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Discussion Starter · #1 ·
Just had the phonecall to say I can pick my car up this Thursday...well excited!!

At the time I placed the order I agreed to GAP insurance as it would only make a £5 difference to the monthly payments (Or so the dealer said). But thinking about it now I don't know if it is worth it because I reckon the car will hold it's value pretty well.

Surely I can just take that off when I go to pick the car up on Thursday?

Any thoughts?
 

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I don't think the GAP insurance is about the car holding its value....

If you have an accident within the first three years GAP covers the value of the car up to the new price (although max of 20K I think is imposed)

While the insurance company will just give you market value.

or am i completely wrong on this ??!?!!? :confused: :confused:
 

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It is definetly worth taking out and it in effect makes up the difference between what your car cost and the value the insurance company pays out to you.....however...i have noticed that in the good old days this used to be about £250 and dint matter how expensive your car was....nowadays they charge a percentage depending on invoice value of car so for a basic A5 (no such thing I know) and would work out around £800 ish...

You can buy GAP insurance on the internet for a £35K car for £250 and if you surf hard you will find some of the same companies that provide the dealerships the same ...
 

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General rule of thumb is whatever the salesman quotes you say you will get another quote he will then half it;)
 

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General rule of thumb is whatever the salesman quotes you say you will get another quote he will then half it;)
I too put GAP on the original order with Audi and was quoted £529. I have since shopped around and found the same cover (return to invoice, 3 years cover, £25k limit) for between £210 and £244. At the same time I also found vehicle replacement cover (ie new for old) for £531 (£25k, 3 years). I mentioned this to the dealership and they have now offered the return to invoice cover for £200 (as a one off). As Hilly10 suggests, definitely worth challenging whatever the dealership offers. Just shows where they make their money. I am fortunate to be able to pay cash for the car and once some of their profit had been lost on the GAP the dealer tried to convince me that their finance deal would be better for me (another area where they make their money).
 

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Discussion Starter · #6 ·
Cheers for the advice all.

Dealer said the GAP would be £300 which I suppose is not bad considering. so may keep it on.
 

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Dealer said the GAP would be £300 which I suppose is not bad considering. so may keep it on.
When I was shopping for my car, the dealer quoted me £495 for my A5. I did some shopping around and when I mentioned it my salesman when collecting the car, he immediately offered it to me for £300 - without hesitation.
 

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I took the audi gap insurance at a price of £399,which i believed was a new for old policy, however i have just recieved my documents and this is not the case.The policy states a limit of £15000 on any claims. I can get a better cover of £25000 for only £250 with axa and will get a full refund from audi as the policy is under 2 weeks old.Make sure you get all the details from your salesman as i was misinformed.
 

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Discussion Starter · #9 ·
Finally got my hands on my shiney new A5 today...Amazing!!!!

I did a bit of research and I agree GAP is definitely worthwhile.

Anyhow, they were actually going to charge me £399 and I found the same cover with ALA for £262. Amazingly the Dealer matched the price.... A result allround..Cheers for the advice everyone.

I'll post some pics in the next couple of days.
 

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Views on Gap insurance: article

By Cliff D'Arcy
In today's 'The Good, The Bad and The Ugly' email, I'm looking at a particularly unattractive car insurance policy.
Guy Hands, the owner of Odeon, the UK's largest cinema chain, recently remarked that he was in the popcorn-selling business, not the film industry. Likewise, when you go to a car dealership, you expect to be sold a car. However, dealers make substantial profits from selling add-ons, particularly what the trade calls 'F&I'.
Indeed, selling finance and insurance (F&I) can be far more lucrative than 'moving metal'. So, when a car salesman (or saleswoman) targets a customer, he aims to sell as many of the following products as he can:
A vehicle;
Various specification upgrades and extras (metallic paint, rust-proofing, car alarm, etc.);
Extended warranty;
Car finance (often a hire-purchase agreement);
The dreaded payment protection insurance;
Car insurance;
Breakdown cover; and;
GAP insurance;

Together, these 'optional extras' can add thousands to the cost of a car and, therefore, £100+ to your monthly repayments. Alas, the brutal reality is that these add-ons are worth far more to the dealer than they are to you. That's because he earns handsome commissions from the sale of these products, particularly F&I.
In Mash Your Motoring Bills, I criticised many of the above add-ons. Today, I'd like to show you why GAP insurance is best avoided. GAP (Guaranteed Asset Protection) insurance is yet another financial product which originated in the US and then took off over here. In a nutshell, it covers the 'gap' between the insurance payout following a write-off and the outstanding balance on a related finance agreement. Here's how it works in practice:
Where's The GAP?
Let's say that you buy a car for £10,000 on credit over five years. Thanks to interest and other charges, the total amount repayable on your loan is, say, £12,500. Now let's fast-forward two years, when your car is written off following an accident, fire or theft. Your motor insurer then offers you a settlement to enable you to replace your car.
Alas, thanks to depreciation, your motor insurer estimates that your car is worth only £5,000, so it refuses to hand over more than this. However, your loan still has three years to run and, after early settlement charges and an interest refund, will cost £7,000 to repay. Thus, you have a 'gap' of £2,000 between your debt (£7,000) and your motor-insurance payout (£5,000).
This is when GAP insurance rides to the rescue, as it promises to pay the shortfall to the finance company in order to clear your debt. Thus, you're no longer out of pocket and everyone's happy, right? Alas, it's never that easy.
The problem is that motorists find GAP insurance difficult to understand. Hence, they are unable to place a value on it -- and dealers are only too willing to prey on this ignorance. In short, GAP insurance is a money-spinner for dealers, who charge as much as they possibly can for this cover. In return, they receive fat commissions for giving GAP insurance the hard sell.
For example, a dealer may urge you to buy GAP insurance, claiming that 'it's very popular these days and most motorists buy it'. A typical premium might be around £400, of which at least half will go to the dealership in commission. Of this £200 commission, the salesman may be paid £100, so it's very much in his interest to convince you to 'mind the GAP'!
Before I started writing for The Fool, I ran large insurance portfolios for leading motor-finance firms. Indeed, I managed a number of GAP insurance accounts, all of which were vastly profitable. For the record, I would estimate that loss ratios on these schemes came to a mere 5%. In other words, for every £20 collected in premiums, only £1 was paid to claimants. Thus, GAP insurance is massively overpriced and should be given the 'bargepole treatment'!
Finally, if you do want the peace of mind which GAP insurance offers, then shop around and buy it from an independent provider -- never from a dealership or finance company. A quick Google search led me to the following providers of stand-alone cover, all of which undercut dealer-bought GAP insurance by a huge margin:
ala.co.uk | car2cover.co.uk | DirectGap.co.uk | gapcover.co.uk | gap-insurance-online.co.uk | gapmyinsurance.com | gap-uk.co.uk | getmegap.com | HCforYou.co.uk | SurfAndProtect.com
If you're looking for a conventional car insurance policy, visit The Motley Fool Insurance Service!





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These are not my views, but i think add to the debate and help balance matters
 

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Got a quote of £250 from axa.I have cancelled my policy and will prob go with them.
 

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Fraser,

Sadly the long quote you've cut across from The Motley Fool doesn't quite tell the full story, as not all GAP insurance is the same. With only a little digging on t'internet I would have thought that the Mr D'Arcy who wrote the original script should have been able to give a better account of what it is you're buying. And given his claimed former employment managing insurance portfolios, he seems very ill-informed.

The type of GAP insurance he describes is 'Return to Finance' or 'Return to Value' which hardly anyone actually buys for a new car as it doesn't really do what you as a punter would want. What most people buy for a new car is 'Return to Invoice' which will in effect pay out the difference between what your invoice price you paid for your car and what your insurance company will pay out at the time your car is written off as a total loss by them.

In the example he gave, where the original price of the car was £10,000 and after 2 years the insurance only paid out £5,000 (seems he bought a Proton!) then the GAP insurance would pay out £5,000 and not £2,000 as he stated.

Ultimately, if you're buying a car from new, then you're a fool if you don't buy some sort of GAP insurance and just rely on your normal insurance - you will definitely be out of pocket if your car is written off and you still have finance on it and don't have some sort of GAP.

The best advice for anyone is to shop around and try to get as much advice as possible. Some of the pitfalls are what the GAP insurance company base their value on - if it's Parker's Top Price then you won't get the full amount you were expecting as this will inevitably be higher than what an insurance company will use, thereby giving a smaller gap for them to cover. Some also won't cover any optional extras over the list price for the basic car, and some don't even include the VAT!

Myself, I went with car2cover.co.uk which cost £210 for 3 years up to £25k claim. They use Hitachi Insurance to underwrite their policy, so quite a big name (not likely to go bust and disappear for good) and they also use up to 110% of Glass's valuation to calculate their GAP. They used to have a very good guide on their website which explained all the common pitfalls and what to look for. Seems it's disappeared off their site now, but thankfully I downloaded it, so here it is. It is produced by this one particular company (car2cover.co.uk) so I make no claims of impartiality on their part (they're obviously trying to get you to buy their product!). Here it is:


My dealer tried to sell me AXA Gap insurance at £495 claiming it was a better deal as it could be transferred to a new car if mine was written off. When I pointed out that I could just go and buy another new policy at £210 if I needed to, and then have 3 year's cover on the new car rather than just what was left on the original policy, and still be better off, he went sort of quiet...
 

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Thanks Scratch that is some useful info.A lot of points there i hadnt considered.
 

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points noted, but the dealer offered me either to cover the gap in finance (cheaper as per "fool" example) or cost to invoice as you suggest. In my case i have no finance (so i would be a fool to take cover where there is no point). I did take the cover to invoice, so i am not against this cover, but nor am i dazzled by the value of it- happily i got a better quote and had the dealer match it (£225).

In perspective, the standard car insurance is much better value, as the biggest risk is not the loss of the car, but a claim for personal injury from an acident, which might be many times the cost of the car. So if your comprehensive cover is say £500 per annum, to cover a car worth say £40,000 plus possible third party risks of say £500,000 (or more), the gap cover is relatively expensive if you are not careful. I say get it, but check all the small print or use a good broker to do that for you.
 
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