Is Guaranteed asset protection (GAP) insurance worth it?

Man of Honour
Joined
17 Oct 2002
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159,534
I personally do not feel its worth it. Hear me out.

Firstly lets look at the premium. You can get GAP for under £100. Yet they'll pay out many thousands when you claim. Bargain! But of course do the sums - for it to make business sense they must have a very low premium:claim ratio, therefore they take in more money in premiums than they pay out in claims. Given the low premium and high claim value this suggests very few people ever need to claim for GAP insurance.

So, first point - you are very unlikely, statistically, to claim under GAP insurance.

Lets move on to what it protects you against. Return to invoice isnt actually protecting you - its putting you in a better position than you were before the accident. This is nice to have but it also means that if you didnt have it it isn't the end of the world even if the worst happens.

Buy a car for £12k, a 1 year old Mondeo. Crash it 2 years later and get paid the value of a 3 year old Mondeo, say, £7000. You now have £7000 to buy a 3 year old Mondeo with and the net result is that before the crash you had a 3 year old Mondeo, after the crash you have... a 3 year old Mondeo. So you've not really lost out in anything other than an incidential way.

IMHO GAP is only worth considering when not having it would cause you financial hardship - ie, if you are the sort of person stupid enough to buy a heavily depreciating mass market eurobox on finance and find yourself in negative equity. Otherwise GAP is simply gambling - you are gambling that you'll write your car off and receive a full refund on the price you paid for it 2 years ago..
 
Associate
OP
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20 Oct 2002
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Redcar
Very true what Fox has said and exactly the thoughts of my wife too. I suspected that even if we did have GAP cover in most cases any accident damage would be repaired (like in my wifes last accident which was repaired) and the cover not used. The only real situation would be if we crashed it and I could accept a loss in that case, or the car was stolen and written off.

Anyway as has been said, if in a year or two the car was gone we'd simply get something similar with the insurance money. Guess I should be putting the couple of hundred quid by not getting GAP in the bank for fuel, new tyres or dare I say a replacement turbo!
 
Soldato
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4 Nov 2003
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Ashford
I can see your point Fox and TBH I wouldnt bother with it on a second hand car really(although my current car was second hand). But our first car with GAP was brand new and pretty expensive so £150 for three years cover on GAP didnt really bother us cost wise. The second car although second hand was more expensive than the first and only 8 months old, again £175 didnt really break the bank and if it does end up written off then I wouldnt really want to only have the option of buying a car as old again as I would replace it with a newer one of similar age to when I initially got the car. In fact if you average the GAP out over the three years its about £60 a year which isnt a lot more to add to my insurance when it £800pa.
 
Soldato
Joined
14 Nov 2002
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Under the Hill
As I work for an insurance company who offer this product, I can give some advice.

In my eyes it is a good product for the insurer to sell. Low claims rates due to payouts more or less being limited to complete write-offs and a fixed indemnity make it profitable withing the industry. It is not without it's merits in that the peace of mind it affords you if you have used finance to purchase a new car is probably worth £200 over 3 years. However, outside of that it is not necessarilly for everybody.

As Fox pointed out, if you write of your car, you will more or less have an equivilent replacement and aren't that much worse off anyhow, GAP returns you to a point where you are better off than you currently were.
 
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