GAP Insurance worth it?

[[TW]Fox]

If you're getting a new car on 0% finance

Then you've bought at the wrong time as finance costs money and if it isn't costing money at that time it's come from somewhere else, probably a lower deposit contribution or something.

I've nothing against RTI gap, I got it myself, but it's essentially just gambling - both you and the insurer is making a bet about whether the car will be written off. You can tell from how low the premiums are how likely it is you'll win that bet.

 

[DereksDontRun]

Surely that's the best outcome scenario?

Is it likely to be worth it on a 66 plate Clio?

As I said - it's relevance is linked with the car's depreciation. The newer (and arguably the more expensive) the car the more it will depreciate, so the bigger the benefit of having it, if it gets stolen/written-off.

Is it worth it - if you feel you have an undesireable to steal car, and don't think you're going to write the car off, then possibly not. But, as you can't control the actions of other drivers, or stop thieves from doing what they do, then you can soon talk yourself into it. And that's all before thinking about negative-equity with finance purchases - anything pcp or under finance, it's worth having, just to prevent a negative-equity situation.

At the end of the day, it's insurance to cover an action you don't intend/hope to happen - much like normal car insurance. Get a quote and weigh up how long you intend to have the car for, and how much it could depreciate during that term. My M135i replacement gap was about £200 for 4 years cover from gap-insurance.co.uk - I'm certainly happy I had it.

 

[Skynet5]

I bought a pretty decent spec 66 plate 520d for under 20k.

Not sure GAP is worth it. I got a personal loan for 20k cos it was a super cheap loan and better than removing my money from investments.

I initially expected to spend 25k on a new BMW 5. But loved the older f10 car I saw.

I haven't got GAP. It didn't seem to make sense. £400 isn't a lot, but it all adds up.

Not sure GAP covers personal loans anyway.

What am I missing? Should I have got it?

 

[BinnsY]

I bought a pretty decent spec 66 plate 520d for under 20k.

Not sure GAP is worth it. I got a personal loan for 20k cos it was a super cheap loan and better than removing my money from investments.

I initially expected to spend 25k on a new BMW 5. But loved the older f10 car I saw.

I haven't got GAP. It didn't seem to make sense. £400 isn't a lot, but it all adds up.

Not sure GAP covers personal loans anyway.

What am I missing? Should I have got it?

It's hard to say and ultimately depends on whether or not the car was written off. It also depends on when. I'm going to assume your talking about "return to invoice" gap insurance on a used car (this is what I have) and it makes no odds how you funded the car whether it be a loan or cash, as ultimately your insuring the vehicle, not the purchase method.

If for example you had the new 20K BMW 6 months and it's then written off, you will likely get the vast majority of your 20k back simply because the car wont have depreciated much and chances are the £400 wouldn't have been wroth spending.

However, say you purchased 3 years of gap insurance and the car was written off after 2 years and 11 months. At this point your car that did cost 20K might only be worth 12-14k depending on mileage / condition etc. If it were written off this is all your insurance would give you. And you would then have to replace the car with only the 13k or so you get from insurance. If you had return to invoice gap insurance this would kick in at this point topping up the 13k you get from your insurance by another 7k to get you back to your 20k invoice price. Obviously that 7k is then worth a huge amount more than the £400 the cover cost you.

Ultimately, it's a gamble. As fox mentioned earlier in the thread, the probability of your car getting written off at the point in the policy it will make you those kinds of savings is low, and that's why the premiums are so cheap. But if it does happen, it can give you a huge boost of cash for replacing the car.

 

[DarrenM343]

I bought a pretty decent spec 66 plate 520d for under 20k.

Not sure GAP is worth it. I got a personal loan for 20k cos it was a super cheap loan and better than removing my money from investments.

I initially expected to spend 25k on a new BMW 5. But loved the older f10 car I saw.

I haven't got GAP. It didn't seem to make sense. £400 isn't a lot, but it all adds up.

Not sure GAP covers personal loans anyway.

What am I missing? Should I have got it?

Look at it this way -there's a greater chance that you'll have saved £400 by not taking out the insurance than getting that and more back. The premiums are calculated to ensure the "house" wins (on average) .
Think about those who are more likely to take out such insurance. Insurance preys on peoples fears. Gap, tyre insurance and even stuff like mobile phone insurance and extended warranties.

 

[Mcnumpty2323]

The house so to speak
Always wins
It's a business after all
Do you follow the same thinking when it comes to house insurance?
The well my house won't be the one burned down. Flooded. Burgled.. Etc
The risk of your car being stolen or written off may not be a huge risk % wise but it's a risk none the less as already confirmed in this post by someone
So taking gap is a sort of gamble but I could afford the 200 quid for 3 years for it I couldn't easily afford the amount I could be out of pocket should the very worst happen

 

[BinnsY]

Insurance preys on peoples fears. Gap, tyre insurance and even stuff like mobile phone insurance and extended warranties.

I'm not really sure this is fair, as it depends on the cost of the insurance vs the replacement cost of the item, and ultimately, how much money the person in question has. This will vary from person to person.

Mobile phones for example can now cost the best part of £1000. Lots of people can't afford this outright and want the latest / greatest and settle with a £50 a month contract which they can afford. If you have no insurance and end up losing / smashing your phone you can rapidly end up with a £1000 bill to replace it with something like for like, or be stuck paying your £50 a month with no phone for however long is left on your contract. Insurance is there to help people offset this risk. Ultimately yes it's more expansive, but it allows people to manage their outcomes depending on their personal circumstances and appetite for risk.

Myself for example I don't both with tyre insurance as the £150 a corner it would cost me to replace them isn't a problem, I do however have mobile phone insurance (as it's bundled with travel / break down in my bank account) and consider the £10 a month I pay for all three to be a pretty worthwhile investment.

Much the same as I have GAP insurance, yes it's £300 I've probably lost and will never see again, but if the worst were to happen it could potentially save me thousands. Of course it's unlikely, but my personal appetite decided it was worth the cost.

Whilst you are perhaps right they've made a market of preying on peoples worries, unfortunately society is at a stage where many people live paycheck to paycheck and lots simply can't take the risk of not insuring their valuable purchases.

 

[DarrenM343]

The house so to speak
Always wins
It's a business after all
Do you follow the same thinking when it comes to house insurance?
The well my house won't be the one burned down. Flooded. Burgled.. Etc
The risk of your car being stolen or written off may not be a huge risk % wise but it's a risk none the less as already confirmed in this post by someone
So taking gap is a sort of gamble but I could afford the 200 quid for 3 years for it I couldn't easily afford the amount I could be out of pocket should the very worst happen

It makes sense to take out only the insurance you really need. Car insurance is unavoidable, as is buildings insurance(risk of living on the streets), life for some too especially with debts(ie, mortgage).

Whilst you are perhaps right they've made a market of preying on peoples worries, unfortunately society is at a stage where many people live paycheck to paycheck and lots simply can't take the risk of not insuring their valuable purchases.

Agree, but we need to ask if we really need those valuable unnecessary purchases if we fear damage/loss so much we pay a premium to insure them.

 

[Haggisman]

When I was making the decision it basically came down to, what would I regret more, wasting £250 after 5 years of not having a claim, or losing potentially thousands if my car was written off or stolen during that period.

Interestingly, I'm the opposite to the above poster, in that I'm considering tyre insurance on the tyres I'm having fitted tomorrow (yes they're only £100 to replace, but 1 puncture and the insurance has paid for itself, even if it's repairable), but I don't have phone insurance as I'm not a clumsy oaf and have never broken a phone yet (and theft is covered under the home insurance) (watch out for a thread tomorrow: "I've smashed my phone, what can I do?)

 

[Dis86]

It turns out yes, it can well be worth it!

Family members car has just been written off by an uninsured drug-driver. Valued at £15k, £19k still outstanding on finance.

 

[[TW]Fox]

losing potentially thousands if my car was written off or stolen during that period.

You don't lose anything over and above normal use though - it's depreciation. The insurance payout should be sufficient to buy another similar car and carry on where you left of.

Gap insurance doesn't prevent loss it allows gain. It's more like buying a lottery ticket...

 

[DarrenM343]

When I was making the decision it basically came down to, what would I regret more, wasting £250 after 5 years of not having a claim, or losing potentially thousands if my car was written off or stolen during that period.

Interestingly, I'm the opposite to the above poster, in that I'm considering tyre insurance on the tyres I'm having fitted tomorrow (yes they're only £100 to replace, but 1 puncture and the insurance has paid for itself, even if it's repairable), but I don't have phone insurance as I'm not a clumsy oaf and have never broken a phone yet (and theft is covered under the home insurance) (watch out for a thread tomorrow: "I've smashed my phone, what can I do?)

To put your puncture into perspective. The last time I had a puncture was in 2017, on a runabout 2nd car that had very old rear tyres (13 years old). The time before that it was 2007. I drive many, many miles per year sometimes too, even over 50k some years. In all the time I've owned cars I've probably had 4 punctures. Gawd knows how many sets of tyres I've worn through over the years.
Alternative to make bills less straining on the wallet could be just to save a bit of money into a car savings pot(account) each month to use for car maintenance and repairs, including tyres.

 

[Haggisman]

To put your puncture into perspective. The last time I had a puncture was in 2017, on a runabout 2nd car that had very old rear tyres (13 years old). The time before that it was 2007. I drive many, many miles per year sometimes too, even over 50k some years. In all the time I've owned cars I've probably had 4 punctures. Gawd knows how many sets of tyres I've worn through over the years.
Alternative to make bills less straining on the wallet could be just to save a bit of money into a car savings pot(account) each month to use for car maintenance and repairs, including tyres.

I've had 5 punctures in the last 7 years, 2 of which couldn't be repaired, so based on that it seems good value

You don't lose anything over and above normal use though - it's depreciation. The insurance payout should be sufficient to buy another similar car and carry on where you left of.

Gap insurance doesn't prevent loss it allows gain. It's more like buying a lottery ticket...

I've highlighted the important word there

Unfortunately battery owned Zoes are pretty sparse, the cheapest one on Auto trader atm with similar mileage is only ~£1k less than I paid for mine a year ago!