Gap insurance is it worth it

[pagzzy]

Hi I was wondering if gap insurance was worth doing on a 2 yr finance.
As far as I can tell insurance will cover complete replacement for the first year and then I have one more year before I pay the final ballon. Also with the mb offers I did get a decent discount on the list price.

So I ask is it worth it. This will be the first car I buy so any help appreciated
Thanks

 

[jonnymerc]

Hi i have gap insurance i pay 49.95 a month thats only for the 1st year then i get 2 more years making a total of 3 years its peace of mind if i right the car off or some idiot plows into my car and rights it off my insurance company will payout what the cars worth at time of accident and MB will payout the rest , the full amount i payed for the car, so say for example i payed 20.000 for the car after 1 or 2 year i have an accident and its a right off the insurance comp say its worth 13.000 book price MB gap insurance will pay me 7,000 that means i can go back to mercedes and buy another car for 20.000 i hope all this makes sence as i said its peace of mind hopefully i wont have an accident which will mean i lose £600 the first years premium BUT I THINK ITS WORTH IT

 

[GP801]

It probably is worth it but NOT from a mercedes dealer (or any main dealer for that matter). They make a huge amount of commission selling these policies. They are available direct from specialist insurers on the web for a fraction of the price the dealers charge. As an example our daughter bought a mini. Gap cover from BMW approx £400 for 3 years - internet price £160 for 4 years. If you have a finance deal you can arrange GAP cover that will also pay off any early redemption fees on the HP or lease agreement in addition to the value of the car.

 

[CLK CHAZ]

Do you have any further info or links for what you have said.
Thanks
Chaz

 

[pagzzy]

Thanks for the info. It makes sense but this only for the first 3 yrs right. Or is it best to take it out on the length of ur finance purchase

Any suggested companies to get some quotes

 

[Dryce]

BUT I THINK ITS WORTH IT

You're paying £600 for up to £7000 of cover. (The actual level of cover potentially varies - it could be less).

So that's about 8.5% or approx 1/12 of the sum covered.

Chances of having an accident are one thing. But the chances of having an accident that involves a write-off are a lot lower - particularly if the car maintains its value.

This isn't (IMHO) worth it on these figures. It's a nice little fear sell by the dealers and the insurers.

 

[Burger]

Just like all insurance it's a matter of risk analysis which has to take into account all sorts of factors. What are the chances of you having an accident that writes off the vehicle and in the event you do, how hard would it be to swallow the loss? I think they're the main questions but again, as with all insurance, you most likely won't need it and so it'll be a waste of money. If on the other hand you're unlucky it could be a God send.

As for where to get it from I know first hand that Mercedes dealers will negotiate on it and can certainly beat any price you might find elsewhere.

Regards,

 

[Simon_M]

I shopped about, best the dealer offered was £745 for 3 years of cover upto 25K payout. I got it for £299. The real test of any insurance is when you actually make a claim.

Also do not presume your insurance will offer complete replacement within the first year, check the small print!

S

 

[pagzzy]

Thanks for the input guys

Simon would you be kind enough to let me know what company you went with

Thanks

 

[Simon_M]

Gapdirect or directgap .co.uk

Seemed OK on face value.....time will tell.

S

 

[GP801]

There are lots out there. Just type gap insurance into google. All offer slightly different cover but all are uk regulated so probably above board. The main dealers probably rebadge these products in any case. Can also be done for a car you already own. They take the Parkers guide price and work from that.

 

[pagzzy]

Thanks again

May sound stupid but which gap insurance do I go for. I'm buying a new car on a 2 yr finance.
Do I give the Market value of the car or the price I got it for including the interest

Thanks again

 

[GP801]

If on finance go for one that will cover early settlement fees. If the car is written off before your agreement ends the finance people will want an early settlement fee. If you plan to keep the car after the 2 yrs go for the longest you can - usually 4 or 5 years. That way if written off in year 3 or 4 you get the money for a brand new car. Try directgap.co.uk as a starting point. Offers return to invoice or replacement car at current new price or the finance option. I think in your situation I would go for the replacement at current new price but obviously this costs a bit more.

 

[A170 Blue]

When I bought my new A180 (cash purchase) last year I took out "deferred Gap" insurance which provides a return to invoiced price for years 2,3 and 4............The first year is covered by normal motor insurance.
In the event of a total loss it will fill the void left by the insurance payout!

 

[gIzzE]

Few thing to consider when taking out 'shortfall insurance'.

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.