Hello all.
My name is David and I represent one of the online providers of GAP insurance. I'm telling you this only in the interests of openness and to demonstrate that I have some detailed knowledge of this field - I will refrain from promoting our own policies specifically and give only general advice.
I came across this conversation and it was of interest. As
pastyboy else has already pointed out, it's normally the case that it's a condition of the New-For-Old cover from the Motor Insurer that you need to have been the first registered keeper of the vehicle from new and it's usually also the case that if you have a Lease Hire / Contract Hire agreement you will
never actually be the registered keeper of the vehicle - thus, as a general rule, vehicles that are the subject of a Lease/Contract Hire Agreement are usually excluded from New-For-Old cover.
MikeS, you said this:
MikeS said:
5. Replacement car. If Your car is:
• stolen and not recovered; or
• damaged to the extent that the cost of repair is
more that 50% of the manufacturers last United Kingdom list price (including VAT) of an identical new car at the time of loss or damage;
we will, at your request, replace Your car with a new one of the same make, model and specification.
We will only do this if:
• you have owned the car (or you have hired it under a
lease or hire purchase agreement) since it was first
registered as new;
• Your car is a United Kingdom specification model,
bought from a BMW Authorised Dealer in the United Kingdom;
So it seems I have no need of gap insurance?
Which suggests that your Motor Insurance doesn't require you to be the Registered Keeper of the vehicle in order for them to provide New-For-Old cover. This isn't impossible but you might want to go to some effort to clarify this with the insurer and maybe, for your own peace of mind, get a response from them in writing, because,
nowtta60's example here...
nowtta60 said:
MikeS said:
So it seems I have no need of gap insurance?
Depends on what the car is worth in year 2 and 3.
These aren't real figures just simple to illustrate:
Say it cost £35k.
1 year its worth 25k.
2 years 20k.
3 year 15k.
Assume with deposit contribution you pay £400 a month on the lease.
Accident writes of the car at exactly 2 years old.
You've got £4,800 of lease payments left to make.
The insurance offer is £20k... the market value of the car. Which goes to the lease company.
You've got to keep paying £400 a months for a car you nolonger have the use of.
The GAP will pay off the outstanding lease so you can then go an lease a new car for £400 a month.
[Edit]
To add it's a bit more complex than that and I'm quickly getting out my depth trying to explain. But basically the lease company are expecting to get a car back after 3 years worth £15k. And a number of interim payments. The GAP is to balance any shortfall from you nolonger having the car.
... is a good one.
Taking it one step further though, if you're paying £400 per month over 36 months, this comes to a combined value of £14,400. If a write-off was to occur before you'd paid the first of the 36 monthly rentals, in theory, if the finance house will hold you liable for 100% of the outstanding monthly rentals (calculation of settlement figures vary from one company to another, but 100% of outstanding rentals is quite usual), you'd be in the position of having to find up to £14,400 before entertaining the prospect of funding a new vehicle.
Hence, clarifying that you absolutely do have New-For-Old cover in place is quite important!
As for GAP insurance itself, far too many people make the mistake (based on having New-For-Old cover in place for the first year from the Motor Insurer) of waiting until the end of the first year to buy it (the GAP insurance). Only to find out that they cannot buy GAP insurance at that time - or at least not to remotely the same level of cover as they could have done initially.
As a general rule, the type of GAP insurance you need to cover a Contract Hire Agreement can only be purchased within the first 180 days. The same goes for vehicles purchased with cash or on a HP, PCP or LP agreement - you buy within the first 180 days, or not. Once you pass this 180 day deadline, you can normally only get a kind of GAP insurance, which, in the event of a claim, would pay the difference between your motor insurance payout and the cost of replacing the vehicle with one of the same Make, Model, Age and Mileage as your original vehicle
was when you bought the GAP insurance policy... E.g. if your car was 12 months old with 14,000 miles on the clock at the time you bought the GAP insurance, they'd be paying up to the cost of replacing the vehicle with a 12month old version of the same car with 14,000 miles on the clock at the time of claim, however, whilst this would still provide some (though considerably reduced) cover for a vehicle that was being purchased, this type of cover would NOT (to my knowledge) be available for a Contract Hire vehicle.
The trick, if you have New-For-Old cover for the first year, is to buy a policy within the first 180 days but specify to defer the start date of the policy so that it actually kicks in at the beginning of year 2. This way if you only wanted 3 years cover in total, you'd actually buy a 2 year policy duration deferred by 12 months from the date of first registration.
The companies that allow you to defer the start date like this (and there are various online) don't charge a fee for the privilege which means you save money on the cost of the GAP insurance (2 years is cheaper than 3 etc), but you get to avoid duplicate cover in the first year and still benefit from GAP insurance cover in the latter years.
I trust this helps and I hope I've not (and I'm sorry if I have) upset anyone by jumping in here.
