Gap insurance - worth getting?

[Mordac]

merc a class

Someone clearly saw you coming...

[Zigenare]

merc a class

For your wife I hope!

[greenlake]

For your wife I hope!

Yes, for his....errr...."wife"....

[fiisch]

Personally, I've never taken it.

1). Some motor insurers (Admiral; 1st Central IIRC) will replace a brand new car with a brand new car in the first year. I.e.: if you write off the car at 11 months old, they'd replace with a brand new car of the same model and specification under the policy terms.

2). If you write off a brand new car, will you be in a fit state to care about covering any shortfall in the lease payments? Depending what car it is, a total write off would suggest a significant amount of damage to it and possibly it's occupants....

3). If the car was written off in an accident that wasn't your fault, you may be able to reclaim shortfall as uninsured expenses, else you would likely also have personal injury claims to help meet the shortfall.

So really, you're effectively paying for insurance to cover for a fault accident should you write the car off in years 2 and possibly year 3 and survive the accident and in such a state to be bothered about the payments. For me, the premium has never justified the amount of cover, but I am fairly risk tolerant (I work in insurance, so as a result I'm fairly anti-insurance where cover isn't a legal requirement..!).

That said, my dad would be terrified to go near a new car until he knew it was insured with GAP. Do ya feel lucky, punk?

[Yorkie62]

Personally, I've never taken it.

1). Some motor insurers (Admiral; 1st Central IIRC) will replace a brand new car with a brand new car in the first year. I.e.: if you write off the car at 11 months old, they'd replace with a brand new car of the same model and specification under the policy terms.

2). If you write off a brand new car, will you be in a fit state to care about covering any shortfall in the lease payments? Depending what car it is, a total write off would suggest a significant amount of damage to it and possibly it's occupants....

3). If the car was written off in an accident that wasn't your fault, you may be able to reclaim shortfall as uninsured expenses, else you would likely also have personal injury claims to help meet the shortfall.

So really, you're effectively paying for insurance to cover for a fault accident should you write the car off in years 2 and possibly year 3 and survive the accident and in such a state to be bothered about the payments. For me, the premium has never justified the amount of cover, but I am fairly risk tolerant (I work in insurance, so as a result I'm fairly anti-insurance where cover isn't a legal requirement..!).

That said, my dad would be terrified to go near a new car until he knew it was insured with GAP. Do ya feel lucky, punk?

Isn't this true of any insurance, legal requirement or otherwise, you don't need it until you need it. If you don't make a claim in any one year on your house insurance then you have just wasted Y pounds. If you don't have to make a claim in 10 years of paying for house insurance then you could say you have wasted 10 x Y pounds. But in the one year that you have a house fire, even a small one, then the insurance cost is worth every penny.

As you point out at the end DO ya feel lucky, punk?

[fiisch]

Isn't this true of any insurance, legal requirement or otherwise, you don't need it until you need it. If you don't make a claim in any one year on your house insurance then you have just wasted Y pounds. If you don't have to make a claim in 10 years of paying for house insurance then you could say you have wasted 10 x Y pounds. But in the one year that you have a house fire, even a small one, then the insurance cost is worth every penny.

As you point out at the end DO ya feel lucky, punk?

Kinda, but some insurance is providing more valuable cover than others.... if your house burns down and you don't have insurance cover, that is a catastrophic financial (and indeed emotional) event that you would probably never fully recover from. It also provides cover for a range of scenarios - e.g.: if the house gets damaged, totally destroyed by fire, flooded, subsidence etc.

GAP is for a very specific event, and protecting for a relatively small loss, so I see it as providing only very limited cover... i.e.: Total Loss AND your fault AND you survive the accident AND you are still in a negative equity position AND you are ineligible for a brand new car. The loss ratios for GAP are incredibly appealing for an insurance company - far more so than motor insurance, home insurance etc.

[Yorkie62]

Kinda, but some insurance is providing more valuable cover than others.... if your house burns down and you don't have insurance cover, that is a catastrophic financial (and indeed emotional) event that you would probably never fully recover from. It also provides cover for a range of scenarios - e.g.: if the house gets damaged, totally destroyed by fire, flooded, subsidence etc.

GAP is for a very specific event, and protecting for a relatively small loss, so I see it as providing only very limited cover... i.e.: Total Loss AND your fault AND you survive the accident AND you are still in a negative equity position AND you are ineligible for a brand new car. The loss ratios for GAP are incredibly appealing for an insurance company - far more so than motor insurance, home insurance etc.

Can't argue with that, and I can see how the loss ratios can be made to make GAP insurance attractive. However, considering your earlier argument that many insurance companies will offer new vehicle replacement in the 1st 12 months of a comprehensive insurance policy, and GAP specific states that it will cover you for any financial difference between what the car insurance Co gives you and what you owe the finance co. Is this not a case of miss selling of insurance, particularly in the 1st year of ownership of a new vehicle. Is this the next Miss Selling scandal?

[psychocandy]

Isn't this true of any insurance, legal requirement or otherwise, you don't need it until you need it. If you don't make a claim in any one year on your house insurance then you have just wasted Y pounds. If you don't have to make a claim in 10 years of paying for house insurance then you could say you have wasted 10 x Y pounds. But in the one year that you have a house fire, even a small one, then the insurance cost is worth every penny.

As you point out at the end DO ya feel lucky, punk?

EXACTLY. I'm member of facebook group for Florida. People on there regularly say they take thousands in cash because they dont want to use a credit card. I point out that there is a cash limit of about $500 so they'd be stuffed if it got nicked.

Answer is always "I'm careful", or "never had a problem in the past". Crazy.

I always point out I've never had a problem with being dying suddenly, but I still pay for life insurance.

[psychocandy]

Personally, I've never taken it.

1). Some motor insurers (Admiral; 1st Central IIRC) will replace a brand new car with a brand new car in the first year. I.e.: if you write off the car at 11 months old, they'd replace with a brand new car of the same model and specification under the policy terms.

2). If you write off a brand new car, will you be in a fit state to care about covering any shortfall in the lease payments? Depending what car it is, a total write off would suggest a significant amount of damage to it and possibly it's occupants....

3). If the car was written off in an accident that wasn't your fault, you may be able to reclaim shortfall as uninsured expenses, else you would likely also have personal injury claims to help meet the shortfall.

So really, you're effectively paying for insurance to cover for a fault accident should you write the car off in years 2 and possibly year 3 and survive the accident and in such a state to be bothered about the payments. For me, the premium has never justified the amount of cover, but I am fairly risk tolerant (I work in insurance, so as a result I'm fairly anti-insurance where cover isn't a legal requirement..!).

That said, my dad would be terrified to go near a new car until he knew it was insured with GAP. Do ya feel lucky, punk?

Couple of chinks in your argument I feel

1) Its a lease car which muddies the waters a bit. Even if they do replace it not sure if the lease would continue with a different car.

2) What if it gets nicked and not recovered? Same thing and no damage to me. Also, even if the worse came to the worse and I was dead - yes I wouldnt care but my family who were left with the debt may do.

3) I live in South Wales. I'd end up chasing some scote who wasnt insured for £ a week.

[psychocandy]

Isn't this true of any insurance, legal requirement or otherwise, you don't need it until you need it. If you don't make a claim in any one year on your house insurance then you have just wasted Y pounds. If you don't have to make a claim in 10 years of paying for house insurance then you could say you have wasted 10 x Y pounds. But in the one year that you have a house fire, even a small one, then the insurance cost is worth every penny.

As you point out at the end DO ya feel lucky, punk?

and its only something like £120 for 3 years anyway...