dtriggs

Just buying a 1 year old car - and garage is pushing strongly GAP insurance. I have always ignored it and never bought, but I plan to keep the car for abt 3 years and as it is costing £20k thought this time it may be worth it. Cost is £250 for 3 years and will pay the difference between an insurance write off figure and the price I originally buy the car for. Question is, is it worth it and is there a catch I should be aware of ?

OllyK

It's worth it if your car gets written off, if not, it isn't.

Dracoro

Does that mean that you can buy a £20k car, drive it for 35 months, write it off and get a brand new replacement (say £10k normal insurance payout + £10k, i.e. the gap) for your £250 premium?

Effectively meaning that for the initial car cost + £250 every 3 years, you can drive around in a new car for ever (i.e. you just start another gap insurance each time you get a new car).

Sure it doesn't work like that or everyone would be at it.

Iain Young

I always understood that the insurance would only cover the value of the car when it it written off / stolen.

So, if you buy a car for 20k, keep it 3 years until the value drops to say 12k, and it gets wriiten off, if the insurance company only gives you 10 grand, the insurance will provide the other 2. So in the end you get your 12k...

Dracoro

That sounds more likely. Although if the value is £12k then how come the normal insurance has only paid out £10k? Is that their value as opposed to 'yours'? Will the gap insurers use a similar argument/model/values that your insurance company uses and say, for example that it's worth £10,100 so you only gain £100 etc.

If the cars worth £12k (market value, not 'your' own placed value) then you can persevere with your normal insurance and they should eventually pay out the £12k, after all, that's what you pay your normal premium for!

mattsan

Took gap insurance for the wifes cooper,200 for 2 years cover.Its well worth it.I payed 12200 for the cooper so if anything happens to it i will get that amount back.Dont have to worry were its left or if anything happens to it.Makes sense really for an extra 100 a year.

dtriggs

GAP insurance comes in different forms but what I am looking at is Invoice Protection - so the market value is immaterial - if the insurance co give you 10k then the GAP insurance will give you a further 10k back up to the Invoiced Price you originally paid (and yes upto 35 months later). The GAP insurers reserve the right to negotiate with the Insurance co. of course. This is only obviously if the car is written off and is comprehensively insured by yourself.

I cant see the hitch but feel there must be one.

Iain Young

Don't know how they work it out, but I get the impression it's like the difference between selling privately and selling to a dealer. If you can get 12k for it privately (or the dealer is selling at 12k), then the dealer is only going to give you 10k for it. I "think" insurance companies use the same guides for 2nd hand car prices as the dealers, and so you are only going to get the trade-in value. The gap insurance covers the difference.

Might be totally wrong, but I seem to remeber it being something like that. I do know that insurance companies very rarely pay out full whack for a claim like this....

andy1505

Gap insurance will pay off any out standing loan you have above the value the write off gives you. If you owe £13000 and the car is worth £10000 they will cover the £3000 to pay off the difference.

jasey

Yep - That's how I remember it .

Iain Young

Aha, yes memory jogged. That's it. Pays out the shortfall on the hp

andy1505

Have they tried to sell you an extended warrenty too!!

hail-hail

I'd be surprised if 'Invoice Protection' actually exist or the description is accurate.

Lets say I spend £20k on a car and 'Invoice Protect' insure it. 35 months later the car is worth 8k.
I take the car to the top of a very steep hill / cliff and accidentally my car falls 400feet into the sea.
The insurance co give me my 8k, other insurance gives me 12k and my car insurance premium goes up by £200...................repeat until dead.

this can't be right can it?

OllyK

Not sure, but I was offered GAP insurance on the cash purchase of a new car. I wasn't really listening to the waffle of the salesman as I repeatedly said "I'm not interested, lalalala", but either he was dumb for trying to sell it or it suggests there is more to it than covering the HP difference.

I suspect, if the truth be known, there are all sorts of insurance schemes out there and all those suggested above are probably available.

hail-hail - I wonder how many creative ways you could come up with destroying a car every 3 years before the insurance companies got wise to it and sent plod round for a little chat about fraud.

Dracoro

hail-hail - that was my point

Paying the shortfall on the hp makes sense (unless you're paying cash lol )

Dracoro

I doubt having a big crash/stolen car etc. every 3 years would ring any bells, plenty of people probably have this happen anway. You'll also probably change your insurer often enough anyway. Anyway, just say you're guilty of being a crap driver

dtriggs

Just read the blurb:

quote:

Invoice Price Protection
Provides upto 36 months cover and pays the difference between your motor insurance settlement and the invoice price you originally paid for the vehicle. When added to your motor insurance settlement you will get back the original invoice purchase price for your vehicle.

unquote

So seems a great deal to me.

OllyK

Only if you crash / burn it out / have it nicked in the first 36 months, otherwise it is a waste of cash. Also check the small print, think you will only be covered in the UK, so if gets smashed when abroad, you loose!

hail-hail

Looks like a good deal for the fraudsters then

Remember the advert ages ago, I think it was for Coke. A truck full of Coke ended up perched over a cliff. Someone grabs a can and the whole lot falls over.
Anyway when the truck driver is asked what happened, he said

"I just flipped out there for a second, and the truck flipped out with me"

This would be my claim on the insurance form every 3 years , but don't everyone use it or they will suss it out for sure

andy1505

If thats what it says get the insurance, trash the car every three years and get a new one. Insurers are losing their grip?

jasey

Is it underwritten by the ex-president of Nigeria's 2nd Nephew ??

Sounds too good to be true - so it probably is !
However - Sounds like a sound investment of £250 if that's what it is !!

dtriggs

It's coming from a franchised Volvo dealer (one of the biggest in Uk) so should be above board. As you say it seems remarkably little money on a 20k car for such cover, which is why I was suspicious.

Chrisgr31

But how many total loss claims are there for a new car?

After all if you buy a brand new car the insurance company will normally replace it with a brand new car should it get written off in the first year. So they are covering the car for 2 years, and only covering it for a total loss.

So effectively they are offering fire and theft insurance, and write off insurance, but only the top slice.

Most cars aren;t written off in the first three years. You just need to decide if ou might write it off by any means.

Delibrately writing it off is unlikely to be successfully and could result in a criminal record. If it doesn;t it will just increase the premiums the rest of us pay!

dtriggs

Thats a very good point - car is 13 months old so not new but it would take an awful lot to write off a 20k Volvo - unlikely in next couple of years atleast, so quite likely money down the drain. But then it isnt that much money...

andy1505

Here is a quote from an insurer.

"These days, if your car is "stolen and not recovered" or "written off" due to an accident, it's highly likely that the payout you receive from your motor insurance, will not be enough to either pay off any finance that you have outstanding on the car, or allow you to purchase a replacement vehicle without being out of pocket.

We have introduced three, value for money GAP Insurance policies, which between them offer three separate levels of protection against this - even if you bought your car for cash!"

Nick100

I was offered the same a month ago.

I declined : you make your choice, you take your chances. It was £300 I didn't want to spend and the likelyhood of it being written of in 3 years is small.

Sounds like extended warranty from electrical retailers - don't know if you can get it elsewhere independently cheaper.

Sales bloke told me he had to offer it by law now, which I thought was bullsh1t.

Nick100

<cough>
I don't think they have many limitations for the type of car !
<cough>

scoob_babe

We lost £10k over the price of our new scoob when it was written off after 14 months. If we'd been offered / known about GAP then, I'd probably thought 'I wouldn't write a car off!' However we have another new car, non scoob, but we do have full VRI (vehicle replacement insurance) which means that if the car gets written off/stolen, we will get the insurance money plus the difference between that and the price we paid for it until we have had the car 3 years. It cost £300 ie £100 per year.