Gap Insurance for a used vehicle 30 September 2022 at 4:14PM in Motoring 4 replies 114 views

jennye55

Hi
im buying a used car (5 years old) and taking out HP to finance some of it. Is it worth me getting a GAP insurance policy? Advice online seems conflicting when it comes to used cars.
Thank you 😊

Ebe_Scrooge

Depends on the value of the car, and the length of time the GAP insurance covers you for.  With a new car, it'll drop in value quite substantially the moment you drive it off the forecourt.  A 5-year-old car has already taken its biggest hit in depreciation.  Yes, it'll still be worth a bit less (if you paid £10,000 for it, you can bet that the dealer wouldn't offer you £10,000 to buy it back off you tomorrow).  But the difference between what you paid and what it's "worth" (always a subjective figure) will be far less than on a new car.  How much is the insurance going to cost?  It's always a bit of a gamble, but - very, very generally speaking - it's not usually worth it on a slightly older used car.

jennye55

Thank you for replying 😊
It’ll be £160 for 4 years with ALA.
im paying £13500 for the car with a £5200 deposit, so taking out finance on the rest 

Ebe_Scrooge

OK - so basically £40 a year, sounds quite reasonable actually.  It's different if you're paying cash, of course, it's arguably less of a worry.  But if you've got finance, then it may be worth it for peace of mind (if the car gets totalled then you still have to pay off the finance).

It's your call - insurance, any insurance, is always a gamble as to whether it's worth it.  But for £160 extra on top of the 13 grand you're paying for the car ... I'd be tempted to say "go for it".  Hopefully you'll get to the end of the four years and say "well that was a waste of money" - because you won't have needed it, which will be a good thing!  But it'll give you that peace of mind for very little outlay.

DrEskimo

Ebe_Scrooge said:

Depends on the value of the car, and the length of time the GAP insurance covers you for.  With a new car, it'll drop in value quite substantially the moment you drive it off the forecourt.  A 5-year-old car has already taken its biggest hit in depreciation.  Yes, it'll still be worth a bit less (if you paid £10,000 for it, you can bet that the dealer wouldn't offer you £10,000 to buy it back off you tomorrow).  But the difference between what you paid and what it's "worth" (always a subjective figure) will be far less than on a new car.  How much is the insurance going to cost?  It's always a bit of a gamble, but - very, very generally speaking - it's not usually worth it on a slightly older used car.

The GAP would cover the shortfall with what the insurance company pay out, and you can almost certainly guarantee that will be less than what you paid...

For me I see it as a decent price to pay just so I don't have to worry about negotiating (/arguing) the value of the write off with insurance company, and inevitably being left with a price that can barely me get me into the same car as before the crash, let alone one similar to the day I purchased it.

I got a 5-year policy for mine, as it was only an extra £50 a year, and given mine was a 2-yr old EV, I knew there was a new model with a larger battery and therefore larger price coming. To get a similar 2-yr old model would cost me a lot more given the increased battery capacity. I think if I were to have a write off today the policy would be worth in the region of £7-8k.