I’m fairly sceptical on extra bits I’m offered when I’m buying new stuff but as we’re going for a low deposit PCP deal on the new car (yes I do know I could run a 10yo 150k mile banger cheaper, yes I do know I’m just paying the depreciation, no I’m not doing a different option) I figured it was worth looking at to cover any difference in the settlement value and the insurance valuation. The scheme details say it covers the difference between the valuation and purchase price of the car. That seems to be insuring in the region of 5x the risk probably with associated higher premium. It’s a con right?

t’s a con right?

No. It well worth having if you end up needing it.

I’m currently thinking about it for a 2nd-hand car I’m buying.
I think the view that it’s a rip-off is because it’s quite a high premium considering the low probability of your car being written off.

Less likely to need it on a second hand car as the cliff drop depreciation after taking delivery only happens when new.

Why would I need to insure beyond the settlement value though? The principle of gap insurance is fine but it only needs to cover the difference between final settlement value and the valuation not the original purchase price.

Why would I need to insure beyond the settlement value though?

You aren’t.

You are insuring the difference between the amount outstanding on the contract, and the insurance valuation of the vehicle.

If the insurance pays out less than you owe on the vehicle, you have pay it out of your own pocket unless you have gap insurance.

My insurance is new replacemention car in first year of registration.

I bet you can get it a lot cheaper elsewhere. Honest John is good on this stuff.

Some policies do have inbuilt gap insurance but not that many (at least not when I was last involved in it, which admittedly was a loooong time ago)

You aren’t.

The policy details would beg to differ and even provides a helpful graph showing how you’re insuring excessive amounts in later years.

My direct line policy has it anyway in year 1 anyway so I’m not that fussed. It just seems a good wheeze to scare people into insuring significantly more than they need to.

I personally think it’s worth it – even with the first 12 months of new-for-old cover.

The early settlement clauses on PCP can be pretty brutal.

Shop around though, you don’t have to buy it from the dealer / finance company – RBS (via Lombard thier finance co) used to sell GAP for £195 for £25k of cover for up to 5 years – BWM finance used to want thousands.

The policy details would beg to differ and even provides a helpful graph showing how you’re insuring excessive amounts in later years.

That sounds more like “Return to Invoice Insurance” than Standard GAP insurance to me.

Work out you risk, find the best premium, then gamble the premium on a horse running at the appropriate odds. Easy

Try ALA for a quote they were a fraction of what the dealer wanted for their gap when I was looking

One thing to consider is that even if you car insurance policy provides new for old for the first year, it may not cover any options unless declared when you take it up, also and more importantly many policy’s do not cover new for old for cars you don’t own, lease cars be definition are not owned by you.

The wife just got her new car, the dealer offered gap insurance for two years for £800, I got three years cover covering up to £50k for £250 which covers replacement cost not back to invoice. We deferred the start of the policy for a year as she owns the new car outright and the motor insurance policy covers the new for old risk for the first year.

Have a look at http://www.gapinsurance.co.uk (other providers are avalable)

A friends car was taken out by a truck leaving staying in to her lane on the A14 last. The truck was registered in Romania and her insurance company have said that without witnesses it will be 50 50 not covering the outstanding cost of the PCP. So yes worth it if you need it

Get a quote from ALA.co.uk – they were about half the price for a similar policy offered by Toyota when I bought new three years ago. Haven’t had to make a claim so have no experience of how good or bad they are at paying out. Back to invoice policy for 3 years on a £25k new car purchase was £170.

Sorry to hijack but someone may know…can you still buy gap insurance once your new car is a couple of years old? Because my insurers will provide a brand new replacement in the event of a write off for the first two years. Can I get a gap policy after that has expired, or am I too late now the car is 8 months old?

Sorry to hijack thread as well, bought new car 1 and half year ago on PCP ..do I still need it?

If you look dispassionately at it… And understand loss ratios…

Then its almost a con

Its just praying on your desire to protect a new shinny thing!

If you’d seen my wife drive… 🙂

I ended up getting a return to invoice GAP policy for 3 years for £150 paying up to a maximum of £50K. The way I see it, if it gets written off after say 2 years or whatever then I just get another brand new one (or get a nearly brand new one or demo from dealer etc.) with insurance + GAP payout money rather than fannying aboot looking for an equivalent car on the 2nd hand car market.

Mind you, the dealer wanted about £600 for the equivalent policy from them..

😀 I may be able to help email in profile.

No. It well worth having if you end up needing it.

+1

We did this for my wife’s last car, £400 covering (I worked out) worse-case £20k. Maybe we could’ve go it cheaper, maybe we won’t need it – but based on spending £40k, 1% seemed a reasonable number.

Obviously been cheaper if she’d have bought a cheaper car 🙂

I used to underwrite it. For the right price, it’s well worth buying. The actual cost of it for the insurer was small at the time, but it did “burn” (i.e., lose money) for the insurer all the time.

For small deposit deals (if I remember this correctly) it’s definitely worth considering as initially your settlement figure may even be higher than the loan amount, plus you lose 20% VAT off the price of the car as soon as it turns a wheel = big “gap”.

An option is to use someone like NFU Mutual or Police Mutual who do 2 year new car replacement. However, you need to check whether they will cover it on a PCP where the ownership MAY pass to you rather than WILL pass to you.

When it works to replace the car, this is (as said above) is RTI or Shortfall Plus cover. This gets much, much more expensive for longer term because of the depreciation.

So, if you can get the above insurers to confirm they’ll cover you in the way you want, I’d insure with them for 2 years from new as long as their price is more or less right. Otherwise just have a gander on the links above and buy GAP from somewhere else.

Shredder or Rich

I’m with Police Mutual so have two years new car replacement. It’s also more than 180 days since I got my car so I appreciate I may have missed the boat for it anyway. Is there anything worth looking at or should I just forget it?

Have a nose around email in profile.
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Facebook

If I understand you correctly, you have an 8 month old car and want GAP cover? What you have with PM is a 2 year RTI cover built in to your car insurance policy – so if your vehicle is written off then you will get a shiny new car back.

This means that you will get “paid out” more than you would do under a GAP policy (which pays difference between motor insurer’s write off figure and the finance settlement figure – which is almost certainly going to be less than the purchase price).

So, I don’t think you need a GAP policy right now as what you have is better. There is a chance you might still have a finance gap after 2 years (depends on term and rate of your finance deal), so it might be worth checking out the online providers and seeing if they do a policy you can buy.

It’s up to you depending on how much you owe and what the car is worth – I’m not sure I’d bother but it looks like Shredder has a range of things that might be suitable/help!

Thanks Rich – It’s not on finance, well not dealer finance anyway – part cash part bank loan.

I’ll have a look at your website shredder, cheers.

OP did exactly the same as you, small car/small deposit (New Aygo) and got the gap insurance.
Worth it for the piece of mind.

My mate bought it as an option on his Audi cabriolet thingy.

Some thieving scum took the keys from inside the house, then took said car.

Gap insurance worked for him – else he would have been several K down…..

I bought a brand new Audi S3 with about £7000 of options on it outright. I wasn’t going to go for GAP insurance but realised that if it is written off or stolen then any normal insurance policy will only cover the base price of the car. Cost £400 for 4 yuears cover from the dealer i bought the car from. Hopefully never have to use it but at least it’s there for piece of mind!!!

@ The Great Ape.

Have a word with http://www.gapinsurance.co.uk (other providers are available) When I spoke to them they told me that I could take the policy out any time in the first year.

I deferred the policy start for 12 months as we got new for old for the first year, I couldn’t see any issue to extend that to 24 months.

I dealt with Louise who was most helpful.

^ @ captmorgan good to know you were looked after will let Louise know.

I bought a brand new Audi S3 with about £7000 of options on it outright. I wasn’t going to go for GAP insurance but realised that if it is written off or stolen then any normal insurance policy will only cover the base price of the car.

Errrr, what?

Cost £400 for 4 yuears cover from the dealer i bought the car from.

Presume the dealer told you that then? 😉

captmorgan – thanks, I have been in touch with them today thanks to shredder and his mates, and suitable arrangements are in hand.

I bought a brand new Audi S3 with about £7000 of options on it outright. I wasn’t going to go for GAP insurance but realised that if it is written off or stolen then any normal insurance policy will only cover the base price of the car

Well maybe not only the base price, but extras depreciate at a greater rate, so it is a higher risk.