GAP insurance

[PB.200]

Very well put!!

Just the facts allowing for a informed choice!!

 

[Maz]

Guys (and Gals?) I work for an online GAP Insurance provider. No doubt the forum rules prevent me from revealing who, so I'm not going to do so.

Nevertheless, I've been alerted to this conversation and having read through all of the posts, there is clearly some confusion about what GAP Insurance is and how it works.

I wanted to take the opportunity to try to clarify matters and hope it will be taken in the good nature that it's intended.

There are now four types of GAP Insurance available in the UK. How they differ is dependant on which "Gap" the policy is intended to cover:

• Finance GAP Insurance - Covering the difference between the motor insurance payout and the amount outstanding on finance at the time of loss.
• Retail Value GAP Insurance - Covering the difference between the motor insurance payout and what was the Retail Value (according to a guide such as Glass' Guide or Parkers - depending on the supplier) of the vehicle when you bought the Retail Value GAP Insurance policy.
• Invoice GAP Insurance - Covering the difference between the motor insurance payout and the original price the vehicle was purchased for.
• Replacement GAP Insurance - Covering the difference between the motor insurance payout and the cost of replacing the vehicle new-for-old at the time of loss.

Other than via motor dealers, "Finance GAP Insurance" is now rarely sold.

Consider... the potential risk to a "Finance Buyer" is almost always decreasing... after all, each month a repayment is made towards the finance agreement and the amount outstanding reduces... this means that the goal posts are constantly moving (shrinking) and (generally) the more time that goes by without a claim, the more will have been paid off the finance, therefore the smaller the potential GAP Insurance payout will be.

In summary, Finance GAP Insurance is a decreasing level of cover.

On the flip side, Invoice GAP Insurance, effectively fixes the original purchase price as the start point... the more time that goes by without a claim, the more the vehicle will have depreciated, therefore the larger the potential gap would be.

In summary, Invoice GAP Insurance is an increasing level of cover.

This being the case, a cash buyer is almost always at a greater potential of financial loss than a finance buyer and subsequently is usually far better suited to buying GAP Insurance. Further, with few exceptions (see below) a finance buyer is usually better suited to purchasing Invoice or Replacement GAP Insurance than Finance Gap Insurance, on the basis that an Invoice or Replacement GAP Insurance policy would usually leave them with money left over, after having settled the remaining finance (if applicable), to put towards the cost of replacing the vehicle - as opposed to Finance GAP Insurance which at best would leave them at zero... (e.g. no car, but no debt either)

The only time that a Finance Buyer would be better suited to buying GAP Insurance than a cash buyer, is if no or little deposit was put down and/or the interest rate of the finance agreement was particularly high, in which case the finance agreement settlement figure in the early part of the loan could well be higher than the original purchase price of the vehicle.

However, to counter this, you'll now find that many companies offer a combined Invoice + Finance GAP Insurance policy which, in the event of a Total Loss, will pay the difference between the motor insurance payout and the GREATER of either, the finance agreement settlement figure OR the original vehicle purchase price - giving the best of both cover types in one policy.


Specifically in answer to the OP's question the difference between the policies supplied by motor dealers and those supplied by the various online companies usually come down to:

Motor dealers charge considerably more because they can. But, most people in their position would do the same. Unfortunately most people still don't know what GAP Insurance is and usually the first time someone hears about it is from the motor dealer, who in turn will normally give the impression that it's a "right-here-right-now" kinda deal and can't be equalled by anybody else (I constantly hear stories about how motor dealers have described nightmare scenarios of other companies not paying out). Regretfully, most people still either fall for it, or simply can't be bothered to look elsewhere, or don't realise they can and therefore the motor dealer effectively has a captive market and can get away with such absurd prices. That being said, they do have much larger overheads than us online providers and are therefore somewhat justified in charging a higher price.

I hope this helps.

I apologise for stepping on anyone's toes. I mean not to cause offence.

Thank you very much for your information this is really helpful.roud:

 

[gapinsurance]

Glad to help out. If anybody has any further questions I'd be happy to try to answer them.

 

[Maz]

I have decided to go for Invoice GAP Insurance - Covering the difference between the motor insurance payout and the original price the vehicle was purchased for.

This has been offered by my insurer for a period of 3 years at a cost of £244.

Im planning on taking out the policy tomorrow and thought this was a better option....

 

[PB.200]

Are you gonna keep the car 3 years?

 

[Maz]

Yep but even if I dont at that price its nothing lost and its only one company to go through should anything happen.

 

[Ed...]

to be honest we need people like you on the website gap, lay down the facts

thanks for that.

 

[Maz]

Here here

 

[gapinsurance]

I have decided to go for Invoice GAP Insurance - Covering the difference between the motor insurance payout and the original price the vehicle was purchased for.

This has been offered by my insurer for a period of 3 years at a cost of £244.

Im planning on taking out the policy tomorrow and thought this was a better option....

Sorry for the delay... You've probably already stated, but is the car brand new? If it is you may be better taking Replacement GAP Insurance, which often isn't that much more expensive than Invoice GAP Insurance, but will cover (or at least attempt to) any increase in price between what you paid for the vehicle first time around and the often higher list price at the time of loss.

It's also not usually (as many people suspect) a case of being tied to having a physical vehicle or having to use a specific dealer to replace the car etc (although there are still some policies out there that will have such restrictions, it's just that they're few and far between).

It just might be worth looking at.

to be honest we need people like you on the website gap, lay down the facts

thanks for that.

You're very welcome and as stated, I'm very glad to be able to help!

 

[Maz]

I have taken the policy now, will wait for the paperwork to come through, dont think I can change now though ?

Thanks for your advice you have been really helpful and informative

 

[gapinsurance]

I have taken the policy now, will wait for the paperwork to come through, dont think I can change now though ?

Thanks for your advice you have been really helpful and informative

You will have a cooling off period as part of any Insurance Contract, it's normally worded as though the 14 days (minimum) begins when you purchase the policy, but if the documentation is being sent through the post, then the 14 days wouldn't be enforceable until you have actually received the paperwork and can digest the terms etc.

Within the cooling off period, you can cancel the policy and are entitled to a full refund of the premium paid, however the company are permitted to charge an administration fee for the cancellation, BUT, that fee is not allowed to be a "penalty".... there is however no guidance (that I'm/We're aware of) in terms of what (amount or percentage) constitutes an administration fee V's a penalty fee and on this basis most companies just simply cancel and refund and don't bother entering in to the argument.

Your cooling off period will therefore give you some grace in which to perhaps consider the different policy types further.

 

[Maz]

She said that the policy was able to be cancelled but not the gap?

 

[gapinsurance]

She said that the policy was able to be cancelled but not the gap?

Interesting... can you clarify "the policy" and from whom you sourced it (via PM if preferred)?

 

[Maz]

I havn't got my paperwork yet, will drop you a pm when I have, thanks again

 

[gapinsurance]

I havn't got my paperwork yet, will drop you a pm when I have, thanks again

ok no worries.

 

[Rookie7778]

Guys (and Gals?) I work for an online GAP Insurance provider. No doubt the forum rules prevent me from revealing who, so I'm not going to do so.

Nevertheless, I've been alerted to this conversation and having read through all of the posts, there is clearly some confusion about what GAP Insurance is and how it works.

I wanted to take the opportunity to try to clarify matters and hope it will be taken in the good nature that it's intended.

There are now four types of GAP Insurance available in the UK. How they differ is dependant on which "Gap" the policy is intended to cover:

• Finance GAP Insurance - Covering the difference between the motor insurance payout and the amount outstanding on finance at the time of loss.
• Retail Value GAP Insurance - Covering the difference between the motor insurance payout and what was the Retail Value (according to a guide such as Glass' Guide or Parkers - depending on the supplier) of the vehicle when you bought the Retail Value GAP Insurance policy.
• Invoice GAP Insurance - Covering the difference between the motor insurance payout and the original price the vehicle was purchased for.
• Replacement GAP Insurance - Covering the difference between the motor insurance payout and the cost of replacing the vehicle new-for-old at the time of loss.

Other than via motor dealers, "Finance GAP Insurance" is now rarely sold.

Consider... the potential risk to a "Finance Buyer" is almost always decreasing... after all, each month a repayment is made towards the finance agreement and the amount outstanding reduces... this means that the goal posts are constantly moving (shrinking) and (generally) the more time that goes by without a claim, the more will have been paid off the finance, therefore the smaller the potential GAP Insurance payout will be.

In summary, Finance GAP Insurance is a decreasing level of cover.

On the flip side, Invoice GAP Insurance, effectively fixes the original purchase price as the start point... the more time that goes by without a claim, the more the vehicle will have depreciated, therefore the larger the potential gap would be.

In summary, Invoice GAP Insurance is an increasing level of cover.

This being the case, a cash buyer is almost always at a greater potential of financial loss than a finance buyer and subsequently is usually far better suited to buying GAP Insurance. Further, with few exceptions (see below) a finance buyer is usually better suited to purchasing Invoice or Replacement GAP Insurance than Finance Gap Insurance, on the basis that an Invoice or Replacement GAP Insurance policy would usually leave them with money left over, after having settled the remaining finance (if applicable), to put towards the cost of replacing the vehicle - as opposed to Finance GAP Insurance which at best would leave them at zero... (e.g. no car, but no debt either)

The only time that a Finance Buyer would be better suited to buying GAP Insurance than a cash buyer, is if no or little deposit was put down and/or the interest rate of the finance agreement was particularly high, in which case the finance agreement settlement figure in the early part of the loan could well be higher than the original purchase price of the vehicle.

However, to counter this, you'll now find that many companies offer a combined Invoice + Finance GAP Insurance policy which, in the event of a Total Loss, will pay the difference between the motor insurance payout and the GREATER of either, the finance agreement settlement figure OR the original vehicle purchase price - giving the best of both cover types in one policy.


Specifically in answer to the OP's question the difference between the policies supplied by motor dealers and those supplied by the various online companies usually come down to:

Motor dealers charge considerably more because they can. But, most people in their position would do the same. Unfortunately most people still don't know what GAP Insurance is and usually the first time someone hears about it is from the motor dealer, who in turn will normally give the impression that it's a "right-here-right-now" kinda deal and can't be equalled by anybody else (I constantly hear stories about how motor dealers have described nightmare scenarios of other companies not paying out). Regretfully, most people still either fall for it, or simply can't be bothered to look elsewhere, or don't realise they can and therefore the motor dealer effectively has a captive market and can get away with such absurd prices. That being said, they do have much larger overheads than us online providers and are therefore somewhat justified in charging a higher price.

I hope this helps.

I apologise for stepping on anyone's toes. I mean not to cause offence.

Hi there, just read your post re GAP Insurance. My partner and I bought a car in 2007 and have been totally mis-sold the GAP, we were told that if anything was to happen to the car then all the finance would be cleared and we would have whatever the insurance paid out to be able to buy another car. I have been onto the Financial Ombudsman and they are currently investigating on our behalf, as well as being onto the car company who sold us the insurance. It's so frustrating that companies can get away with this sort of thing. We have been left with nothing after buying a policy in good faith. I'm just waiting on what kind of response I get from the car company otherwise if i'm not satisfied I will be seeking legal advice.

 

[Maz]

I will never buy gap again.. Total waste of money IMHO.

 

[PB.200]

I have a feeling Gap will go the way of PPI.

 

[Maz]

It should!!

 

[gapinsurance]

Hi there, just read your post re GAP Insurance. My partner and I bought a car in 2007 and have been totally mis-sold the GAP, we were told that if anything was to happen to the car then all the finance would be cleared and we would have whatever the insurance paid out to be able to buy another car. I have been onto the Financial Ombudsman and they are currently investigating on our behalf, as well as being onto the car company who sold us the insurance. It's so frustrating that companies can get away with this sort of thing. We have been left with nothing after buying a policy in good faith. I'm just waiting on what kind of response I get from the car company otherwise if i'm not satisfied I will be seeking legal advice.

How were you mis-sold the GAP Insurance?

I will never buy gap again.. Total waste of money IMHO.

Check your PM. I've not been around for a while so didn't get the PM you sent me about your policy, until just now.... How did you get on?