Just bought a new car and the dealer is trying to sell gap insurance. It sounds like quite a good idea but the price they want is £500 for 3 years cover. Is it really worth going for this?

Insurance companies are not charities… what do you think?

Unless you’re prone to bad accidents or see an accident as a way of getting a new car then IMO no, waste of £500

If you really do decide it’s a good idea then go via an independent gap insurer-Waaaay cheaper than the dealer.

If you really do decide it’s a good idea then go via an independent gap insurer-Waaaay cheaper than the dealer.

This, I used to work in auto finance. Dealer gets commision that’s why he’s pusing it. A few questions are how big a deposit are you putting down? How long is the term? If >30% and less than 4 years, then I would say don’t bother, put the 500 hundred in a savings account, with a bit more every month, then in 2yrs check your equity, and pay yourself a premium. 😀 If not look at a independant supplier. If they charge you loads, it possible you’re being screwed on the finance. 8)

Obviously the + of the dlrs package is it gets rolled into the finance as a parallel personal loans (not part of the HP as there’s no assett).

I had gap insurance, got it off t’internet. When my car got written off (not my fault, honest) it certainly helped pay some of difference between car insurance company pay-out and actual cost of car – this is what you need to check with the gap insurer, how much they actually think your car is worth, They don’t pay you upto what you paid for car if it is greater than what they value it at.

But, on the whole, worth it if your car is written off.

I have put a $500 deposit on the car and pick it up on Thursday. I am paying the remainder in cash so there won’t be any finance. The dealer told me that the price that i pay for the car will be what i would get back in the case of an accident or theft as it would be taken out through them. I’m not at all accident prone but the car has cost a lot of money to buy and you always have to think about other drivers no matter how good you are!!

I’ll maybe go back to the dealer and see if i can get a reduced price but will probably just bin the idea.

I thought Gap insurance was to cover any shortfall between what your insurance company pay out and what you owe on finance? Perhaps not if they’re offering it to a cash buyer?

As far as I’m aware after the first year most insurance companies will only pay out the “market value” – if you get the right gap insurance then it’ll pay out the difference between that current market value and the price you’d have to pay to get a replacement new car. As others have said you should be able to get a much better gap deal from an independent specialist – get a quote from ALA online to compare with what the dealer is asking.

When I changed my car last year Admiral made it quite clear that they would only pay the market value of the car. This could leave me several thousand pounds out of pocket if the car was written off. I shopped around for Gap insurance and it was significantly cheaper than Mercedes, but in the end I just took the risk.

I purchased Gap Insurance when I bought my S2000 a few years ago. For the extra couple of hundred quid on top of what I was already paying it seemed sensible.

6 months later when i’d spun and destroyed it on the M275 it came in quite handy and certainly recovered more money than the policy cost me!

There are two types of cover

1) Return to invoice – this pays the difference between the insurance payout and the original invoice price
2) Settlement Shortfall – this pays out only if the insurance payout is less than the finance settlement figure.

Most dealers will offer Return to Invoice – there really isn’t any difference in price between the two products but Return to Invoice is the product to have.

With regard the price, £500 is too much. Tell the dealer you like the idea and have a haggle. You could get it as cheap as £200-£250. The dealer needs to sell them and as long as they make profit you could get it cheaply.

Word of warning – if you do buy off the Internet you aren’t always getting the same level of cover, so check the small print. The products sold in dealers are normally provided by the big insurance companies but the Internet is littered with companies nobody has every heard of.

Ive just come across this as well as ive just ordered a new car, mine is £365 for 3 yrs , which i thought was reasonable … id never heard of gap insurance before i entered the showroom !!.
Ive done a bit of looking around since and could of got the same cover for £169 !! 🙁

Don’t buy from the dealer. Search online and get it from an independent.

Either way they’re making a killing – the dealers especially so. They buy it in at £30 or so a policy (I know because I was looking at becoming a GAP insurer so had all the pricing).

Cheers

Danny B