GAP insurance and paying off PCP

[Ness1812]

Hi, I’m a Skoda newby and have on order a Karoq SE L with lots of extras, I think I may have it around August judging by everyone else’s comments on here regarding delivery, I can’t wait!

My question is, I am buying the vehicle on PCP but will pay it off in the first 14 days (I’ve read all the forum comments about it, massive help) but I’m really unsure where that leaves the GAP insurance. Does anyone know how it works if you settle early? My intention is to have a low rate (2%) bank loan for 3 years to pay the PCP off, but I’m not sure if the GAP will still be viable on the loan, does anyone know? Thanks 👍🏼

[Babs]

Normally it's a separate product, bundled into the total cost. So in essence, you will still be paying for it.

[SimonAudi]

Depends - if you buy the GAP through the dealer or one of the online brokers....

 

I buy online at a fraction of the dealer cost and buy a combined gap that will cover me whether its on finance or not and pay the difference between new and write off price....  so basically pays the difference between settlement and new vehicle price at time of right off.

 

I am not sure the policy details you bought.. so its difficult to give advise...

 

 

[David@GAPInsurance]

If you’re buying just Finance GAP insurance, it’s effectively void the moment you clear the finance.

 

If you’re buying Invoice or Replacement GAP insurance, it just means that there’d be no finance company to pay from the proceeds of any claim payout - e.g. you receive all of the money yourself.

 

See www.gapinsurance.co.uk for more info and use discount code “BRISKODA10” to save 10%

 

HTH

 

David

[SkodaVRS1963]

I work in the insurance industry and the official line works like this:

 

Say you bought your car for £18,000, which depreciates at roughly 20% per year.

 

By year three, it’ll be worth about £10,800 at market value.

 

If your car is stolen or written-off at that point, then your insurer will only pay out the market valuation of £10,800 and it's unlikely that this'll be enough to buy a newer equivalent model.

 

If you’d taken out GAP insurance on an RTI (return to invoice) basis when you’d first bought your car, you’d get £18,000 (£10,800 from your insurance policy and £7,200 from the GAP cover).

 

This would mean you’d be in a better position to get a suitable replacement without having to dip into your own pocket.

 

Well that's how it's sold anyway.

Edited 2 June, 2019 by SkodaVRS1963
RTI clarification

[David@GAPInsurance]

17 minutes ago, SkodaVRS1963 said:

I work in the insurance industry and the official line works like this:

 

Say you bought your car for £18,000, which depreciates at roughly 20% per year.

 

By year three, it’ll be worth about £10,800 at market value.

 

If your car is stolen or written-off at that point, then your insurer will only pay out the market valuation of £10,800 and it's unlikely that this'll be enough to buy a newer equivalent model.

 

If you’d taken out GAP insurance on an RTI (return to invoice) basis when you’d first bought your car, you’d get £18,000 (£10,800 from your insurance policy and £7,200 from the GAP cover).

 

This would mean you’d be in a better position to get a suitable replacement without having to dip into your own pocket.

 

Well that's how it's sold anyway.

 

Indeed.  What you describe is what we call “Invoice GAP insurance”.

 

By comparison, Replacement GAP insurance is when, at the time of claim the then equivalent of the vehicle you bought originally is selling for say, £20,000.  The Replacement GAP insurance policy would aim to cover the additional £2,000 too.

 

Either way though, if there’s finance outstanding at the time of claim, the finance company get their bit first and “you” only see the remaining funds leftover.

[Ness1812]

Thanks for all of the advice, I’m not sure I’m less confused now though!

So, I need to purchase Invoice GAP as it pays out to me and not the finance company?

[David@GAPInsurance]

14 minutes ago, Ness1812 said:

Thanks for all of the advice, I’m not sure I’m less confused now though!

So, I need to purchase Invoice GAP as it pays out to me and not the finance company?

 

At least Invoice GAP insurance... Replacement GAP insurance is superior still (though more expensive as a result).

 

Both policy types are available whether you’re  a cash buyer or using finance (it’s a popular misconception that you only need or can have GAP insurance if you’re financing your vehicle).  Either policy will pay out whether there’s finance outstanding at the time of claim or not.  If there’s no finance to pay, all of the money comes to you.

 

Either policy type, from a specialist broker like us, will likely be considerably cheaper than what a motor dealer will try to charge you for their cover.

 

Full explanations of the different policy types can seen at www.gapinsurance.co.uk

 

Give our office a call when convenient though and we’ll talk you through what options are available for your specific circumstances. 

 

HTH

Edited 2 June, 2019 by David@GAPInsurance

[SkodaVRS1963]

On 02/06/2019 at 19:13, David@GAPInsurance said:

Either way though, if there’s finance outstanding at the time of claim, the finance company get their bit first and “you” only see the remaining funds leftover.

 

Exactly this; and if you're paying a silly interest rate (I think Skoda are currently on something stupid like 5.5%) and your car gets trashed quite early on then you need to factor that into your equation.

[Guest]

On 02/06/2019 at 19:41, Ness1812 said:

Thanks for all of the advice, I’m not sure I’m less confused now though!

So, I need to purchase Invoice GAP as it pays out to me and not the finance company?

Hi,

 

So as per the example if you have a 3 year old car and say it's done 45k miles and you get £10,800 - why would you expect your standard insurance to pay out for a car 3 years younger with no mileage?

 

You should, roughly, be able to go out and buy a car the same age, mileage and condition as your car was before the incident - isn't that enough.

 

You would be better of, when you consider the risk, saving the 'GAP' money every month.

[Ness1812]

Thanks for that.

23 minutes ago, john2017 said:

Hi,

 

So as per the example if you have a 3 year old car and say it's done 45k miles and you get £10,800 - why would you expect your standard insurance to pay out for a car 3 years younger with no mileage?

 

You should, roughly, be able to go out and buy a car the same age, mileage and condition as your car was before the incident - isn't that enough.

 

You would be better of, when you consider the risk, saving the 'GAP' money every month.

 

[David@GAPInsurance]

42 minutes ago, john2017 said:

Hi,

 

So as per the example if you have a 3 year old car and say it's done 45k miles and you get £10,800 - why would you expect your standard insurance to pay out for a car 3 years younger with no mileage?

 

You should, roughly, be able to go out and buy a car the same age, mileage and condition as your car was before the incident - isn't that enough.

 

You would be better of, when you consider the risk, saving the 'GAP' money every month.

 

Except if the car is financed, some (depending on the exact circumstances, possibly all) of that £10,800 you refer to will be paid to the finance company.  You'll only be left with whatever is left over once the finance company has been paid... which might not be much. If the MI payout didn't clear all of the original finance agreement balance, you'd also have to find a way to repay that as well as funding your next car.

 

If you were a cash buyer, or the finance had been cleared by the time of any write-off, you could of course just take the MI settlement and buy a car of similar age, spec' and condition as the one that was just written off, but... why settle for just the motor insurer's settlement when the likes of GAP Insurance which is relatively low-cost (at least when NOT purchased from a motor dealer) can provide you with what in some cases will be a substantial amount more?

 

In terms of "...saving the 'GAP' money every month." you may be over-estimating the price of GAP insurance. The average invoice price of the SKODA vehicles that we currently cover is a little under £20,500 and the average policy duration is ~3.5 years.  The average cost of those GAP Insurance policies for these same vehicles equates to ~£160 which breaks down to an equivalent of ~£3.80 per month.

 

On the flip side, the average GAP insurance claim payout we've made for SKODA vehicles is currently standing at £6,046 whilst the largest claim we've paid out for a SKODA is currently £10,275.

 

Obviously, selling GAP insurance for a living I'm biased and I do accept that the risk of financial detriment is greater to some people than others but, I genuinely don't understand, given the low cost, why anybody would buy a car without GAP insurance.

Edited 6 June, 2019 by David@GAPInsurance
spelling mistake

[Guest]

"Given the low cost", given the very low risk of being in that situation - like most insurance if you can put the money in a bank / building society you will be better off irrespective of the interest rate.

 

I follow the principle that I rather keep the money in my account rather than pay it into someone elses'

 

Edited 6 June, 2019 by Guest

[David@GAPInsurance]

16 minutes ago, john2017 said:

"Given the low cost", given the very low risk of being in that situation - like most insurance if you can put the money in a bank / building society you will be better off irrespective of the interest rate.

 

I follow the principle that I rather keep the money in my account rather than pay it into someone elses'

 

 

Indeed it's true that the risk of a vehicle being written off through accident, fire, theft or flood is statistically low... but that doesn't mean there's no risk at all and we're seeing total loss claims being paid out frequently... ultimately, using your logic, you'll only be "better off" through not buying it, if you're never in a position to need it and of course saving ~£3.80 per month would only usually cover a fraction of your car's depreciation should the worst happen.

 

Some people see value in the peace of mind that having GAP insurance provides.  Others don't.  Some people would comfortably take the financial hit that a vehicle being written off might bring about. Others would suffer.

 

Each to their own of course.

[Guest]

19 minutes ago, David@GAPInsurance said:

 

Indeed it's true that the risk of a vehicle being written off through accident, fire, theft or flood is statistically low... but that doesn't mean there's no risk at all and we're seeing total loss claims being paid out frequently... ultimately, using your logic, you'll only be "better off" through not buying it, if you're never in a position to need it and of course saving ~£3.80 per month would only usually cover a fraction of your car's depreciation should the worst happen.

 

Some people see value in the peace of mind that having GAP insurance provides.  Others don't.  Some people would comfortably take the financial hit that a vehicle being written off might bring about. Others would suffer.

 

Each to their own of course.

of course each to their own, and our money to your companies profit and salary

[David@GAPInsurance]

35 minutes ago, john2017 said:

of course each to their own, and our money to your companies profit and salary

 

As the broker (and unlike a motor dealer) we make comparatively very little on the policies that we sell.

 

But yes, you're right. We make profit and pay staff salaries etc from the policies that we sell... and in return, amongst other things, we provide peace of mind to many people, some of whom view that as invaluable - for those who go on to claim, we're able to help them out financially - sometimes to the tune of many thousands of pounds (our highest claim payout to date was £48,859!).

 

I respect your opinion in relation to GAP insurance.  I just don't share it 🙂

[Guest]

If you want to be transparent not just about your payout please advise your profits and salaries?

 

I was interested in your company and your website about us states "its assets were acquired by "Pickles & Burns Ltd" - a company wholly owned by David & Andrew (Pickles)" - is this correct?

 

 

Edited 6 June, 2019 by Guest

[David@GAPInsurance]

1 minute ago, john2017 said:

I was interested in your company and your website about us states "its assets were acquired by "Pickles & Burns Ltd" - a company wholly owned by David & Andrew (Pickles)" -is this correct?

 

 

 

Yes.  I’m the David it mentions.  Andrew is my business partner.

[Guest]

1 hour ago, David@GAPInsurance said:

 

Yes.  I’m the David it mentions.  Andrew is my business partner.

Did not Andrew resign recently?

 

If you want to be transparent not just about your payout please advise your profits and salaries?

 

 

Edited 6 June, 2019 by Guest

[David@GAPInsurance]

1 hour ago, john2017 said:

If you want to be transparent not just about your payout please advise your profits and salaries?

 

I just noticed this extra bit you added to your previous post.

 

We’re (to my knowledge) the only GAP insurance company to actively publish the details of each of our claims and have done so for years.  This being something that the FCA have discussed making compulsory for some time in the face of industry-wide mis-selling and considerable overcharging of GAP insurance by motor dealers.  I’ve no issue with the level of our transparency.

 

I don’t mind sharing that from the average policy price of ~£160 that I referred to in my earlier post, the average amount that we as the broker saw was ~£40 (after all overheads/operating costs, tax etc have been paid, there isn’t much left of that!) The rest, consists of Insurance Premium Tax and the amount paid over to the insurer.

 

As for Andrew resigning, he resigned as a Director in November but, is still a shareholder.  His business (Frank Pickles Insurance Brokers) is our principal still too - so he’s very much involved in our business regardless.

 

What’s your point? 

[J.R.]

4 hours ago, David@GAPInsurance said:

 I genuinely don't understand, given the low cost, why anybody would buy a car without GAP insurance.

 

 

 

Being in the insurance industry you must be aware of people like myself that buy vehicles with our own funds and have 3rd party insurance.

[David@GAPInsurance]

49 minutes ago, J.R. said:

 

 

 

Being in the insurance industry you must be aware of people like myself that buy vehicles with our own funds and have 3rd party insurance.

 

Indeed.  But it’s not something I’d ever do myself.  

 

I prefer to lease my cars rather than sink a load of my own money in to buying them and last time I looked at third party insurance I was quoted higher prices than comprehensive.  

 

Plus, I wrote my own and two other cars off in an accident I caused back in 2014 which would have left me with a not insignificant bill to the finance company had I not had comprehensive cover

[J.R.]

Yes I realise that I am definitely not representative of most modern motorists hence the market for products such as yours.

 

There have always been the types that either crash their vehicles or arrange to have them stolen because they cant sell them for what they believe them to be worth, accident damage or blown engine, electronic problems etc, I guess for them GAP insurance would really appealing but they would have to start out with it in the first place.

 

Someone coming to the end of a lease or PCP that would be facing considerable charges for damage/neglect if they have GAP insurance and dodgy mates would be very tempted.

[Rustynuts]

Hey, I don't want or need GAP insurance, but any excuse for an argument and I'll join in.

David, you should be ashamed of yourself for holding a gun to these peoples heads and forcing them to pay you a much smaller premium than the dealer selling the car. And as for explaining the workings of the policy in plain language so that people can understand what the costs and implications of taking out said policy, well you should be ashamed of yourself.
 

Preying on people at their most vulnerable is horrible. People quite happy to spend £500 - £800 for basic GAP insurance at the dealers, and you poke your bloody nose in and tell them they could actually get a better and more suitable policy for about 20% of the cost they were happy to spend? Have you no morals or ethics?

Hang your head in shame.

 

Oh, and btw. Thanks once again for the policy you povided me with, along with the refund pro rata of the previous policy which I cancelled when I exchanged cars. I still remember the dealers face when I told him how much I paid for my policy when I was listening to his sales drivel.

[Guest]

1 hour ago, David@GAPInsurance said:

 

I just noticed this extra bit you added to your previous post.

 

We’re (to my knowledge) the only GAP insurance company to actively publish the details of each of our claims and have done so for years.  This being something that the FCA have discussed making compulsory for some time in the face of industry-wide mis-selling and considerable overcharging of GAP insurance by motor dealers.  I’ve no issue with the level of our transparency.

 

I don’t mind sharing that from the average policy price of ~£160 that I referred to in my earlier post, the average amount that we as the broker saw was ~£40 (after all overheads/operating costs, tax etc have been paid, there isn’t much left of that!) The rest, consists of Insurance Premium Tax and the amount paid over to the insurer.

 

As for Andrew resigning, he resigned as a Director in November but, is still a shareholder.  His business (Frank Pickles Insurance Brokers) is our principal still too - so he’s very much involved in our business regardless.

 

What’s your point? 

Define what you meant as business partner in terms of:

Cessation of Andrew Frank Pickles as a person with significant control on 1 January 2018   partner | ˈpärtnər | noun 1 a person who takes part in an undertaking with another or others, especially in a business or company with shared risks and profits.