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Old 24th Apr 2009, 07:19   #1
Five_Star
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Is Guaranteed asset protection (GAP) insurance worth it?

Looking at all the figures for getting a Focus ST I've been told that GAP insurance on the 11k Focus is worth taking, but like all insurance policies is it a good deal? it seems that the different finance companies and brokers push this quite hard so I'm guessing they make a lot of commission on the extra insurance as well?

I've always owned cars outright before so not come across this before. I assume I only need to use GAP insurance if the vehicle is a total loss before the end of the finance agreement?

If I don't take the insurance and the car is a write off for whatever reason in the future what kind of depreciation loss could I expect?
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Old 24th Apr 2009, 07:23   #2
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I've just taken GAP Insurance for my Fiesta ST, I looked on the internet and saved myself some money on it. I've always had it and tbh if the worst happens then you will be very glad you have it.

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Old 24th Apr 2009, 07:26   #3
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what type of GAP protection are they offering

will they meet the full value of the outstanding finance, or just the trade in value of the car at the time ?

If you take the latter kind of GAP protection, you wont be out of pocket at all. If the former, it really depends upon what 2nd hand focus ST prices do.

However, an 11k Focus ST has already done the bulk of its depreciation, so you should be ok. You wont find Focus STs dipping below 5k in the next 3 years.


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Old 24th Apr 2009, 08:09   #4
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The GAP insurance both different companies are offering is that they will pay the difference between my insurance pay out and the cost of the finance agreement.

I'm making quite a few assumptions here but say the car costs 11k. With our trade in of 2k and a 1k deposit the total finance is 8k
If the car is written off next year and direct line pay out 8k for market value this would cover the finance.

So in this case what would GAP insurance pay out?

Out of interest where should I look online for comparison costs, therubble where did you look?
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Old 24th Apr 2009, 08:17   #5
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Quote:
Originally Posted by MrLOL View Post
will they meet the full value of the outstanding finance, or just the trade in value of the car at the time ?

If you take the latter kind of GAP protection, you wont be out of pocket at all. If the former, it really depends upon what 2nd hand focus ST prices do.
I think this should be other way around...
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Old 24th Apr 2009, 08:23   #6
Janesy B
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Looks like there's a few different types.

Quote:
Back to Invoice Car Gap Insurance

This type of car GAP Insurance will pay you the difference between your motor insurer's settlement figure and your original invoice price of the vehicle. If the vehicle is financed you can use this payment to settle the outstanding financeowed, with the remaining amount put towards a replacement vehicle. This policy is suitable for vehicles owned outright or on finance.



Vehicle Replacement Car Gap Insurance

This product will cover the difference between your motor insurer's settlement figure and the cost of replacing with a brand new or equivalent age vehicle, up to the benefit limit, whether you own the vehicle outright or it is on finance.



Contract Hire Car Gap Insurance

Protects the shortfall between the outstanding balance under the Contract Hire agreement (this can be up to 100% of outstanding rentals) and the total loss settlement offered by insurers in the event of a vehicle being written off following an accident, fire or theft Available for cars and light vans on Contract Hire and Personal Contract Hire Agreements.
I'd say it was well worth having.
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Old 24th Apr 2009, 08:56   #7
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Thanks for pointing me in the right direction people It seems from some extra reading the policy that the finance companies are offering (only Finance GAP insurance) is way over priced, and might not actually pay out if my insurer pays a reasonable market value.

I would like to hear from anybody who has taken Invoice GAP insurance out, I'm looking at about 190 for 3-4 years but would like to go with a company somebody has good words to say about rather than a stab in the dark on Google.
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Old 24th Apr 2009, 09:03   #8
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Quote:
Originally Posted by Five_Star View Post
The GAP insurance both different companies are offering is that they will pay the difference between my insurance pay out and the cost of the finance agreement.

I'm making quite a few assumptions here but say the car costs 11k. With our trade in of 2k and a 1k deposit the total finance is 8k
If the car is written off next year and direct line pay out 8k for market value this would cover the finance.

So in this case what would GAP insurance pay out?

Ive had it before, and if the car is written off and you dont need to claim on the GAP they would pay you 1000. I didnt think that could be right at first bout i double checked the small print and it is

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Old 24th Apr 2009, 09:14   #9
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I have invoice GAP insurance but can't remember much of the details about it. I'll try to remember to check tonight when I'm home.
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Old 24th Apr 2009, 09:15   #10
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Where did you get your cover from Defcon5, finance company or a 3rd party insurer?
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Old 24th Apr 2009, 09:20   #11
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Originally Posted by Five_Star View Post
Where did you get your cover from Defcon5, finance company or a 3rd party insurer?
IIRC the company wer Cardiff Pinnacle http://www.pinnacle.co.uk/ . It was arranged by the dealer at the time.

When I wrote the car off all I had to do was fill in a single page form and that was it, they paid out straight away

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Old 24th Apr 2009, 09:28   #12
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I took out GAP insurance on my vRS - mainly because the dealer offered it to me at a really good price.
My GAP insurance is "back to invoice" value and it is in place for 3 years.
The car is all paid for - a loan from my mum means we own the car outright.
However, if at any point within 3 years I was to write the car off, the GAP insurance will boost any offer the insurance company gives me back to the invoice price of the vehicle.
So examples:

Car costs me 12k
I write it off after 2.5yrs
Insurance company offer my 8k - current value
GAP insurance pays 4k
I have 12k again to spend on a new car

For the amount it cost me just seemed a nice little safety net.
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Old 24th Apr 2009, 09:33   #13
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Yeah, especially when you can get is for a couple of hundred

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Old 24th Apr 2009, 09:45   #14
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Warning, I got screwed over by GAP insurance. I bought a new bike at a risky time financially for me and took out the top GAP cover that technically covered me for any circumstance that the insurance didn't pay out and it should have covered any remaining finance too. The bike got stolen and after a lot of arguing I didn't get a penny from either.

I'd never take it out again.


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Old 24th Apr 2009, 09:48   #15
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Quote:
Originally Posted by Defcon5 View Post
IIRC the company wer Cardiff Pinnacle http://www.pinnacle.co.uk/ . It was arranged by the dealer at the time.

When I wrote the car off all I had to do was fill in a single page form and that was it, they paid out straight away
I'm pretty sure they are the same people, will double check tonight on the paperwork. cheers
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Old 24th Apr 2009, 09:56   #16
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Quote:
Originally Posted by Jonny69 View Post
Warning, I got screwed over by GAP insurance. I bought a new bike at a risky time financially for me and took out the top GAP cover that technically covered me for any circumstance that the insurance didn't pay out and it should have covered any remaining finance too. The bike got stolen and after a lot of arguing I didn't get a penny from either.

I'd never take it out again.
Possibly the reason the insurance company didnt pay out are the same reason the GAP insurance didnt pay either. What happened?

Ive used both these companies (http://www.click4gap.co.uk/ http://www.directgap.co.uk/) in the past for return to invoice GAP and they both worked out very good prices compared to what was about at the time. They are both hitatchi finance backed insurance same as many main dealers including Audi use.
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Old 24th Apr 2009, 10:08   #17
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Quote:
Originally Posted by Jonny69 View Post
Warning, I got screwed over by GAP insurance. I bought a new bike at a risky time financially for me and took out the top GAP cover that technically covered me for any circumstance that the insurance didn't pay out and it should have covered any remaining finance too. The bike got stolen and after a lot of arguing I didn't get a penny from either.

I'd never take it out again.
I'm interested too.
What reason did they give for not paying out?
Reading through the T&C of my insurance I just cannot work out a way I couldn't get paid
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Old 24th Apr 2009, 11:33   #18
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I thought about it but to me if you had it you'd be hoping you had an accident to make it worth while as otherwise you may as well set the money on fire.

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Old 24th Apr 2009, 11:44   #19
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Originally Posted by Dandle View Post
Possibly the reason the insurance company didnt pay out are the same reason the GAP insurance didnt pay either. What happened?
De-restricted 50cc bike and I needed a CBT to ride it, insured TPFT. I didn't have a CBT when it was stolen from outside my flat and my claim was refused on the grounds that I couldn't supply a valid licence. The GAP then refused because the insurance refused. I got the insurance refunded (150) and the cost of the GAP insurance refunded and cut my losses, about 2K out of pocket. In hindsight I probably should have pursued them in court but this was before my internet days when lots of people offer good advice, like on here.


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Old 24th Apr 2009, 12:19   #20
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Originally Posted by a1ex2001 View Post
I thought about it but to me if you had it you'd be hoping you had an accident to make it worth while as otherwise you may as well set the money on fire.
I wouldn't be getting the GAP on the off chance that I manage to binn the car myself. As my wife has proved with our old Focus it's far more likely to have some idiot drive into us, or it's stolen and written off. These are my main worry.
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Old 24th Apr 2009, 12:23   #21
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Quote:
Originally Posted by a1ex2001 View Post
I thought about it but to me if you had it you'd be hoping you had an accident to make it worth while as otherwise you may as well set the money on fire.
And what about the car being stolen/burnt out/hit etc? You can't guarantee against that.
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Old 24th Apr 2009, 12:26   #22
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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..

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Old 24th Apr 2009, 12:39   #23
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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!
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Old 24th Apr 2009, 12:44   #24
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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 alot more to add to my insurance when it 800pa.
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Old 24th Apr 2009, 12:46   #25
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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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