Question:
I'm waiting for a new car to be delivered (a couple more months yet). On a previous car I have had gap insurance (where, in the case of a total loss the gap between insurnace pay-off and original price is filled). I have also had tracker monitor on an Audi S3 a couple of years ago. This time, I'm being offered a three year gap insurance policy for just under £500. Or I could have a tracker installed (£409 plus £100 per year for future years).
I guess that as the garage are keen to sell me gap that they must be making nicely on it. Perhaps I could beat them down a bit on the quote. They say that 71% of all car thefts result in a total loss claim. Hence, why bother with tracker? You might as well get gap to get you back to where you started. Of course, if the car is retrieved quickly and the nasty thieves are caught red-handed then surely that is good.
Perhaps I shouldn't bother with either.
Any helpful comments would be appreciated to help me overcome this dilemma.
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Gap insurance gives you cover in the event of vehicle being stolen or written off in an accident whereas tracker only assists in vehicle being recovered, hopefully before it is written off! You have to be aware however that you don't always get back the full net invoice cost of the vehicle. This is based on both your insurance company and the gap company coming up with the same market value. I took out a gap policy on my Rover 200 in June 2001 for a cost of £300 for three years
cover. My car was written off in November - not my fault - and the insurance company put a market value of £2100 on it. I paid £7200 for the car. The gap company insisted that the market value was £3500 despite both companies using Glass's guide. Instead of getting back full purchase price I would have received £1400 less. After loads of correspondence during which gap were really helpful and the insurance company were extremely unhelpful I received an offer of £3100 from my insurance company leaving a difference of £400. I feel that the £300 was money well spent as I have received £6800 instead of £3100 so have taken out gap on my new car. It is surprising how quickly cars depreciate in value and if finance is involved then I think gap is the answer.
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I don't personally belive in GAP insurance - but then I don't belive in plumbing insurance and pay cash for cars - it depends on your opinon on risk.
For a new car on finance GAP can be a useful addition as you can then be fairly sure of paying off any outstanding balance but bear in mind that your car insurance is obliged to put you bcak into your original position (ie your not supposed to lose out) GAP insurance puts you in a better position then you were before your claim - you actually have an incentive to have the car stolen/written off.
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I disagree in principle to an insurance that puts you in a better-off position for that very reason. There are enough dishonest people out there without encouraging them.
Speaking of dishonesty, it sounds like there's just as much dishonesty in the insurance industry, judging by the meagre offer for the Rover.
On a more practical note, insurance underwriters will calculate premiums (income) = claims + admin costs + profit (outgoings). Any insurance (on average) is therefore not worth it financially, as the claims payments will be less than the premiums, unless you know something the insurer doesn't. Or you simply can't risk not buying it.
Mattster
Boycott shoddy build and reliability.
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My attitude towards insurance is to never buy any insurance that you don't need to. Think of it like gambling - you'll get a payout now and then but overall the house always wins.
If you must have the security, better to save the money yourself.
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