Gap insurance

[Simon]

I know not everyone here does gap cover, but anyway I found this interesting. When I got the Merc 4 years ago I bought gap from ALA through Pistonheads (for their discount code). It was a return-to-invoice policy that would pay me back to the £20.5k I paid for the car in cash. That policy runs out the day after tomorrow so I rang them to discuss my options.

The car is now nearly 7 years old, and they don't do a RTI policy for it anymore. However, they are able to look at the value today and are able to agree a policy to pay back to that. They valued the car today at £20.5k, which is exactly what I paid for it! I know the second hand car market has gone a bit funny, but he said that's the first time he's ever seen a valuation the same as the invoice price 4 years ago.

Anyway, they are covering it for another 3 years back to the agreed value today (effectively the same as RTI) for £150, with PH discount code again.

So I could have the car up to 7 years, at which point it'll be 10 years old, have it written off and still get the invoice value I paid for it back in 2019. Not bad!

[Jobbo]

While I have always been suspicious of back-to-invoice GAP insurance because it seems to be providing cover for something which isn't an insurable interest (the depreciation), I did take it out for my Audi. Had no idea you could extend it when it expires.

My old neighbour who had his car nicked by burglars who broke in during the night had only bought it a couple of months ago and had back to invoice GAP. He's relieved he took it out (the car was a 67 plate M3 so wouldn't have been paid out on the basis of new-for-old as is common for insurers in the first 12 months with a car bought new).

So despite having a bit of a negative view of this type of insurance, it is pretty damn cheap considering it covers something you can't otherwise cover. It seems to incentivise parking your Merc in a dodgy area every night when it's nearly 10 years old, though

[Rich B]

Seems they got a decent deal, £150 premium to cover a car that didn't depreciate at all, so their payout even if it had been stolen/written off would have been zero?

[Simon]

Seems they got a decent deal, £150 premium to cover a car that didn't depreciate at all, so their payout even if it had been stolen/written off would have been zero?

Up to now, yes. But who knew the second hand market would go so crazy? Also, I doubt the car will be worth £20k when it's 10 years old. It HAS to depreciate from here, surely?

A pound a week for the next 3 years seems very fair to me.

[Rich B]

Seems they got a decent deal, £150 premium to cover a car that didn't depreciate at all, so their payout even if it had been stolen/written off would have been zero?

Up to now, yes. But who knew the second hand market would go so crazy? Also, I doubt the car will be worth £20k when it's 10 years old. It HAS to depreciate from here, surely?

A pound a week for the next 3 years seems very fair to me.

yeah, Gap insurance must be a fantastic business to be in at the moment, but what goes up...

[Jobbo]

Seems they got a decent deal, £150 premium to cover a car that didn't depreciate at all, so their payout even if it had been stolen/written off would have been zero?

Up to now, yes. But who knew the second hand market would go so crazy? Also, I doubt the car will be worth £20k when it's 10 years old. It HAS to depreciate from here, surely?

A pound a week for the next 3 years seems very fair to me.

yeah, Gap insurance must be a fantastic business to be in at the moment, but what goes up...

GAP insurance was incredibly profitable even before used values went up. No doubt helped by dealers selling it for vastly inflated premiums as well; only ever buy it when you've checked the price online, used the PH discount etc.