GAP insurance for private purchase

[FLIPSKNACKER]

Earliest experience I can recall of this being on a policy is 1976 - and my recollection is that it was not unusual even then. And it was certainly on our insurance policies thereafter.

If that's the case, we've clearly had very different experiences of Motor Insurance. The very first brand new car I had was in 2005. I'm now on my third and only my most recent Motor Insurance policy has included New-For-Old cover - although I won't ever benefit from it because my car is leased and they don't provide New-For-Old cover for a leased vehicle.

I'd be interested to know which insurance companies you're referring to as I recently published an article in relation to the New-For-Old cover offered by Motor Insurers and I'm planning a follow-up.

I'm going to disagree with you.

That's because I know people who have benefited from it over the last 40 years.

So from my perspectve - actual experience in effect says otherwise.

I think you've misinterpreted my point.

For clarity, we regularly deal with people who have benefited from New-For-Old cover under their Motor Insurance policy (if someone with a GAP insurance policy has their vehicle replaced New-For-Old by their Motor Insurer, we transfer the GAP insurance policy to the new vehicle) however more recently, we've noticed that *some* Motor Insurers who claim their policies provide New-For-Old cover, appear to be taking steps to make it even more difficult to qualify for.

Generally speaking, if your car is involved in an accident, it'll usually be declared a Total Loss (written off) if the cost of repairing the damage to that vehicle exceeds 50-60% (depending on the insurer) of what your car was worth at the time of loss.

We've seen Motor Insurance policies then state that if, at the time of loss, the vehicle happened to be less than 12 months old and the policyholder had owned the vehicle from brand new, they would then replace the vehicle with a brand new equivalent - subject to availability.

More recently we've seen *some* (an increasing number of) Motor Insurer's revise this basic criteria, such that the cost of repairing the damage to the vehicle has to exceed 60% of the manufacturer's list price for the new equivalent vehicle at the time of loss, before they'll consider replacing the vehicle with a brand new equivalent - again, subject to availability.

Clearly, the depreciating value of your vehicle and the (potentially increasing) list price of the brand new equivalent could (even in the first year) end up a reasonable sum apart and therefore the "gap" between say, 60% of what your car is worth and 60% of the list price of the new equivalent at the time of loss, could see the cost of repair sufficient enough to warrant the vehicle being declared a Total Loss but insufficient in terms of your qualification for a New-For-Old replacement vehicle.

There's also then the issue of "availability" (and how strict the Motor Insurer will approach an "equivalent vehicle" allowing for model refinements/improvements over time) because what a Motor Insurer will do in the event that you DO qualify for a New-For-Old replacement vehicle, when there isn't a new equivalent one available to them, varies considerably, as follows:

• Some will pay you a lump sum equal to the manufacturer's list price at the time of loss, for the equivalent new vehicle (akin to already having Replacement GAP insurance in the first year, hence if you were inclined to buy GAP insurance, you'd look to have a GAP insurance policy cover year two onwards)
• Some will pay you a lump sum equal to the original invoice price that you bought your car for (akin to already having Invoice GAP insurance in the first year, hence you *may* decide to have GAP insurance cover year two onwards, but having Replacement GAP insurance in the first year offers higher cover.)
• Some (in our experience, the majority) will revert to a Market Value payout based on what your car was worth at the time of loss (e.g. as if "New-For-Old" cover was never offered in the first place).

As an aside and somewhat curiously, the third point above appears to be in contravention of the Ombudsman's approach to what they'd instruct the Insurer to pay, should a complaint be raised by the policyholder (see here).


We're more than happy to work with people that have New-For-Old cover from their Motor Insurance policy and assist them in avoiding having unnecessary 'duplicate' cover in that first year, but we actively encourage people to specifically check the exact wording of their Motor Insurance policy in terms of New-For-Old cover to see that it will do exactly what they think it will do, in order to avoid them being in a situation whereby they have delayed the purchase of (and/or start date of) a GAP insurance policy, relying on their Motor Insurance policy in the first year instead, only to have their vehicle written off and then discover that they don't qualify for a new vehicle from their Motor Insurer and (in the worst case) end up with just a Market Value payout.

 

[Dryce]

I'd be interested to know which insurance companies you're referring to as I recently published an article in relation to the New-For-Old cover offered by Motor Insurers and I'm planning a follow-up.

My 1976 reference was to Cornhill if that's any help.

One thing to watch for is that in the early 90s GA started selling direct and the likes of Direct Line kicked off to cut out brokers. The market started changing. Guaranteed hire cars started coming in. Finer grained segmentation of product started to appear with things like commuting started to be treated as separate from SD&P - almost as if they were preparing for what was to come with the internet a few years later.

So if you were looking at change in the norm of what was offered in policies there is probably a transition in what the market was offering as a standard or normal package I think you may find that there were a number of shifts over the mid nineties.

 

[Camchan]

Sorry to bring this thread back to life but.....

New car on the way and insurance with direct line who have new car cover for the first year. I would like to get additional insurance to cover a further 3 years. Any recommended products that would fit the bill for that?

I will initially start with finance but will pay this off either almost imediately to get mb contribution or keep the finance for 1 year and pay off.

 

[kam09]

Sorry to bring this thread back to life but..... New car on the way and insurance with direct line who have new car cover for the first year. I would like to get additional insurance to cover a further 3 years. Any recommended products that would fit the bill for that? I will initially start with finance but will pay this off either almost imediately to get mb contribution or keep the finance for 1 year and pay off.

Look at online quotes from ALA gap insurance return to invoice and also other companies like warranty direct etc.. They will incorporate the first year..