Sorry if this if noddy question , but at the moment its not quite clicking about when it is a good idea to get GAP insurance, and when it's actually not worth it. When I ordered my FL vRS, the dealer did go over it and I said I'd think about it (to do some shopping around). But having looked into it, I'm actually not 100% sure of what is the right thing to do.

For example's sake, say I buy a new car for 20K. I pay 50% via cash, and take the remaining 50% on HP over 2 years. I have fully comp insurance. I then write off my car after 6 months.

The bits I'm confused about are:

1) will my insurance company only pay out a maximum of the amount of equity I have in the car? (i.e. 10K + 6 monthly payments) So say I've made 2.5K worth of payments in those 6 months, the max amount = 12.5K and so GAP insurance will also cover the part of the car that is owned by the finance company?

2) some bits I read said that GAP insurance is recommended when you have a low deposit. So is it not really necessary if you have a large deposit?

3) the amount of cover to get for GAP insurance, should that be the amount of finance being taken out?

Been quoted £91 for 2 years for Return To Invoice, but I really don't want to pay it out unless there is actually a benefit in me doing so

Thanks in advance.

I think the key thing is that conventional insurance will only pay the "market value" of your car if you write it off. Bearing in mind that you will have a lost a huge chunk of value just driving it off the forecourt, and again in the first 6-12 months, the amount they would pay is likely to be a lot less that the what you paid (regardless of whether it was cash, finance or a mixture of both). Most insurance companies will also try and talk you down on the amount they would pay in a total loss as well. The GAP insurance simply makes up the difference between what your insurance company pay out and what you paid, so you should not be out of pocket.

As far as I know, the amount you should cover is the amount you paid - the invoice price.

Thanks Guinness.

Over the years I've bought 2 cars from new. Both times, I didn't take out finance. Both times, I never heard a sniff about GAP insurance. I've always just accepted I'd get market value for my car and never knew about GAP insurance until recently.

So I guess the bit I'm most confused about is actually whether taking finance out is actually a reason in itself to get GAP as I got the impression that somehow,my insurance company would only pay out in relation to how much of the car I owned compared to the finance company, and that GAP insurance was there to cover you for the rest?

If I had a very low deposit, I could see potentially the insurance company payout would not cover the outstanding finance on the car and so GAP would be really beneficial.

But in the case where I have a large deposit, then the settlement would always cover the outstanding finance - it's just that I would be down a fair whack of money for a replacement car?

I can feel I'm being dense about this, but it's one of those things that when the penny drops, a ray of light will beam out, a choir of angels will sing and all will become clear!!

I think gap insurance differs if you buy the car outright and if you purchase on credit, Buying outright it will make up your car insurers payout up to invoice not including your excess. So if your car is bought for £18k and written off after 35 months your insurers may pay out say £8K with £300 excess so £7.7 and gap would then pay £10k

If you buy gap purely to cover the finance contract then I believe it is cheaper but only covers you up to any differance between insurance payout and finance owned.

IE Finance shortfall Gap or Return to invoice Gap

This is not about the size of your deposit but whether you want to risk losing some or all of it during the life of the GAP insurance.

Scenario. In 12 months time your car is stolen or totalled, doesn’t matter who’s fault it is, your ins company will pay you the current market value probably about 40% of the invoice value.

Without GAP this may pay off the finance but will leave little left over for you to use as a deposit for another new car. With GAP the GAP ins will pay YOU the difference between your ins payout and the original cost of the car, in full, and you will get ALL your initial deposit back so you can put it towards a new car.

This is piece of mind – do you want to risk losing several thousand pounds for an initial investment in insurance costing £91??? – only you can decide.

If you do decide to go with GAP ins the do a search on line before you take anything offered by the garage. I also suggest that a 3 year GAP policy is better than a 2 year one.

I've gotta admit my understanding of it is pretty basic, but I think you might be over-complicating it a bit. I don't think insurance companies are bothered about whether you financed the car and what size deposit you paid. Their obligation, in the event of a total loss, is to pay you the market value of your car just before you crashed it (or as little as they can get away with!). The market value of your car is not really affected by the way you paid for it.

But yes, I guess GAP insurance becomes proportionally more important, the more of your vehicle's value is financed. In a total loss claim, not having enough money to pay back your finance company could land you in an awkward situation. As you say, if the insurance company's settlement is enough to cover outstanding finance then it's not such a worry, but you'd still be out of pocket personally and maybe not able to replace the car you lost.

But yes, I guess GAP insurance becomes proportionally more important, the more of your vehicle's value is financed. In a total loss claim, not having enough money to pay back your finance company could land you in an awkward situation. As you say, if the insurance company's settlement is enough to cover outstanding finance then it's not such a worry, but you'd still be out of pocket personally and maybe not able to replace the car you lost.

Hence why there are two forms of gap

You still don’t get it – GAP insurance means YOU do not loose your deposit in the event of a total loss. The amount of finance is not important its is about how much money YOU stand to loose not the finance company.

With a large deposit and NO Gap the finance company gets all its money first and YOU get whatever is left over to put towards a new car – but anything you get will be a lot less than the deposit monies you paid when you bought the car..

With GAP, the finance company gets all its money and YOU get ALL your deposit back – ALL of it – so you now have the deposit to go and buy another new car.

YES if you get Finance GAP

IF you get RTI Gap then it is return to invoice, so in March the MX-5 had an invoice of £19k it is now worth about £14K for a total loss. My CAR insurance would pay me £14 K less my excess MY GAP RTI would pay me £5K

IF I had bought the Mazda on finance with 0 deposit I might still owe the finance £18K despite payments of £2K the insurers would pay out £14K less excess and the Finance GAP would pay the £4K I would still owe after giving the finance all of my CAR insurers payout. If thMY CAR insurance payed out more than I owed the finance then my Finance GAP would pay out 0

GET IT?? yes I do

Thanks all, it does make sense. I think I just misunderstood from the start, thinking it was specifically to do with having finance on the car.

I agree £91 for 2 years is peanuts for what it covers you for. I just wanted to make sure I understood fully before I made a decision.

Done all the looking around online as I nearly swallowed my face when the dealer said how much theirs would be!

Just one more thing. Do check if your insurance company offers any 'new for old' cover as standard. Mine does for the first year of ownership and so I arranged for my (two years) gap insurance to start after that.

No point paying for cover if your normal policy already provides it and it shouldn't a problem deferring the start of the gap policy.

been looking at this myself the dealer wants arounf £350 for 3 years (I think) but I;ve been looking around and can get 4 years cover for about the £270 mark. Just unsure about the company incase it goes under etc. I would go for back to invoice myself Unless you have a really small deposit and the finance is going to be high.

I'd go one step further and go for the replacement car option, given that most of us receiving our cars at the moment are benefiting from already heavily discounted cars...mine's over £4k under the list price, so that would be a potential shortfall of £4k (albeit not taking into account negotiation in the future) that the GAP RtI Insurance wouldn't cover...

It's looking to be around £100 more expensive but I think it's worth it. Also Quidco are giving cashback on www.click4gap.co.uk (£22.50) and www.ala.co.uk (10%) that saves a bit more on top

That is a good point as chances are with price increase etc you probably wont get it for the same price. Thanks for the link too

Ok quick question as I need to get mine sorted on the Octavia has anyone on here used a GAP insurance and if so who with and have you had any problems?

Used Skoda gap, they knocked off £100 for me and bundled it in with 0%.

Used Skoda gap, they knocked off £100 for me and bundled it in with 0%.

do you know who its underwritten by? as that might help me choice who I go with. at the moment "DirectGap" seem the best value for money against the possible get outs in their terms and conditions. Some will not cover if you drive it outside the UK which makes that useless to me as I would want to.

AFAIK is done by VW Finance. Same as 0% etc..

P.S It was either return to invoice or finance, whichever is greater.

P.S It was either return to invoice or finance, whichever is greater.

cheers I'm after like for like replacement cover as I doubt I will get the same amount of discount again.

Maybe buzz the supplying dealer and ask them about it?? It looked ok to me.

Didn't want to start a new thread, so here goes!

i've just bought RTI cover from Click4Gap, cost me £133 (I went for extra cover, could have got it for £131), but here's the best bit. Sign up to Quidco and track the purchase through there and you get £30 expected cashback

If you're not a Quidco user, just go to their website for more info.

I'm just about to go with DirectGap - 3 years RTI for £116, compared with £299 if I had gone through the dealer!

Click4Gap works out at £100 if you use Quidco.

Don't forget to check your insurance policy - I didn't go for GAP insurance in the end, as my insurance company told me they just replace the car outright in the first year so GAP insurance would be pointless until the 2nd year!