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Discussion Starter · #1 ·
Hi All,

Mini offered us Gap insurance I hadn't thought about it before as this is our first new car. They quoted £499 for 10K over 3 years which seemed alot on top of everything else.. so I said I would think about it..

We did a quote with ala through autotrader and it was £117 for 3 years.

Just wanted to know what others used or thought?
 

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Seems about right. They quoted me about £500 to begin with and very quickly reduced it down to £150 for a cooper SD straight swap replacement.

Chancers!
 

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Hi All,

Mini offered us Gap insurance I hadn't thought about it before as this is our first new car. They quoted £499 for 10K over 3 years which seemed alot on top of everything else.. so I said I would think about it..

We did a quote with ala through autotrader and it was £117 for 3 years.

Just wanted to know what others used or thought?
Talk to your insurance company, I was about to fall for this and then found out mine (Churchill UK) included it for free in the first year
 

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Did the same to me, a friend who works in insurance said the dealer takes around 70% commission on these quotes!
Best off looking around, Think mine worked out at £137 in the end ;)
 

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Discussion Starter · #8 ·
Did the same to me, a friend who works in insurance said the dealer takes around 70% commission on these quotes!
Best off looking around, Think mine worked out at £137 in the end ;)
They sales guy prefixed the spiel with we don't make any commission on this...Then showed me a video of his friend car that was hit by a joy rider..

I don't disagree that gap insurance is a good idea.. but do all sales men think that we were all born yesterday?
 

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I have ALA cover too. Check the cashback sites (quidco, topcashback) as when I bought mine you got a decent amount back on top of the highly discounted rate over the Mini offering...

Just checked and through quidco you get 12%
 

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Your insurers will probably have a like for like replacement clause for the first year, gap takes you beyond this into years 2+. The only problem is you have to take it out within a set amount of time of the car being first registered so in effect you double dip for that first year, but for £150 its great value, especially if you are on finance and cannot afford to clear the amount owed if the car was written off
 

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£600 they tried to bleed out of me, and they nearly did until I got home and googled it.
 

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$900 in US currency from my dealer. $700 from my insurance company. I'm still trying to decide whether I'm gonna roll those dice, but the dealer can take their price and ... do something ballistically improbable that results in a minor anatomical miracle
 

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£600 they tried to bleed out of me, and they nearly did until I got home and googled it.
What annoys me is that they would happily take that £600 knowing that the true vslue is nearer a sixth of that. No wonder they make more on financial producs than actual cars
 

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Discussion Starter · #14 ·
Spoke to the dealer yesterday and explained that autotrader are offering gap insurance for £117 and they ran there own quote and managed to come down to £131 which is much more palatable than £499.

Give them there due they said they would try and match another quote.. But how may people just accept the cost and sign up along with the 3 or 4 other policy's the dealer offer????
 

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If they quoted £600 to me and then agreed to match £130 i would tell them to stick it. Its insulting
 

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I went with ALA too (Vehicle Replacement Plus)... go through Quidco for 10% cashback :)
 

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.....also when the dealer miraculously dropped the quote, check they didn't drop the actual cover too!
 

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Hello people.

I represent one of the online providers of GAP insurance. Forum rules no doubt prevent me from specifying which unless I become a sponsor, so I'll keep to just generic advice for now and if there's enough interest I'll certainly consider adding this to the list of other forums that we already sponsor.

In the meantime, though I wanted to bring your attention to a few issues in this thread. Specifically, the following:


  • New-For-Old cover from your Motor Insurer in the first year (brand new vehicles only)
  • Discounted GAP Insurance from a Motor Dealer.


New-For-Old cover from your Motor Insurer

As some people have already pointed out, many Motor Insurance policies now include New-For-Old cover during the first year for a brand new vehicle. In principle this means that in the event the vehicle is declared a Total Loss within the first year, the Motor Insurer will physically replace the vehicle with a brand new one at the time of claim.

However, things are not always straight forward as you might think.

As it happens, I recently published an article on our company blog on this very subject - though I can't link to that without breaching forum rules, so below is an extract of it (with our links etc removed)

(The formatting options on this forum don't work correctly so I've had to adapt it a little in order to keep its structure.)

We’re noticing a trend amongst Motor Insurers that would appear as though they’re making it more difficult for people to qualify for a new replacement vehicle in the event of a Total Loss. The issue is that they’re introducing two different thresholds in terms of the cost of repairing damage to the vehicle… the first (lower) threshold is in relation to the how the cost of repair compares to the current Market Value of your vehicle at the time of loss, whilst the second (higher) threshold is in relation to how it compares to the manufacturer’s list price for a brand new version of the same (or nearest equivalent) vehicle at the time of loss.

To clarify, it’s somewhat normal practice and most people accept that if the cost of repairing damage to your vehicle exceeds 50-60% of what your car is worth at the time of incident, the Motor Insurer will likely declare your car to be a Total Loss. In the not too distant past, with some insurers it was a case of replacing the vehicle New-For-Old if the vehicle also happened to be less than 12 months old at this time.

These days however we’re seeing more frequently that in order to qualify for a New-For-Old replacement vehicle from the Motor Insurer, the cost of repairing damage to your vehicle would have to exceed 60% of the manufacturer’s list price of the brand new version of the same (or nearest equivalent) vehicle on sale at the time of loss.

What Does This Mean?
Consider… after an incident your car has been valued at £20,000 (A) by your Motor Insurer, but the manufacturer’s list price of a brand new version of your car might be (for example) £25,000 (B).

Assuming your Motor Insurer will declare your vehicle to be a Total Loss if the cost of repairing your vehicle will exceed 60% (this varies between companies) of what your car is worth (A), the cost of repair would have to be in excess of £12,000 (60% of A) for the vehicle to be declared a Total Loss. However if they’ll only provide you with a New-For-Old replacement vehicle if the cost of repairing your vehicle will exceed 60% of the manufacturer’s list price (B) of the brand new equivalent vehicle at the time of loss, in this example the cost of repair would have to be in excess of £15,000 (60% of B).


This means that it’s entirely feasible that an incident within the first 12 months could lead to your vehicle being declared a Total Loss but (subject to the sums involved) not quite eligible for New-For-Old cover to step in and replace your vehicle with a new one, in which case despite having a Motor Insurance policy that offers New-For-Old cover you end up with a policy that pays out just the Market Value of your vehicle.

What If A New Vehicle Is No Longer Available?
Well that’s the other thing to consider too. New-For-Old schemes will say that they’ll replace your vehicle with a brand new one so long as one is available to them. If one of the same (or nearest equivalent) vehicles is not available at the time of claim, the Motor Insurer will revert to a cash-payout which, as ever, varies considerably from one insurer to another.

In our experience, it would appear that there are three possibilities:



  1. The Motor Insurance pays out a lump sum equivalent to the manufacturer’s list price for replacing the vehicle with a brand new equivalent.
  2. The Motor Insurance pays out a lump sum equivalent to the original invoice price that you bought the car for.
  3. The Motor Insurance pays out a lump sum equivalent to what your car was worth (based on it’s age, mileage etc) – aka “Market Value” – at the time of claim.

GAP Insurance: To Defer Or Not Defer
In its most basic form, the theory is that if you have New For-Old cover with your Motor Insurance policy you wouldn’t need to have GAP insurance in place in the first year. Whilst in many cases this is true, New-For-Old schemes offered by some Motor Insurers are going to be particularly difficult to qualify for.

If you’ve thoroughly checked your Motor Insurance terms and conditions and verified that you not only have New-For-Old cover but you’re also comfortable that it entirely and suitably covers you in the first year, we’ll permit you to defer the start date of one of our GAP insurance policies by up to 12 months from when the vehicle was first registered (you must still buy it within the first 6-months though).

This would enable you to still benefit from GAP insurance in the later years whilst avoiding having duplicate cover in the first year.

However… it’s important that you check your Motor Insurance terms carefully before committing to deferring the start date of a GAP insurance policy and to help you with this, we’ve prepared the following questions that you should reference against/with your Motor Insurer:


  • If the vehicle is damaged in an accident. At what threshold (in terms of the cost of repair) is the vehicle declared a Total Loss?
E.g. they may say that the they’ll declare the vehicle to be a Total Loss if the cost of repair exceeds say, 50% of the current Market Value of your vehicle.
  • At what threshold (in terms of the cost of repair) is the claim eligible for a New-For-Old replacement?
Sometimes there’s an additional threshold such as “if the cost of repair exceeds 50-60% of the cost of buying a brand new version at the time of claim the New-For-Old clause is invoked”.
This is quite important as the difference between this and the first question above, can in theory see the vehicle written off but not quite eligible for a New-For-Old replacement – In which case you’d be needing to claim the difference via a GAP insurance policy.
  • What will they do (how will they handle the claim) if they cannot source a physical replacement vehicle?


In our experience, there are three possible scenarios as follows:



  • The Motor Insurer pays you a cash-lump sum equivalent to the Manufacturer’s List Price for buying a brand new version of the same vehicle at the time of claim – this would be like having Replacement GAP insurance in the first year.
  • The Motor Insurance pays you a cash lump sum equivalent to the price you originally paid to put the vehicle on the road – this would be like having Invoice GAP insurance in the first year
  • The Motor Insurance pays you only the Market Value of the car that was written off – this would clearly be like having no GAP insurance in the first year.


Ultimately, you don’t want to be in a position of having deferred the start date of your GAP insurance policy, only for your car to be in an accident within the first year, declared a Total Loss, but not quite eligible for New-For-Old replacement of your vehicle, or, you are eligible, but one isn’t available and your Motor Insurer is only obliged to pay you the Market Value of the vehicle that they’re writing off.


Discounted GAP Insurance From A Motor Dealer

Hat said:
If they quoted £600 to me and then agreed to match £130 i would tell them to stick it. Its insulting
I couldn't agree more. It frustrates me how many people don't do this, often under the misconceived idea that the dealer's policy is somehow superior - it almost always isn't btw!

In any case, agreeing to a discounted GAP Insurance policy from a Motor Dealer can actually cost you money. It's all down to HOW they write the figures up on the invoice.

A common tactic used by Motor Dealers is to leave the GAP Insurance showing on the invoice at full price, and take the agreed amount of discount off the cost of the vehicle.

So for example, if you were buying a car for say, £28,000 and they'd quoted you £600 for GAP insurance but then agreed to reduce the cost of the GAP insurance to say £150, instead of writing the figures down as:

Cost of Car: £28,000.00
Cost of GAP: £ 150.00
Total Cost: £28,150.00

What they tend to write down would be:

Cost of Car: £27,550.00
Cost of GAP: £ 600.00
Total Cost: £28,150.00

Now whilst the end result (£28,150) is the same, you'd be forgiven for thinking that there is no issue, however, when you consider that the dealer's policy will almost certainly be an Invoice GAP insurance policy (rarely do Motor Dealer's offer Replacement GAP insurance, though confusingly they sometimes refer to their policies as "Vehicle Replacement Insurance")... a policy that covers you for the difference between your Motor Insurance payout and the original invoice price that you paid for the vehicle AFTER discounts were applied... it's clear that you've now got an invoice showing that you bought the car for £27,550 therefore at the time of any claim, you'd be £450 short!

According to a recent FCA study, as an industry, Motor Dealers have been overcharging the UK consumer for GAP insurance by up to £76million per year! If they don't rip you off first time, why would anyone give them a second chance to do so!?

Buy online, save a considerable sum (our research suggests up to 85%) and get a superior policy in the process!

I'm sorry for such an essay as my first post, but I do hope it's of some use to you. I'm happy to answer any general questions about GAP insurance if you'd like me to.

Best wishes

David
 

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Excellent write up, thank you very much for this. I think this will be great info for people considering their options
 

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Discussion Starter · #20 ·
A common tactic used by Motor Dealers is to leave the GAP Insurance showing on the invoice at full price, and take the agreed amount of discount off the cost of the vehicle.
I agree with this as the gave me some free accessories for taking the car early which they charged at full price and put the discount of the car up.

But as for the GAP insurance in my case I have brought my car and taken delivery. They only tried to sell the insurance at collection and I said I would think about it and get another quote. So this discount is purely on the insurance. If they want to change there sale figures I am not that fussed.

It does annoy me that there initial cost of the insurance is so high but that is not set by the sales man as it is printed on a nice branded glossy so is likely to be set by an accountant somewhere....
 
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