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Tried to search this , but just comes up with gap jumps…
Buying a new vehicle tomorrow , and have been offered gap insurance. It’s not being financed , I am buying outright , so don’t need to worry about inflated prices including interest etc.
The impression the dealer gives , is that if you have a total loss, then the gap insurance will pay out the difference between what your insurance pays out and the retail cost of the new vehicle. I am getting the vehicle at 12% under list anyway.
The only person I know who has taken it out , had their car stolen and the gap insurance didn’t pay out .
is it worth having , or just snake oil ?
cheers
Bought a Skoda from Skoda dealership and was offered the same.
Turned it down, you just run the risk. To me it’s just an extra way of making a bit extra on the sale
Maybe MoneySavingExpert has an article on this?
IDK, gap insurance is typically bought by folks on new/ish vehicles being financed with PCP. The reason being that if the insurance pays out market value on a write off you’re still on the hook to the finance company for the whole outstanding amount. This may be higher than market value.
for a cash sale? A discounted cash sale? Unless you are very risk averse and the vehicle is new new then take the proposed gap premium and save it.
plus, dealership gap insurance may be more expensive than whole of market. Like any insurance product: shop around for the best price if you are going to buy it.
The only person I know who has taken it out , had their car stolen and the gap insurance didn’t pay out
Must be some additional detail behind that, was theft excluded, or had they left the keys nearby, or....can't comment on whether that is common though, IANAIB
is it worth having , or just snake oil ?
I guess it depends on how much you value a 'new' car and are willing to pay for having one. My wife has had a few over the years and we never bought the Gap insurance from the dealer. Rationale: It's accepted that the moment it leaves the dealership it's no longer new and has depreciated, how much obvs depends on the car but with some it can be 20% easily. So then a few weeks later it is written off (in itself a 'feature' of the car and its repair costs vs replacement costs) and they offer you a fair value for a car that was new a few weeks ago but has now depreciated by 10-20%. And you can then buy a car that was new a few weeks ago and you're in 'exactly' the same place.
Depends how precious you are about the actual car you specced and chose, about not having a new car that only you have owned, etc., also whether you can get a replacement or are they like hen's teeth.
If you still value that, you can shop around and possibly get a better deal from the free market (although acc to article the dealers had wrists slapped and are now more competitive anyway). Or look at policies that offer 'new for old' in the first year or whatever. Or take theirs, but use it as a bargaining point for something else like first service free, or mats or..... But to do that know what the true value is by researching what the other options are.
https://www.moneysavingexpert.com/insurance/car-insurance/gap-insurance/
There are many different types of gap cover. All have vast profit margins for dealers (which is why the FCA got involved in the sale of it in 2024).
If you like the product then you can buy it elsewhere usually cheaper. I bought a type of lease gap from ALA in the past.
The type you seem to be looking at is a type of "vehicle replacement" cover which tops up your insurance payout, probably to the original purchase price of the car (I doubt it'll pay up to the retail price, but I could be wrong).
If you're buying a new car (properly new, not pre-registered, you must be the first owner) then your car insurance likely will replace your car in the first year anyway, if it gets written off.
So, you'd be buying a policy that covers the risk of writing the car off (severe crash, fire, theft) in year 2 and 3? Depends on how long the cover lasts I suppose.
If you have bought a fast depreciating car then it could be good thing. If you suspect it may get nicked or written off in the first few years then it could be a good idea.
If you're NOT the first owner then it'll also cover the first year.
Would I buy this "vehicle replacement" cover? For the right price, possibly. If I had finance or a lease, would I buy cover? Absolutely yes, but only at the right price.
I used to set up gap insurance schemes. I know how much profit there is in it, but I also know how much cover there can be.
Nothing of value to add bar that you can almost always find the same cover cheaper away from the dealer. You can decide if you want it or not, but make sure you look online at other providers before buying it.