GAP Insurance - worth getting or not?

[Amethyst]

250 for 36 months cover - apparently if the car is on finance and gets written off the GAP insurance pays the difference betweeen what the Insurance company pay out on the car and the amount left owing on the finance ?

a) is that right ?
b) is it actually worthwhile or is it like extended warranties and PPI where they never actually pay out ?

[Phaeton]

Whether it is worth it depends on your view of insurance, personally I hate insurance (although I do have some) I resent paying for something I've never used in over 40 years, I do wonder if I had been allowed to put the same amount of money into a fund how much there would be there now. But I also know I wouldn't have put that money away.

It's down to maths really, how much is the car, how much of it will be financed, if what the insurance pay out for the vehicle doesn't cover the outstanding finance are you paying too much for the car in the first place.

[Amethyst]

The only insurance I ever have is the bare minimum I can get away with to be legal for the car. Now and then I have contents insurance ( bare minimum ) and buildings is covered by the council. I NEVER had any PPI, I have never touched an extended warranty or taken out any card protection insurance or anything that wasn't completely essential. I'm one of those 'No Thankyou' as soon as the sales person opens their mouths people.

This is actually first car I've ever had on finance too ( always been cash before ) so even doing the finance has had me waking up in a panic for the last week and it's taken us ages (like 12 months) to actually bite the biscuit and do it, mainly because my old car froze in the recent weather and I bent the pistons or something... anyway that's the trouble with spending so much time on here watching peoples car finance go tits lol.

So now I have a beautiful little car which seems to hold it's value pretty well, but if it was written off tomorrow then I'd have a £3k on top of the value of the car to sort ( worst case scenario based on zero rebate from settlement early )

So maybe I need to work out what the settlement figure would be across the next 3 years vs the value of the car over the next 3 years ? It's 5 years finance ( I know, dodgy credit file still ) but aiming to settle it early ( once I figure out the settlement numbers - I tried reading s.94 etc but I really don't do Maths and seriously how is anyone meant to understand

Where a debtor takes the steps in subsection (4) his indebtedness shall be discharged by an amount equal to the sum of the amount paid and any rebate allowable under section 95 less any amount which the creditor claims under section 95A(2) [F4or section 95B(2)].

and

95 Rebate on early settlement.

(1)Regulations may provide for the allowance of a rebate of charges for credit to the debtor under a regulated consumer credit agreeement where, under section 94, on refinancing, on breach of the agreement, or for any other reason, his indebtedness is discharged [F1or is discharged in part] or becomes payable before the time fixed by the agreement, or any sum becomes payable by him before the time so fixed.

(2)Regulations under subsection (1) may provide for calculation of the rebate by reference to any sums paid or payable by the debtor or his relative under or in connection with the agreement (whether to the creditor or some other person), including sums under linked transactions and other items in the total charge for credit

)

Fancy working it out for me if I get the numbers ?

Oh also, I have never had an accident beyond a scuffed wheel arch and a broken wing mirror - other half is a mechanic - and I have sod all idea how much parts for 'posh' cars are ( they seem to be 'written off' bloody easily though, one of daughters friends car got hit outside out house a few months back and I thought ahhh can just hammer that back out into shape ... but nope, write off ( see how old my usual cars are ! ))

This is all well out of my comfort zone !! lol.

But... my car is a bloody babe

[Phaeton]

All I would say is IF the car is on finance then Fully Comprehensive to my mind is a must

[Amethyst]

Oh, yes it is ( just checked lol) - 260 fully comp for the year with a 250 excess

[des8]

Hi Ame
I would disagree vehemently with Phaeton's view of insurance, but that's another discussion.

What sort of GAP insurance were you thinking of buying?
Yep, there are different types for different situations!
"Back to invoice "or "Vehicle replacement"?? I doubt you want "contract hire" as you aren't leasing the car.

I think you'll find it only pays out if you have comprehensive insurance, so no use if you only have third party cover.

You should also take into account the age of your car.
This has an effect on the rate of depreciation, which is what some GAP insurance covers.
So a new car depreciates rapidly and GAP is probably worth considering.
An older car depreciates more slowly so GAP is worth less.
(above refers to vehicle replacement GAP)

Back to the invoice insurance can be useful if you are buying on finance as it effectively pays off the balance owing in the event of a total loss

If you decide to buy "Gap" cover don't buy through the dealer, search online1

[Amethyst]

Okay, thanks Des - It's a 2014 car 6.5k - 2011 plates are going for only 500 or so less - actually we nearly got a 2012 plate for 500 more - so think depreciation is an ok rate - I'll check what type the 'offer' is on and look at some options ... overall though am I on right lines thinking it covers for any shortfall in the finance if the car got written off

[des8]

Yes.." return to invoice GAP insurance" will cover the difference between what your comprehensive insurers pay you in event of a total loss (except for the policy excess) and either what you pay for the car or what is outstanding on your finance whichever is the higher.

You need to decide if a one off payment of say 250/300 is going to be more or less than the amount the vehicle depreciates over 3 years, and also bear in mind that insurers rarely offer what the owner feels is the true value!

Also the outstanding financial burden might well be in excess of the vehicles value.
You pay 36.5 for car now and it is written off in three months time
Vehicle still worth 6.500, but how much to pay off finance

[ploddertom]

Something else to bear in mind that should the worse happen then the GAP people may nedd you to prove that servicing has been kept up to date with etc - possibly by a dealer stamping a service record.

[Amethyst]

Thanks Guys. It'd about 2.5k ( ouch ) interest over the term (hence wanting to pay off early at some point) so there would likely be a shortfall if anything happened in next 2/3 years. We're fully stamped to date so will keep that up too.

Just had a quick look around some of the direct GAP insurer sites and looks like the dealers quote is well over egging it ( of course ) so we're looking more at 80 to 166 .... which seems like it might be worthwhile for peace of mind ... it covers for theft as well as write off - never had a car worth stealing before lol.

[Amethyst]

Right been looking ( well Jules has ) does this sound alright ? ( No weird exclusions / terms etc )

insurethegap ( halo insurance )
Combined Total Loss GAP Insurance


This policy covers all eventualities, covering the GAP between your main motor insurance settlement, the price you paid for the vehicle and any outstanding finance.


120.18 - cover for four years

• Policy Wording
• Key Facts

[Amethyst]

Hopefully it'll just be money down the toilet but it'll make me less paranoid about someone twatting into me writing it off and being stuck with the finance ( which is presumably the sales pitch anyway )

[ploddertom]

Just make sure you read all the small print and exclusions.

[des8]

Just read policy quickly and would draw your attention to:
A). (just in case OH has own business!) 1)You must not be a motor trader, garage or associated company, the proprietor(s) of such motor trader or garage, or an employee or a direct relative of such proprietor(s),
B)Hope you did a full HPI check ...2) [the vehicle must not] have been previously written off and
C)don't let anyone drive your baby unless they are named on your certificate of insurance.


Trustpilot has suspiciously high number of 5*reviews, but can't find any reviews about their claims handling (which is the important part of insurance!)

[MIKE770]

gap insurance ( if not added to loan repayments is a good safeguard if the vehicle has a large amount of worth especially that the value once on the road if new or even 2nd hand can be a lot less of the original loan if a payout necessary, as many peeps over the years have found out to their detriment when an accident and car written off then outstanding moneys owed to loan companies, always work out the cost and best interpreter if needed