Hi David.

 

We could give Tolstoi a run for his money....

 

 

It really comes down to one thing... what do you want from your GAP insurance policy?

 

Peace of Mind, 5 star (Defaqto'ish) rating, ability to change car if needed without penalty and, going on your post (quote below) in favour of Replacement over 4 years.

 

 

Replacement GAP insurance is just circa £8 more expensive than Invoice GAP insurance.

 

 

 

If you don't know already, you should check to see if you're covered on a New-For-Old basis by your Motor Insurer during the first year

Our Current insurers - Churchill -  do not (As far as I know) offer a new for old policy.

 

 

 

I'm not really sure where the reference to 10yrs has come from.

Just my way of making sure I did not get confused, by saying 10 years it takes it out of the 'norm' and your reply clarify's the answer

 

 

Which is why Motor Dealers who continue to sell GAP insurance in a "Tick a Box" manner need to be (as the FCA have already proposed) banned from selling GAP insurance.

Which is why I did a bit of early research and advised the Mrs not to tick the box as suggested by the dealer, who to be fair quite understood and did not push the point.

 

 

I'm afraid I'm unable to do this as it would breach the forum rules and wouldn't be fair to Chris Knott and any other official forum sponsor who can offer GAP insurance

Quite correct and I fully understand, however I am sure Admin will appreciate the efforts you have made to help out a forum member and will look favourably on your case...

 

 

I just noticed that nobody appears to have replied to your original question about the level of cover you should choose.

Yip, I had noticed that but thought I would get there in the end!And thanks to you I have...   I think based on what you have said that £15k should be fine. As said in my  post #3 they would not pay out in full (So no point in going for the full amount).

 

 

I will now print your replies out and see what I can find. If Admin comes back to you and you can get things sorted with them please send me a PM as we will probably not buy this for a few days anyway.

 

Best regards

 

:clap: :clap: :clap:

 

Alan.

Resurrecting an old thread rather than starting a new one.

 

In the case where an insurance company pays out new for old in the first year, why would I defer my GAP insurance for a year instead of just buying it in a years time. Surely that money is better in my pocket for that year than the insurance companies. I'm just trying to decide what to do re GAP now (getting new vRS on Monday)

Resurrecting an old thread rather than starting a new one.

 

In the case where an insurance company pays out new for old in the first year, why would I defer my GAP insurance for a year instead of just buying it in a years time. Surely that money is better in my pocket for that year than the insurance companies. I'm just trying to decide what to do re GAP now (getting new vRS on Monday)

 

Because you wouldn't be able to buy the same level of cover in a years time.

 

With our policies for example, you have to buy them within 180 days (6-months) of taking ownership of the vehicle and we provide either Invoice GAP insurance  (covering the difference between Motor Insurance payout and Original purchase price paid) or Replacement GAP insurance (covering the difference between Motor Insurance payout and (assuming the vehicle was bought brand new) the cost of replacing the vehicle at the time of claim with a brand new version of the same (or nearest equivalent) vehicle - even if that replacement vehicle costs more than you bought the vehicle for first time around).

 

If you were to wait longer than 6-months from purchasing the vehicle, to purchase GAP Insurance, you'd only be able to get a form of GAP Insurance that secures the already-depreciated-value of your vehicle at the time you bought the policy.  For example, if you bought  say a 3-year GAP insurance policy for a vehicle that you'd owned for a year and had 12,000 miles on the clock at the time you bought the policy, if that car was then written off 2-years later, the policy would only look to pay the difference between your Motor Insurance payout and a 12mth old version of the same vehicle with circa 12,000 miles on the clock (because that's what you had when you bought the policy)

 

Clearly, the latter would be considerably inferior cover to that of an Invoice or Replacement GAP Insurance policy available to purchase within the first 6-months.

 

There's currently no reason why you couldn't buy on the 180th day though and keep the money in your "pocket" for that period - with the exception of making sure that you comprehensively understood the New-For-Old cover offered by your motor insurer and were entirely satisfied that it was absolutely sufficient and therefore GAP Insurance wasn't required in that first year.

 

I hope this helps.

 

Thank you by the way, I recently had discussions with the forum owner about sponsoring this forum and therefore being permitted to reveal who I represent.  With lots of other stuff going on right now it slipped my mind... I'll get right on to it.

Thankyou, that is very helpful and I understand why I should really purchase now. i hope you are able to reveal who you represent soon (especially as I am now in the market for GAP insurance)

We'd be happy to offer a quote tasmanuk. It's one of the products available under Briskoda Insurance.

Thankyou Chris. I only just realised that when I read further up the thread so I have gone ahead and got a quote from your website. 

 

 

We'd be happy to offer a quote tasmanuk. It's one of the products available under Briskoda Insurance.

I opted for the Skoda GAP insurance when I purchased the Superb in June... Like most people I was sure this was a waste on money, I paid outright for my car, so no finance of any description to consider, but I had a very near miss in my last car, and it made me think... 

 

What I will say is the dealer can do a deal..... I was quoted around £379 (I think) to cover the £32000 for the Superb for 3 years, when I "mmmmm" about it, I was told £299 which is not bad really ... £100 a year for the reassurance that whatever the insurance payout the Skoda policy covers the "return to invoice" difference... 

Ours would have been £151.09 on that value Stuart.

I opted for the Skoda GAP insurance when I purchased the Superb in June... Like most people I was sure this was a waste on money, I paid outright for my car, so no finance of any description to consider, but I had a very near miss in my last car, and it made me think... 

 

What I will say is the dealer can do a deal..... I was quoted around £379 (I think) to cover the £32000 for the Superb for 3 years, when I "mmmmm" about it, I was told £299 which is not bad really ... £100 a year for the reassurance that whatever the insurance payout the Skoda policy covers the "return to invoice" difference... 

 

By comparison Stuart, (because now that we're forum-sponsors we're allowed to say :-))

 

A 3yr Invoice GAP insurance policy from us, also with a £20k Claim Limit (same as Chris Knott's policy), after your forum discount would have been £124.24.  As an alternative, the Replacement GAP insurance equivalent would have been £155.38.

 

However that said, I'd recommend (particularly with Replacement GAP insurance) a Claim Limit of £25,000 over 3-years and that would have worked out at £164.70.

 

Although if you have New-For-Old cover with your Motor Insurance in the first year, subject to you checking and being comfortable with how their New-For-Old cover functions, with us you'd have been able to elect to have the 3-year policy start on the date the vehicle reaches 12 months old (you must still buy within the first 6-months though)... which means for the prices above you could end up with a policy running for years 2, 3, and 4 at no additional cost!

 

As a further alternative, if you DO have New-For-Old and only required 3-years GAP cover in total, you could have dropped down to a 2-year (slightly cheaper) policy, deferred to cover years 2 and 3, for which you'd have paid the following with us:

 

2-years, £20k

 

Invoice GAP = £108.73

Replacement GAP = £142.42

 

2-years £25k

 

Invoice GAP = £112.52

Replacement GAP = £145.38

 

 

In other words... your dealer may have done you a deal, but, you still paid far too much for it.  You simply can't beat buying from a specialist broker when comparing against the **** Turpins that are Motor Dealers :-)

Alan, if you're not yet sorted with GAP insurance... this is me! www.gapinsurance.co.uk :p

 

...If Admin comes back to you and you can get things sorted with them please send me a PM as we will probably not buy this for a few days anyway.

 

Best regards

 

:clap: :clap: :clap:

 

Alan.

Hi David.

 

I'm pleased to see you have got things sorted with Admin :clap: :clap:.

 

We now have Gap Ins' for my wife's Rapid, but my Octy will not arrive until Feb 'ish next year so it should be registered March 1st.

 

I will certainly be looking for Gap then so will get a quote from you!

 

BTW, is there an option of a Briskoda discount code that members can use on your website ? Just a cheeky thought!

 

Hope it works out well for you.

 

Regards

Alan.

Hi Alan,

 

I look forward to hearing from you in due course RE the new Octy :-)

 

There's no discount code (our current website isn't that intelligent, but there's a new one currently in build ;-)) however forum members do get 10% off our normal prices... there's a sponsor's "Introduction" post coming from me shortly which will have further details.

 

Best wishes

 

David

Hi David.

 

That's great! swmbo always says she gets embarrassed when we go shopping together, but, 'don't ask don't get' is my motto.

 

Mind you she did smile when I got her previous used Jazz down in price by nearly £1800. off the screen price and got spare wheel and rear sensors included as part of the deal!

 

Salesman said " Sorry, could not do that!"

 

His Boss, nearly cried but agreed, must have been a very slow week!!

 

Merry Christmas

 

:beer: or :cocktail: or :coffee: 

Hi David,

 

I'm ready to purchase GAP insurance now so just wondering about the forum members discount.

 

Also, having now done a quote on your website, I'm confused about what amount I should use for the policy claim limit. How does one work that out? Plus is 3 years enough on a 42 month finance deal? My insurance company pays new for old in year 1.

 

Thanks

Andrew

 

 

Hi Alan,

 

I look forward to hearing from you in due course RE the new Octy :-)

 

There's no discount code (our current website isn't that intelligent, but there's a new one currently in build ;-)) however forum members do get 10% off our normal prices... there's a sponsor's "Introduction" post coming from me shortly which will have further details.

 

Best wishes

 

David

Hi David,

 

I'm ready to purchase GAP insurance now so just wondering about the forum members discount.

 

Also, having now done a quote on your website, I'm confused about what amount I should use for the policy claim limit. How does one work that out? Plus is 3 years enough on a 42 month finance deal? My insurance company pays new for old in year 1.

 

Thanks

Andrew

Hi Andrew,

 

If your Motor Insurer covers New-For-Old in the first year and having checked how it works and what conditions apply to it etc, you're happy to defer the start date of your GAP insurance policy by the first year, you could purchase a 3-year policy and delay it by up to 12 months from when the vehicle was first registered.

 

Technically if you delayed by the whole year this would leave your 3-year policy covering years 2, 3 and 4.  If you sold your vehicle at 42 months subject to how the dates fall there'd be 6-months cover remaining on your GAP insurance policy.  You'd cancel it, claim a rebate of the unused premium (the value of those 6-months) and then use that sum against the cost of a new policy on a new vehicle.  No cancellation or transfer fee would apply.

 

In terms of the Claim Limit, there's a few ways you can approach this and I'd need to know a little more about your finance agreement, your car and how many miles per year you're going to drive in order to advise you more accurately, however, the general rule of thumb is that the average car is expected to depreciate by between 50% and 70% over a three year period.  To this end, I wouldn't recommend taking a claim limit of any less than 50% of the original purchase price but in your case with a policy potentially covering in to the 4th year I'd be leaning closer to the 70% mark.  Note that if you're considering Replacement GAP insurance, it's normal to take a higher Claim Limit than you would with an Invoice GAP insurance policy because unlike Invoice GAP insurance when all you're primarily concerned about is by how much the car will drop in value from the price you paid first time, with Replacement GAP insurance there's also the potential for the list price for the brand new vehicle cost to increase too.

 

Another good way to get a starting point for your Claim Limit is that if you have a PCP agreement you can approach the Claim Limit as follows:

 

• Invoice GAP Insurance - Deduct the guaranteed future value of the vehicle (the final repayment under the PCP agreement) from the original cash price (after discounts) you paid for the vehicle.
• Replacement GAP insurance - Deduct the guaranteed future value of the vehicle from today's list price (before discounts) for the brand new vehicle

Using this "PCP" approach, your Claim Limit should not be less than the resulting figure... how much higher you take it is your own personal preference.

 

 

In terms of the forum-discount, you'll need to buy your GAP insurance policy over the phone, or get in touch with me via DM or email to furnish me with all the details and I can create a discounted policy on our online system for you to simply log in to, retrieve and pay for.

Hi David.

 

The car is now built and waiting to be shipped over, I will not take delivery until March though.

 

Probably a daft question but with  replacement cover  how does the payout go if the car is written off on day one (God forbid after waiting for 6 months!)? EG: Purchased car list price £24000.00 with negotiated discount of £1000.00 leaves £23000.00 paid on Skoda's PCP 0% over 42 months. The dealer takes my car in P/X with a given value of £7000.00. Leaving me owing £16000.00 to VWF. (Not exact figures)

 

As of the 1st Jan prices rose so the replacement cost now would be £25000.00, my insurance company pay out 'Market Value' of £XX000.00 and my 'Gap insurance' pays out £XX000.00 to total £24000.00?  Do I get the full £7k back on my P/X? as I assume the balance owed to VWF is paid from any money left over from my insurance/market value & gap insurance. However the replacement cost is now £25000.00 and the 0% finance is now 3% (maybe It could be on the next rise!) Also servicing on my car was included and now is an 'option' at £500, would this now be added to the new car price which becomes £25.500.00. Not including the interest @3%

 

Would replacement cover bring me back to this position. Buy the same car, with servicing and interest?

 

If not, how, exactly, does this work? I have read what your webpage says but this only seems to show buy outright or buy with PCP outright, no mention of P/X.

 

All figures are just figures, not accurate to any car.

 

One point David, I was looking to buy from an insurer with a  5* Defaqto rating, I did not see any mention or rating on your webpage. Checking on the Defaqto site showed your company as 5*. I very nearly removed you from my possible's list! As the old saying goes, if you've got it - flaunt it!! Many brokers who have this rating make a good show of it, it's normally the 1~2* who don't!

 

Regards

Alan

Hi David.

 

The car is now built and waiting to be shipped over, I will not take delivery until March though.

 

Probably a daft question but with  replacement cover  how does the payout go if the car is written off on day one (God forbid after waiting for 6 months!)? EG: Purchased car list price £24000.00 with negotiated discount of £1000.00 leaves £23000.00 paid on Skoda's PCP 0% over 42 months. The dealer takes my car in P/X with a given value of £7000.00. Leaving me owing £16000.00 to VWF. (Not exact figures)

 

As of the 1st Jan prices rose so the replacement cost now would be £25000.00, my insurance company pay out 'Market Value' of £XX000.00 and my 'Gap insurance' pays out £XX000.00 to total £24000.00?  Do I get the full £7k back on my P/X? as I assume the balance owed to VWF is paid from any money left over from my insurance/market value & gap insurance. However the replacement cost is now £25000.00 and the 0% finance is now 3% (maybe It could be on the next rise!) Also servicing on my car was included and now is an 'option' at £500, would this now be added to the new car price which becomes £25.500.00. Not including the interest @3%

 

Would replacement cover bring me back to this position. Buy the same car, with servicing and interest?

 

If not, how, exactly, does this work? I have read what your webpage says but this only seems to show buy outright or buy with PCP outright, no mention of P/X.

 

All figures are just figures, not accurate to any car.

 

One point David, I was looking to buy from an insurer with a  5* Defaqto rating, I did not see any mention or rating on your webpage. Checking on the Defaqto site showed your company as 5*. I very nearly removed you from my possible's list! As the old saying goes, if you've got it - flaunt it!! Many brokers who have this rating make a good show of it, it's normally the 1~2* who don't!

 

Regards

Alan

 

Hello Alan

 

Sorry for the delay.

 

Firstly, your P/X value is basically your money.  They bought your car off you for £X and you put that same £X towards the cost of the new car.  It's not treated as discount, it's part of the money you spent.  So, for a nice simple example if you bought the car for £23,000 less a PX allowance of £7,000, you still bought the car for £23,000!

 

Secondly the interest rate is a side-issue with Replacement GAP insurance as this policy is not specifically interested in the Finance Agreement secured on the vehicle, other than to know who needs to be paid first (E.g. the finance company get their bit before you see anything - just as they would with your Motor Insurance payout - however, in this case, if you've only financed £16,000 of a £23k car, your Motor Insurance payout is likely to be sufficient to clear the finance at any given time.)

 

Where a Finance Agreement (secured on the vehicle) of any nature is involved, the policy works as follows:

 

1. Motor insurance pays out what they believe the car to be worth (this either is, or isn't sufficient to clear the remaining balance of the finance agreement at the time of loss.  If it is sufficient, any surplus funds to come to you)
2. Replacement GAP insurance pays the difference between your Motor Insurance payout and (in the case of a vehicle bought brand new for which you are the very first registered keeper) the manufacturer's list price at the time of claim for a brand new version of the same or nearest equivalent vehicle - even if that replacement vehicle costs more than you bought it for first-time around (subject to the policy Claim Limit). If your Motor Insurance payout wasn't enough to clear any outstanding finance in step 1 above, some of the GAP insurance payout will go to the finance company to clear your remaining liability to them and any surplus funds come to you.  Of course if the finance has already been cleared, the whole GAP insurance payout comes to you.
3. You then use the funds that you're left with towards the cost of any vehicle from any dealership of your choice.

 

Using your figures in the event that your car is written off on day one, the Market Value of your 1-day old car (as paid out by your Motor Insurer) shouldn't be too far (if at all) different from the Manufacturer's List price for a brand new vehicle. In which case with such an early claim it's unlikely a claim would be required of a Replacement GAP insurance policy - or at least a minimal one only.

 

Example... Not too long ago I spoke with a gentleman who'd bought a £119k Maserati, discounted to £105k. 8-weeks later with very few miles on the clock it was involved in an accident and written off.  There were only three of the cars in the UK at the time, only one of which was on sale, with slightly higher mileage than his car but for virtually the full list price of £119k.  His insurer (despite being one that does NOT provide New-For-Old cover) paid out the full list price of £119k - no claim required of his GAP insurance policy!

 

It would be a different matter of course, if say, you had a claim after 6-months because at that point a "gap" has of course formed.  So let's look at that using a hypothetical example and some of your figures from above:

• [a] Car purchased for £23,000
• Borrowed £16,000
• [c] Written off @ 6-months old, Motor Insurer pays £19,000
• [d] Balance outstanding on finance @ 6-months = £14,500 (assuming 0% and repayments of £250 per month)
• [e] List Price for replacement car @ time of claim £25,000

Replacement GAP insurance would pay the £6,000 difference between your Motor Insurance payout [c] and the £25,000 cost of replacing the vehicle brand new [e].  You'd then settle [d] the £14,500 outstanding on finance and you'd have £10,500 left over to put towards the cost of your next car and as mentioned above, unlike some other GAP insurance providers, we don't apply any restrictions as to what vehicle you buy or from which motor dealer.

 

As for the Service Plan, unlike GAP insurance policies of old, we no longer specifically exclude the cost of the service plans etc from a payout, however it would only become a consideration initially on a pro-rata basis (the amount of unused cover that remains at the time of claim) and only then if the outstanding balance was not available for you to reclaim and/or transfer forward against a new car.

 

 

Defaqto.

 

A company has to purchase a licence from Defaqto in order to display their star-rating on their website and documentation etc. When (after discovering the Defaqto GAP insurance review and pointing out errors they'd made in the facts about our policies) I initially enquired as to the cost of such a licence I was quoted circa £13,000!

 

After I'd picked myself up and got my bearings, the guy I was corresponding with claimed he'd made a mistake and revised his quote but it was still a substantial figure and by that time I'd switched off.  I'm pretty sure he'd have taken £13k off us if I'd have agreed to it.

 

It's very nice of Defaqto to have rated our policies as highly as they have (without a licence I'm not permitted to state how highly) but I'm/we're not prepared to pay the sums they asked for in order to have the privilege of being able promote their rating.  Besides, IMO their rating criteria has (seemingly under pressure) been skewed more recently in favour of getting more companies (namely Motor Dealers) the coveted 5-star rating (more companies shouting about their ratings = more money for Defaqto) when in fact there are considerable albeit sometimes intricate differences between many of the 5-star rated policies that should warrant a 6-star rating being created - of which IMO we would be worthy! :p

 

 

If you (or anyone else) has any other questions, don't hesitate to ask.

Hi David.

Thank you for your time in replying and excellent explanation :clap: I had been given a different explanation elsewhere and thought that they had it wrong and they obviously had . !! I hope that this thread may help others going along this route for the first time.

 

I did not realise the situation with Defaqto, I had always thought (my mistake) that they operated in a similar way to 'Which?' Perhaps not :notme:

 

Regards

 

Alan

Thank you David. I have sent you a PM

 

Hi Andrew,

 

If your Motor Insurer covers New-For-Old in the first year and having checked how it works and what conditions apply to it etc, you're happy to defer the start date of your GAP insurance policy by the first year, you could purchase a 3-year policy and delay it by up to 12 months from when the vehicle was first registered.

 

Technically if you delayed by the whole year this would leave your 3-year policy covering years 2, 3 and 4.  If you sold your vehicle at 42 months subject to how the dates fall there'd be 6-months cover remaining on your GAP insurance policy.  You'd cancel it, claim a rebate of the unused premium (the value of those 6-months) and then use that sum against the cost of a new policy on a new vehicle.  No cancellation or transfer fee would apply.

 

In terms of the Claim Limit, there's a few ways you can approach this and I'd need to know a little more about your finance agreement, your car and how many miles per year you're going to drive in order to advise you more accurately, however, the general rule of thumb is that the average car is expected to depreciate by between 50% and 70% over a three year period.  To this end, I wouldn't recommend taking a claim limit of any less than 50% of the original purchase price but in your case with a policy potentially covering in to the 4th year I'd be leaning closer to the 70% mark.  Note that if you're considering Replacement GAP insurance, it's normal to take a higher Claim Limit than you would with an Invoice GAP insurance policy because unlike Invoice GAP insurance when all you're primarily concerned about is by how much the car will drop in value from the price you paid first time, with Replacement GAP insurance there's also the potential for the list price for the brand new vehicle cost to increase too.

 

Another good way to get a starting point for your Claim Limit is that if you have a PCP agreement you can approach the Claim Limit as follows:

 

• Invoice GAP Insurance - Deduct the guaranteed future value of the vehicle (the final repayment under the PCP agreement) from the original cash price (after discounts) you paid for the vehicle.
• Replacement GAP insurance - Deduct the guaranteed future value of the vehicle from today's list price (before discounts) for the brand new vehicle

Using this "PCP" approach, your Claim Limit should not be less than the resulting figure... how much higher you take it is your own personal preference.

 

 

In terms of the forum-discount, you'll need to buy your GAP insurance policy over the phone, or get in touch with me via DM or email to furnish me with all the details and I can create a discounted policy on our online system for you to simply log in to, retrieve and pay for.

Hi David.

 

Pick-up of my new Octavia is 1st March so getting nearer to sorting the GAP insurance.

 

I checked my Churchill policy booklet which states:

 

Quote:

New car cover

If your car is less than one year old and you are the first and

only registered owner, we will replace it with one of the same

make and model if it has:

1. been stolen and not found; or
2.  suffered damage covered by the policy and the cost of repairing

it is more than 60% of the last United Kingdom list price,

(including taxes).

We can only do this if a replacement car is available in the UK

and anyone else who has an interest in your car agrees.

If a suitable replacement car is not available, or your car was not

supplied as new in the UK,

we will pay you the market value of your

car at the time of the loss (less any excess that may apply).

 If we settle a claim under this clause, the lost or damaged car becomes

our property and you must send us the registration document.

Un-quote

 

As I read the above the text in red concerns me, should my car be written off and there is no Octatvia 1.4TSI Elegance Estate with similar options available, they will only pay me the 'Market Value'. If I took your GAP insurance deferred for the first year and this scenario happened would I have shot myself in the foot so to speak? GAP insurance not yet active and Churchill will only paying out Market Value. It would seem that an option to purchase a different car of similar value is not possible which is somewhat restrictive!

 

I will contact Churchill to check and ask why this restriction is in place but am asking if delaying the GAP's start would leave me in no man's land in the first year?

Thank you David. I have sent you a PM

 

I've just replied.  Sorry for the delay.

 

Hi David.

 

Pick-up of my new Octavia is 1st March so getting nearer to sorting the GAP insurance.

 

I checked my Churchill policy booklet which states:

 

Quote:

New car cover

If your car is less than one year old and you are the first and

only registered owner, we will replace it with one of the same

make and model if it has:

1. been stolen and not found; or
2.  suffered damage covered by the policy and the cost of repairing

it is more than 60% of the last United Kingdom list price,

(including taxes).

We can only do this if a replacement car is available in the UK

and anyone else who has an interest in your car agrees.

If a suitable replacement car is not available, or your car was not

supplied as new in the UK,

we will pay you the market value of your

car at the time of the loss (less any excess that may apply).

 If we settle a claim under this clause, the lost or damaged car becomes

our property and you must send us the registration document.

Un-quote

 

As I read the above the text in red concerns me, should my car be written off and there is no Octatvia 1.4TSI Elegance Estate with similar options available, they will only pay me the 'Market Value'. If I took your GAP insurance deferred for the first year and this scenario happened would I have shot myself in the foot so to speak? GAP insurance not yet active and Churchill will only paying out Market Value. It would seem that an option to purchase a different car of similar value is not possible which is somewhat restrictive!

 

I will contact Churchill to check and ask why this restriction is in place but am asking if delaying the GAP's start would leave me in no man's land in the first year?

 

 

Alan,

 

You are quite right... with your policy as it is, it's possible that your car could be written off and if one of the same (or nearest equivalent) vehicles was not available to your Motor Insurer, they'd only be paying you the Market Value of your vehicle which, assuming you'd delayed the GAP insurance start date by a year from first registration, would leave you in a position of having no GAP insurance.

 

There's another issue too though (I've highlighted it green) in that even if a vehicle was available to them, the cost of the repair would have to exceed 60% of the manufacturer's list price of that replacement vehicle before they'd entertain supplying a physical vehicle to you... in which case, you have to know what their lower threshold is in terms of declaring the vehicle to be a Total Loss in the first place.

 

For example, If you bought your car for £25,000 and it was involved in an accident at say, 11-months old, it's not unreasonable to say that it may have depreciated by £5,000 (if not more) by then... but with your car worth circa £20k, it would be somewhat normal for a Motor Insurer to declare the vehicle to be a Total Loss (write it off) if the cost of repair came to 50-60% of what your car was worth (this'd be £10k-£12k).  However with your policy, Churchill are only going to provide you with a New-For-Old replacement vehicle (assuming they can get one) if the cost of repair exceeds 60% of the manufacturer's list price for the equivalent vehicle at the time of claim... this'd mean that the cost of the repair would have to exceed £15,000 in this example and that's assuming that the list price was still £25,000 at the time of claim and had not increased!

 

Personally... in your position with your existing Motor Insurance policy, I would not be considering delaying the start date of a GAP insurance policy.  I'd either have it starting on day one, or, I'd be looking to change Motor Insurance provider/policy to one that offers a superior New-For-Old scheme.

 

As it happens, earlier today I published this blog article: The Perils Of New-For-Old Cover - it might be worth having a read.

 

Best wishes

 

David

Hi David.

Thank you for your confirmation of what I thought. My opinion of Churchill has just dropped considerably!

 

I renewed my Insurance in Jan and my wife is also with them, luckily as it turns out she did not read her policy document so is GAP covered in 1st year.

 

I think her renewal is middle of the year so I will look at renewing her car with another company then. but as she is already GAP covered then it may not be worth changing though....... Have to check the Terms and Costs.

 

The dealer has now advised me of the registration number so I will PM you with my details for a quote. I agree with you and I would certainly not take the risk of Churchill's crafty T&C's in relation to New for Old.

 

Your blog link above is definitely worth a read for anyone contemplating a new car and GAP cover.

 

Regards

 

Alan.

Sorry to hijack the thread.

 

What is your opinion on GAP Insurance on used cards bought on finance? In general is it worth buying GAP, as the depreciation isn't as drastic as buying new?

 

Also hoe long after purchasing does GAP need to be purchased?

 

Thanks,

 

John 

Sorry to hijack the thread.

 

What is your opinion on GAP Insurance on used cards bought on finance? In general is it worth buying GAP, as the depreciation isn't as drastic as buying new?

 

Also hoe long after purchasing does GAP need to be purchased?

 

Thanks,

 

John 

Hello John,

 

Firstly, I'm assuming that by "used" you're referring to a vehicle that was (or will be) more than 6-months old at the time you bought/buy it and the advice that follows is based on that.

 

You're correct that used vehicles depreciate at a slower rate than brand new vehicles, but unless you've got a classic car, a used vehicle will still depreciate in value.

 

Consider... whether your car is new or used, the "gap" between what your car is worth on any given day (its Market Value) and the original purchase price, continues to increase the more time that goes by.  If your car is declared a Total Loss (written off) through accident, fire or theft, your Motor Insurer is only obliged to pay you the Market Value of your vehicle at the time of loss.  With a vehicle bought on finance, depending on the exact structure of the purchase (the type and length of the finance agreement, the interest rate, the amount borrowed etc) and when the Total Loss occurred, it's possible in some circumstances that the finance agreement settlement figure could not only be greater than the amount paid out by your Motor Insurance policy but also in extreme circumstances (e.g. a very early claim), greater than the original invoice price of the vehicle itself.

 

There are some exceptions, but generally speaking, there are two forms of GAP insurance that a Motor Dealer would offer you for a used vehicle bought on finance:

 

Finance GAP insurance:

 

Pays the difference between your Motor Insurance payout and the amount outstanding on finance at the time of loss.

 

In theory, it will allow you to walk away in a "zero" position, e.g. no car but no finance either.  However sooner or later, there'll come a time when you've paid off so much of the finance agreement that the Motor Insurer payout alone will be sufficient enough to settle the finance on its own, in which case the GAP insurance is then useless.

 

There's a popular misconception that if you're buying a car on finance, you must have Finance GAP insurance, when in fact, in almost all (non-Contract-Hire) cases, Finance GAP insurance is a terrible form of GAP insurance and consequently, with the exception of some Motor Dealers that still peddle it, most (but not all) independent companies have stopped selling it as a standalone product.

 

Invoice GAP insurance:

 

Pays the difference between your Motor Insurance payout and the original purchase price of the vehicle.

 

In most cases a payout on an Invoice GAP insurance policy will allow you to clear any remaining finance AND have money left over that you can then put towards your next vehicle - on this point it's worth noting that the "better" policies will payout in cash to the policyholder (that is to say, any surplus funds after settling any finance agreement (if any) secured on the vehicle) and not insist that the GAP insurer has to get involved in the supply of the vehicle or (as is sometimes the case) that you must go to specific dealer of their choice to organise your next vehicle.

 

The problem with "traditional" Invoice GAP insurance however (specifically if there's finance involved) is that if you put little or no deposit down and the finance involves a particularly high interest rate, a very early claim can see the finance agreement settlement figure be a sum that is higher than the original purchase price of the vehicle.  If this were to happen a "traditional" Invoice GAP insurance policy would only aim to get you back to the original vehicle purchase price and you'd still have to put your hand in your pocket to settle the remaining balance outstanding on finance.

 

Combined Invoice/Finance GAP insurance:

 

Recognising that Finance GAP insurance doesn't really cut the mustard and that "traditional" Invoice GAP insurance may still fall short for some finance vehicles, most companies have now moved to a policy that is a combination of both Invoice and Finance GAP insurance.

 

In the event of a claim for a vehicle which is the subject of a finance agreement, there are two possible scenarios:

 

• The finance agreement settlement figure is MORE than the original invoice price of the vehicle. 

If this happens the policy becomes a Finance GAP insurance policy paying the difference between your Motor Insurance payout and the amount outstanding on finance at the time of claim.  The aim being to allow you to walk away at a "zero" position.

• The finance agreement settlement figure is LESS than the original invoice price of the vehicle (or the finance has already been repaid). 

If this happens the policy becomes an Invoice GAP insurance policy paying the difference between your Motor insurance payout and the original invoice price of your vehicle.  The aim being to allow you to clear any remaining finance AND have money left over that you can use against the cost of a new vehicle.

 

So... that's the long answer...

 

The short answer?

 

With very few exceptions, every vehicle less than 10years old (cars have to be less than 10yrs old to buy GAP insurance) will depreciate and consequently I believe it's absolutely worth buying GAP insurance regardless as to whether your car is new or used - though you may not need as much cover (e.g. the Claim Limit) for a used vehicle as you would with a brand new vehicle.  Then again I sell GAP insurance for a living, so perhaps I'm always going to say that

 

 

How long after purchasing the vehicle do you have to purchase GAP insurance?

 

Some Motor Dealers will tell you that you must buy GAP insurance on the day you buy the vehicle and then when you decline, they'll phone you a few days later to offer you the option to buy GAP insurance again .  In contrast (though it does vary from one to another) independent providers will currently allow you up to 180 days (six months) to purchase an Invoice GAP insurance policy, and then after 180 days some providers will be only be able to provide you with an "Agreed Value GAP insurance" policy which, rather than securing the price you bought the car for, is at it's most basic level, about the value of your vehicle at the time you bought the policy.

 

 

Obviously what I've posted above is quite general. If you'd care to share the details of your specific purchase with me either here on this thread or via PM, I can advise you specifically according to your own figures.  No obligation and no pressure.  I'm happy to help (as I'm sure other members of this forum will confirm).

 

Regards

 

David

Hi David.

 

GAP insurance purchased today through a very nice lady in your offices (Name withheld to protect the innocent ! )

 

All I need now is the car.........

 

Regards

 

Alan.