Gap insurance worth it?

[JeffL]

I thought Gap insurance had been discussed on here but can't find anything since 2016 when I do a search. My daughter and her husband have just bought a used low mileage car  (might be a demonstrator) from a main dealer (not a Lexus unfortunately) for £24,750 (List price £30,000). They have rejected a GAP insurance quote of £400 from the dealer but have got a quote from gapinsurance.co.uk for £165. They are paying cash plus part exchange so there is no finance amounts to be insured. They are asking me if it worth it in their case or should they save the money. What are the pros and cons? Thanks.

[Herbie]

We recently bought a 2018 RX450h with just under 24k on the clock and we also bought it cash plus trade-in, no finance.

The cost was £32,990 but that's the retail price. If the car was a total loss I think the insurance would pay out about £28,000 if I remember correctly.

If they can afford to stand that loss then they don't need gap insurance.

However, I've just got 3-year gap cover from https://protect.motoreasy.com/gap-insurance for £175 on a 'Return To Invoice' basis. I don't pretend to understand it but if I'm right, the insurance pay the current market value of the car, with the gap insurance making up the difference between whatever that is and what we paid for it.

Of course, it only comes into play if the car is a total loss and if I ever need to use it I may find out that it's not what I thought it was, but at £175 for 3-years cover it just seemed silly not to do it.

[cruisermark]

I agree with Herbs - its small outlay for piece of mind.

[Malc]

or maybe insure it for " agreed value " ....  can you do that with ordinary, not just classic type cars ?

Malc

[ColinBarber]

3 hours ago, Malc said:

or maybe insure it for " agreed value " ....  can you do that with ordinary, not just classic type cars ?

Malc

It's normally only available for older vehicles and your choice is so limited that you could end up paying more for insurance compared to taking our GAP insurance.

 

5 hours ago, JeffL said:

They have rejected a GAP insurance quote of £400 from the dealer but have got a quote from gapinsurance.co.uk for £165. They are paying cash plus part exchange so there is no finance amounts to be insured. They are asking me if it worth it in their case or should they save the money. What are the pros and cons?

They have done the right thing by rejecting the dealer's offer as you will nearly always find cheaper elsewhere.

If you don't have finance then I don't normally recommend GAP insurance. What gap are they trying to cover? If they have a total loss after a year for example then the insurance company should pay out enough to purchase the same car of a similar age and specification - obviously not £25k to purchase a year younger vehicle, but the market rate to replace the one just lost.

GAP insurance is really to cover you if you have finance and you essentially end up in negative equity on your loan - because initial depreciation is higher than your monthly payments.

[DAN@ADRIAN FLUX]

Hi.

Just to let you know that we offer a 12 month product called Total Loss Protection. Whilst it's not exactly the same as your traditional GAP insurance we feel for some customers it can make a cost effective alternative.

Please feel free to take a look if you wish.

https://www.adrianflux.co.uk/extras/total-loss/

Regards,
 

[paulrnx]

On 5/15/2021 at 10:52 PM, ColinBarber said:

It's normally only available for older vehicles and your choice is so limited that you could end up paying more for insurance compared to taking our GAP insurance.

 

They have done the right thing by rejecting the dealer's offer as you will nearly always find cheaper elsewhere.

If you don't have finance then I don't normally recommend GAP insurance. What gap are they trying to cover? If they have a total loss after a year for example then the insurance company should pay out enough to purchase the same car of a similar age and specification - obviously not £25k to purchase a year younger vehicle, but the market rate to replace the one just lost.

GAP insurance is really to cover you if you have finance and you essentially end up in negative equity on your loan - because initial depreciation is higher than your monthly payments.

Yes agreed 👍