Car Gap Insurance

scotpics

I have just bought a new car and have been offered Gap insurance at £350 for 3 years. This seems expensive. Can anyone advise, is Gap insurance worth buying and if so, where from and how much should I pay for a car costing £19,000.
Thanks

anna42hmr

as for wether gap insurance is worth buying, it depends on how much you have on finance, and if your vehicle is written off during the terms of the insurance cover (ie in the first 3 years) would there be a shortfall between the finance you still owe, and the market value of the car that the insurers would pay out.

whatamess_2

£350 pounds for three years piece of mind, that if your car is written off the shortfall between what is paid by the insurer and what you owe is covered.


That shortfall could potentially be a few thousand pounds.

£350 verses £3k+ no contest.

a11waysindebt

Surely the finance company would have taken out insurance to cover this.

anna42hmr

a11waysindebt wrote: »

Surely the finance company would have taken out insurance to cover this.

to my knowledge, no. as if a car is written off, the ins co will pay the settlement owed to the finance company, any left over then goes to the policy holder,

however if there is a shortfall, ie if the value of the car is £7000 at the time of the accident, but the remaining balence on the finance is £11000, then the customer has to pay the remainder of the amount to the finance company, even though they no longer have the car (beit paying in lump sum, or continued monthly payments etc).

whether gap insurance is right for a person depends on the indivdual circumstances and what finance is taken on a car,

for instance if you bought your £19000 car, and paid £12000 in deposit (ie cash payment, part ex) and only have the £6000 balence on finance, then it is unlikely that if you have an accident in the first 3 years that the payment for the market value is less than £6000, so the insurance payout would be more than the origional £6000 balence on finance, so gap may not be such a good buy in that circumstance

however if you bought your £19000 car with only £500 cash deposit, and £18500 is on finance, then if you have an accident and the car is written off, then gap insurance would be a good idea, as cars loose their value drastically over the first couple of years, so would be more likely that the market value of the car is less than the outstanding balence.

and dont forget when you are working this out, that you need to factor in the interest (if there is any) into the finance agreement to know what the full amout you owe to the company

raskazz

When you say 'new' is the car brand new?

If it is, most motor insurers have a clause in their comprehensive policies whereby if you have owned the vehicle from new and it is written off in it's first year then (subject to a few conditions eg mileage and availability in the UK) they will replace it with a brand new car rather than settling with cash.

So in those cases the gap insurance is actually only providing you two years of cover not three.

olddogbreath

scotpics wrote: »

I have just bought a new car and have been offered Gap insurance at £350 for 3 years. This seems expensive. Can anyone advise, is Gap insurance worth buying and if so, where from and how much should I pay for a car costing £19,000.
Thanks

We are about to buy a new car for £6K. Gap insurance offered at £179 for 3 years. But type in Gap insurance on Google and quote at £109. Seems a lot better. Hope this helps.

dikvdyke

I would always take out gap insurance for a new car or second hand one, if it costs several thousand pounds. We've had cars written off twice and we've lost a lot of money having to replace those cars with only the market value from the insurance. Very helpful guy can be found on the phone at surfandprotect.

lisyloo

Surely the finance company would have taken out insurance to cover this.

I strongly suspect the finance company will go after the consumer if there is a shortfall, but even if not, insurance companies DO try to recover their losses where possible.
An insurance company will only go short if the money is not recoverable e.g. 3rd party is unidentified or a homeless tramp.
Any 3rd party with the "means to pay" i.e. anyone with a job or a house, would be pursued by an insurance company.