Gap Insurance for a new car?

[TommyGunn]

I will be picking up my new E250 coupe in the new year and someone suggested I should consider "Gap insurance", to pay the difference between what the insurance company pays out and the invoice value of your car if it is written off in the first 3 years.

The purchase is cash and there's no finance deal involved so is Gap Insurance relevant to me?

Advice welcome!

Thanks.

TG

 

[PXW]

It is only relevant to you if you write off your car within the first three years - which, given the value of a new E250 coupe, is one hell of a smash. Personally, I don't bother with gap insurance, though I can see why people might if they've taken a finance deal such that they can't actually afford the downside risk of having to pay over real cash.

 

[Benzowner]

Gap isnurance is normally only relevant when taking HP or Lease. It fills the gap between car value and what is owed to the finance company. It will not reimburse you back to the full value of a new car, that is in effect agreed valuation policy and doubtful it is available.

 

[davidjpowell]

Gap isnurance is normally only relevant when taking HP or Lease. It fills the gap between car value and what is owed to the finance company. It will not reimburse you back to the full value of a new car, that is in effect agreed valuation policy and doubtful it is available.

There are two types of GAP. One is the above, the other is Return to Invoice, which is meant to pay the difference between insurance payout and the invoice value.

OP do check other sources for premiums - often more competitive than the dealers.

 

[The Boss]

Hi.

Its relevant to anyone whom is concerned about the financial position in the car.

Personally i think it does have value... to a point! but not always..

 

[DJM]

I took GAP because mine was new with finance...my wife insisted. After all, she allowed me to buy it and generously gave me the deposit ...paying the GAP was the least I could do really! Happy Christmas to me!

 

[TommyGunn]

Thanks for feedback

Wasn't aware of "Return to Invoice" insurance but will look into it.

Wouldn't buy from dealer as I'm aware that there would be many better deals elsewhere. Anyone able to comment or recommend "Return to Invoice" insurance ?

 

[st13phil]

As others have already said, it can give peace of mind (and protect you financially if the car is on a finance deal where the market value of the vehicle can be less than the outstanding finance balance in certain circumstances), but it's rarely worthwhile if it's a cash purchase.

If you decide to get GAP insurance then shop around as there are much cheaper offerings than those available from the dealer.

 

[Burger]

I have return to invoice GAP insurance on my SL. Got it from my MB dealer for £500. 3yrs return to invoice cover. Dealers will in my experience very often haggle and do deals on such insurance.

Regards,

 

[GP801]

Worth remembering that most insurers replace like for like if written off in the first year, I think some even do this up to 2yrs, so actually buying less than you may think with GAP insurance. Internet deals are very competitive so still worth doing in my opinion.

 

[splang]

i have return to invoice GAP on my E250 (3 year)

Could have bought from the dealer for about £400 but in the end I found a policy which I bought seperately for £150.

Do check the small print...

 

[elpeterol]

Probably (!) worth having, if you write your car off at two years you would only get 50% of value at best so you could accept an equivalent second hand car or find the money to buy a new one ot take out return to invoice GAP ins. Like all insurances it comes down to risk vs "comfort" !

 

[cliveyboy8]

but it's rarely worthwhile if it's a cash purchase.

Rubbish.

We are talking here about someone who is buying very expensive car and paying cash.

People keep using the words "if you write it off". What about if it gets stolen and stuffed into a container and shipped to some far off country never to be seen again? What if it is parked up somewhere and someone smashes into it and writes it off?

Return to Invoice GAP will pay out the difference between the full loss insurance settlement and the original invoice price of the car.

Stick "GAP Insurance" into Google to find independent sites as dealers will be on a big commission for selling. You will be able to choose a period of cover and, I think, the maximum monetry amout covered.

 

[gIzzE]

I posted this in the finance and insurance section, I will post it again as it covers everyone...


Few thing to consider when taking out 'shortfall insurance', I say 'shortfall insurance' as many call all types 'Gap' for some reason.

There are 3 main sorts of cover.

Replace with new.
Return to Invoice.
Gap.

Replace with new will give you a brand new car, even if the list price increases.

Return to Invoice will give you the invoice price you paid back in full, if the car is 35 months old and written off and the insurer pays out £15000 but you paid £45000 the shortfall cover will pay you the £30,000 difference or up to the amount you have agreed.

Gap simply covers the gap between paying settling the finance owed.
So if your insurer pays you the book value of £15000 but you still owe £21000 they will pay the £6000 gap to make sure the finance is settled.



Now, gap is not really worth the paper it is written in, all finance houses these days will make sure that by the end of year one you are not upside down with payments, or it will be damned close, by year 3 you will owe less than the car is worth, that is pretty much certain at the moment due to the much lower guranteed final values.
And in year one where there is a chance of being upside down, 99% of insurers pay in full anyway, so no need for gap.
It is actually more useful on a used car.


Return to Invoice is the one you want, and be careful on price, I pay £4.80 a month to cover a £51000 730d for up to £30000 on return to invoice.
Nice thing about paying monthly is if I want out after 12 months I am not paying for shortfall cover that is not being used.

I don't like replacement cover, to be honest if I write a car off at 35 months I would rather something else, and no they won't give you the money as they mostly have deals with suppliers to get a model from stock at cheap prices. So Return To Invoice or don't bother.


I know people who are sold Gap when they have put 50% down, and even know of a few have been sold Gap for a cash purchase, now obviously this is a complete con as it would never pay out, however Return To Invoice would, so be careful on what your buying and make sure you do the maths.

 

[TommyGunn]

i have return to invoice GAP on my E250 (3 year)

Could have bought from the dealer for about £400 but in the end I found a policy which I bought seperately for £150.

Do check the small print...

Can you share who this is with, so I can add to the mix? Its seems comparable with gIzzE's £170 for £30K

I'll check the small print but useful to know that you've done some of the legwork

 

[DJM]

These prices sound really good! I only purchased my car on the 8th...can I cancel and set-up with another insurer? Any thoughts would be appreciated.
DJM

 

[HR17]

Thanks for feedback

Wasn't aware of "Return to Invoice" insurance but will look into it.

Wouldn't buy from dealer as I'm aware that there would be many better deals elsewhere. Anyone able to comment or recommend "Return to Invoice" insurance ?

Its well worth it. No one expects to have their car stolen when their house is burgled(as happened to us) or robbed from them in the street(it happens!).

For the sake of a couple of hundred quid, you can insure against the difference in what your insurer will give you for your car, against what its actually worth(esp if a cash buyer). My wife's brand new Civic was stolen following a burglary at our house. We thought the insurers were 'aving a larf with their offer as it was so low. They raised it slightly after we hassled them, but ultimately wouldn't pay the full worth or replacement value of the same car. Fortunately, a couple of hundred quid for a 3 year policy paid out to the value of £2k-ish.

 

[Dryce]

Fortunately, a couple of hundred quid for a 3 year policy paid out to the value of £2k-ish.

This is a good example of the pro/con argument of this type of insurance at £200ish for cover vs a £2000ish return in the event of a loss.

• Pro: it covers the loss
• Con: 10% premium to cover that loss

It depends on how you value the cost vs the risk.

On those simple numbers GAP insurance is poor value unless you feel very strongly that you must cover the possible eventuality of such a loss.

 

[Dryce]

Worth remembering that most insurers replace like for like if written off in the first year, I think some even do this up to 2yrs, so actually buying less than you may think with GAP insurance. Internet deals are very competitive so still worth doing in my opinion.

Insurers usually only cover 1st owner on this sort of cover. So if you buy a low mileage demonstrator or even a delivery mileage pre-reg you don't necessarily get this level of protection.

 

[gIzzE]

This is a good example of the pro/con argument of this type of insurance at £200ish for cover vs a £2000ish return in the event of a loss.

• Pro: it covers the loss
• Con: 10% premium to cover that loss

It depends on how you value the cost vs the risk.

On those simple numbers GAP insurance is poor value unless you feel very strongly that you must cover the possible eventuality of such a loss.

If it had been Return To Invoice a new car could have been ordered, even at 2 or 3 years into the agreement, that is when it really pays out.