The Financial Conduct Authority (FCA) is poised to announce changes to promote competition in the guaranteed asset protection (GAP) insurance market, including limiting the point of sale advantage for GAP insurance sales made on the vehicle showroom floor and making it easier for consumers to shop around.
GAP insurance is likely something you’ve heard of but may not fully understand. It might, therefore, be useful to summarise the protection afforded by our GAP insurance policy (arranged by Nice 1 Limited with UK General Insurance Limited on behalf of Ageas Insurance Limited). Should your car be stolen and not recovered or in an accident, GAP insurance can provide valuable benefits for the majority of customers (see exceptions below) who purchase a new or used vehicle. If a Total Loss of the insured vehicle occurs within the territorial limits specified in the policy during the period of insurance, GAP Insurance pays the difference between the insured value (the amount you receive under your motor insurance policy in respect of your vehicle being a Total Loss) and either the purchase price of the insured vehicle as confirmed by the net invoice selling price or (if under a finance agreement) the amount of your early settlement finance figure, whichever is the greater. Due to the quality of cover and price, this is the sole GAP Insurance product offered by P F Spare Insurance Brokers.
To put our summary into context, depreciation means new cars can rapidly lose value and, the insurer will typically pay out the car’s value at the time of loss. On average, a new car loses 40% after one year and 60% after three years (source: The AA). GAP insurance enables you to get paid the difference between the price you paid for the car and the car insurance payout agreed when a claim is made; remember, it will only pay out if the insurer insuring your car states that the car is written off or unrecoverable.
P F Spare Insurance Brokers can arrange GAP insurance from just £249 for a five year policy.
However, we take care to ensure that customers do not buy insurance which is not suited to their needs. The FCA’s research has indicated that, based on an analysis of claims, it does not currently offer good value for money. It is, therefore, important to remember that you may not need GAP insurance if:
Check your policy wording as many fully comprehensive car insurance policies offer “new-for-old” car replacement during the first 12 months of ownership.
Check whether your agreement already covers you for the difference between the ‘book price’ (official value of the car) and how much you paid. If this is included in the agreement then you don’t need to add GAP insurance.
Finally, don’t forget you are not obliged to buy GAP insurance at the same time you purchase your vehicle and it seems likely that in the coming months the FCA will take steps to ensure this is explained clearly to all car buyers at the point of sale. We encourage you to contact us today and compare our GAP insurance product for both price and cover with that you may be or indeed have been offered by your garage or dealership.