I ask because brother is buying a new car and the salesman is keen to tuck him up with a policy.
A quick Google suggests there are a few different types, but I'm struggling to see the need if you are paying cash for the car, which brother is.
The phrase I keep coming back to is your motor insurer has to put you back into the position you were in prior to the claim.
If that's so, why the need for a GAP policy?
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My case explains why you need cap insurance:-
If it is written off and they offer you a pay out it is likely to be less than owed on the finance in the first couple of years. The gap covers the difference
It is very cheap mine was something like £130 for the four years.
Don't let the dealer push your brother into it, he can buy it himself from the net far cheaper. It is also ilegal to suggest he needs to buy a GAP policy from them in order to get finance which one dealer tried on with me.
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If the car is new, many insurance policies will provide a new car in the first year if the vehicle is written off.
Therefore try to buy GAP insurance that is deferred for a year if this is the case and save a bit of money.
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It depends on the policy, my Directline policy did that but my Admiral one dosn't.
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NFU (there could be others) provide 2 years replacement new car cover as part fo their normal policy if the worse should happen...the car must be brand new and the policyholder the first regd owner.
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To make a profit for the salesman. SWMBO had this plus Autoglym (or was it 3M?) treatment pushed at her. Salesman was reasonable and backed off straight away. Others are pushy. I got the impression he was offering it because he had to. Having asked, he could tick the box.
John
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>> I'm struggling to see the need if you are paying cash for the car, which brother is.
I'm struggling to see it too - surely if the car's not on finance then he doesn't need cover to pay the finance off!
...Is it me?
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The most common kind of GAP cover is to cover any possible shortfall on an insurance payout versus any outstanding finance. However it is also possible to buy Return To Invoice (RTI) GAP cover which does what it says; in the event your car is written off during the term of the policy it will pay the difference between what you car insurance pays out and the invoice price. Effectively making for "new for old" car insurance.
As is pointed out above though most comprehensive policies will provide a replacement new car in the first, or sometimes second, year and the chances of your car being written off in the first place are so low that IMO the cover is unnecessary.
Peter
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>> To make a profit for the salesman. SWMBO had this plus Autoglym (or was it
>> 3M?) treatment pushed at her. Salesman was reasonable and backed off straight away. Others are
>> pushy. I got the impression he was offering it because he had to. Having asked,
>> he could tick the box.
>> John
>>
Correct - because they are sold as insurance policies then they have to "offer" them to you. A dealer told me if they didnt tick the box to say it had been offered and you then suffered a loss in the future you could pursue them for any losses - i.e. shortfall on finance if they hadnt offered you GAP. Nots ure if that applie sto the autoglym stuff though
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I think the OPs brother needs to get some quotes, I have a feeling the GAP here will be very very cheap. If I am a high risk and get it for £130 I then it just shows how cheap it can be.
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>> Correct - because they are sold as insurance policies then they have to "offer" them
>> to you. A dealer told me if they didnt tick the box to say it
>> had been offered and you then suffered a loss in the future you could pursue
>> them for any losses - i.e. shortfall on finance if they hadnt offered you GAP.
That is just rubbish, as explained clearly and accurately by Mad Maxy here
www.honestjohn.co.uk/forum/post/index.htm?t=49295&v=t&m=553607
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"I ask because brother is buying a new car and the salesman is keen to tuck him up with a policy."
If he doesn't buy it then he will be "Tucking himself up in the event of a claim"
I had gap when I bought a brand new jaguar in 2003, in 2005 it was written of in a motorway pile up !
The insurance company NU offered £16500 for its value, the Gap then gave me another £10k to go buy another brandnew one ! otherwise I would of ended up with iether 10k bill or someones elses s/hand replacement
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For £130, you have a three year guarantee of no surprises where your hard earned disappeared in the event of a write off.
That autoglym life shine stuff is surprisingly good, but get a pro detailer to apply rather than the dealer. It's all in the prep before it goes on,and dealer does no prep other than a gritty sponge being drawn over the paint :-)
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I have the Return to Invoice type on the Skoda. As the salesman suggested, what I need to do is write her off in a smash just before the finance finishes to make myself a cash buyer for the replacement.
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>> The insurance company NU offered £16500 for its value, the Gap then gave me another
>> £10k to go buy another brandnew one ! otherwise I would of ended up with
>> iether 10k bill or someones elses s/hand replacement
>>
In other words, GAP insurance is to replace old and used with brand new - you are paying for betterment in the unlikely event of a write-off.
If you want like for like, i.e. old for old, then to you don't need GAP.
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It really depends on the cost. If it is as cheap as what I paid it is worth it, if it costs £1000 then it is a gamble.
All insurance is a gamble the only one which is not is third party as that is a legal requirement, anything extra is a gamble and in terms of statistics the insurance company will win BUT if the worse does happen you will wish you had paid for the extra benefits.
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We've had return to invoice GAP insurance each time we've bought a new car since 2001. I can get cheap GAP insurance through CSMA, - sometimes for half the price dealerships charge. Often dealers will match the price.
When one considers the cost of GAP insurance against the cost of the car, it usually works out quite cheap. For example, on my current Auris the cost of the GAP insurance for three years cover is 1.14% of the car's purchase price.
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>> usually works out quite cheap. For example, on my current Auris the cost of the
>> GAP insurance for three years cover is 1.14% of the car's purchase price.
>>
How much is the percentage compared to the "GAP" in the price between its 2nd hand write-off value and the purchase price? It is this "GAP" that you are paying the insurance for.
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If my car was written off today, the GAP insurance I purchased represents approx 2.37% of the gap between the market value and the invoice cost. Obviously this percentage reduces as the car gets older, and the gap between market value and invoice cost widens.
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>> >> Correct - because they are sold as insurance policies then they have to "offer"
>> them......
>> That is just rubbish, as explained clearly and accurately by Mad Maxy here
>> www.honestjohn.co.uk/forum/post/index.htm?t=49295&v=t&m=553607
>>
Seems much the same point to me. FSA requires them to document offers made and advice given. No documentation and dealership may be liable as failed to offer proper advice.... Or am I missing something??
The motor trades inter-realtionship with FSA does seem unreasonably complex. I've certainly had it mentioned as a reason why it's difficult for the dealer to advise on extended warranties after expiry of the provided with the vehicle.
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>> Seems much the same point to me. FSA requires them to document offers made and
>> advice given. No documentation and dealership may be liable as failed to offer proper advice....
>> Or am I missing something??
>>
There is absolutely NO requirement to offer you any insurance at all.
The car trade makes a big margin from the finance and insurance they sell. Because they sell the financial products, they are subject to FSA regulations. But those FSA regulations do NOT require them to offer you any insurance or financial product of any kind whether or not that trader offers that product as part of their portfolio.
Salesman will tell you that they are required by FSA rules to inform you of these products. Not so, it is utter baloney.
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...Salesman will tell you that they are required by FSA rules to inform you of these products. Not so, it is utter baloney...
The concept of utter baloney from a car salesman is one I find easy to accept.
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>> Salesman will tell you that they are required by FSA rules to inform you of
>> these products. Not so, it is utter baloney.
>>
Accept that no FSA requirement. However, if I were 'risk managing' this area than, given the level of compo for FSA infringements and the number of no win/no fee sharks in the field I'd want want a clear account of product offered/declined on each file.
Better than a fight five years down the line.
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Mrs F was ambushed in the closing moments of collecting her C3 last year with a several page assesment of finances/circumstance that ended in the pushing of Gap insurance. Salesman said he was duty bound to do this... she didn't buy it.
More recently a contact of mine told me he'd been sold Gap insurance for a used car purchase.... this despite it being a cash purchase and the guy having enough money to write a cheque for the full replacement cost several times over without the slightest quibble. He'd been given the impression it was to help in the case of total loss if his insurance co didn't pay the correct value.
I think there could well be a nationwide case of misselling on these policies.
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>> Accept that no FSA requirement. However, if I were 'risk managing' this area than, given
>> the level of compo for FSA infringements and the number of no win/no fee sharks
>> in the field I'd want want a clear account of product offered/declined on each file.
>>
>>
>> Better than a fight five years down the line.
>>
It is a non-existent risk, one that people have now become accustomed to dreaming up due to the elf and safety culture firmly imbedded in our society.
People creating work just to cover their backsides "just in case", it is typical civil service behaviour.
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Does anyone need GAP insurance? - RattleandSmoke
