreciation is a certainty and it should not be possible to insure against a certainty.

Reading this thread, I remain confused.  Taking the thread as a whole, the types of cover seem to be:

1. GAP insurance = fill the gap between insurance payout in the event of total loss and remaining outstanding finance
2. Return to Invoice = fill the gap between total loss insurance payout and price paid for the car
3. Replacement Vehicle = fill the gap between total loss insurance payout and an equivalent brand new car as the original car (after price gone up etc)

Items (2) and (3) appear to be insuring against the certainty of depreciation.

neilmcl

Grumpy_chap said:

AdrianC said:

There's two types of gap.

The first just covers the shortfall from a payout to what you owe the financier.
The second covers the shortfall to the price you paid, or of an equivalent new car.

Neil seems to be suggesting there is a third type:

neilmcl said:

Replacement vehicle will make sure you have the funds to get a brand new, like for like replacement should you need to make a claim. Therefore replacement vehicle insurance is likely to pay out much more than an RTI product.

I have never understood GAP insurance and never taken it, though maybe should have done for my wife's car.  I always thought GAP insurance was really a product that is either mis-sold or obviously open to being mis-claimed against.  This always seemed to be to be taking insurance against depreciation, where depreciation is a certainty and it should not be possible to insure against a certainty.

Reading this thread, I remain confused.  Taking the thread as a whole, the types of cover seem to be:

1. GAP insurance = fill the gap between insurance payout in the event of total loss and remaining outstanding finance
2. Return to Invoice = fill the gap between total loss insurance payout and price paid for the car
3. Replacement Vehicle = fill the gap between total loss insurance payout and an equivalent brand new car as the original car (after price gone up etc)

Items (2) and (3) appear to be insuring against the certainty of depreciation.

I think you're missing the underlying purpose of GAP insurance, which is to cover any shortfall between the amount paid out by your main insurance for a write off or unrecovered (stolen) vehicle and the amount owed to the financier. All the different "flavours" of GAP insurance provide you with this, the only difference being the amount leftover to allow you to continue motoring without being out of pocket.

I'm unsure how you can "mis-claim" on GAP insurance but any mis-selling would largely be due to dealers offering products that were not required, ie, for cash purchases, or for their own products that were far more expensive than they needed to be and which could be gotten much cheaper had the buyer been allowed to shop around. The latter has largely disappeared due to the protections put in place in recent years by the FCA.

Grumpy_chap

neilmcl said:

I'm unsure how you can "mis-claim" on GAP insurance but any mis-selling would largely be due to dealers offering products that were not required, ie, for cash purchases, or for their own products 

We were offered "return to invoice" GAP for my wife's car, even though bought outright.  I've since learned that cash is not the best way to buy, but hey-ho.

Irrespective, the insurance to cover outstanding finance makes obvious sense.  The cover for more than that seems open to abuse:

• Buy a car, say £12k
• Buy 5-year GAP policy
• Drive car for 4 .5 years
• Leave handbrake off so car rolls into river
• Hey-presto, shiny new car and no depreciation on the last car...

Obviously, that's fraud, but it really has an element of "too easy".  It is not just my thoughts - that is exactly what the salesman set out when he was trying to sell the insurance (except he used the example of driving into a wall, which might hurt ).

AdrianC

Grumpy_chap said:

Irrespective, the insurance to cover outstanding finance makes obvious sense.  The cover for more than that seems open to abuse:

• Buy a car, say £12k
• Buy 5-year GAP policy
• Drive car for 4 .5 years
• Leave handbrake off so car rolls into river
• Hey-presto, shiny new car and no depreciation on the last car...

Obviously, that's fraud, but it really has an element of "too easy".  It is not just my thoughts - that is exactly what the salesman set out when he was trying to sell the insurance (except he used the example of driving into a wall, which might hurt ).

Your insurance premiums may prove to be a powerful disincentive.

Grumpy_chap

I agree, and I'd never do that.

It still seems as though the GAP insurance is providing protection against a certainty (depreciation) and something so highly likely as to ordinarily be considered a certainty (new car retail price inflation).  It is highly unusual to be able to insure against a certainty.