Gap Insurance - anyone used it ?

[Corey_R]

Except if you're leasing a vehicle. This is where gap insurance is important.

If you lease for a 3 year period, it will take at least 18 months for the payout figure to be less than market value on a VW. So if you write it off in that period you will end up with a gap, as the value to payout the lease is basically the balloon payment , plus the remaining lease payments.

Aah cool, that makes sense. I haven't considered the leasing option

[KWICKS]

Shame, because they're the cheapest with Rating 1 for life

Rating 1 for Life is marketing mumbo jumbo. You get guranteed a maximum discount of 60% (up to 70% with some insurers) but this doesn't mean anything because they still change the base premium they deduct the discount from based on your claims history and demographics annually anyway. 60% off a $1000 premium one year, next year you make a claim and it is 60% off a $1400 premium, and you think that's a good deal?

[Laidback]

Exactly and for such a relatively small outlay it's just not worth not having it. As that website says: Peace Of Mind Insurance - POMI

I have seen amny clients claim with it. They were all non chalont when buying; Ie What the heck it's cheap I may as well have it, and when it comes to claim it's your best friend.

[elisiX]

I haven't heard of GAP insurance for years. I remember when I bought one of my first cars that it was suggested to me. As a private buyer, I always go with NRMA who replace my vehicle new for old in the first 2 years. From that point, I select an agreed value (which is generally in line or above the outstanding loan amount/value of the car). So in this situation I dont think its necessary - however I can certainly see the merit on a leased vehicle or for those using an insurer who do not replace new for old early on in the cars life.

[bigmouthmedia]

I liked them when I started using them back in the late 90's but their repair service has gone downhill, they're screwing repairers for more and paying less (hence why no decent repairer does work for AAMI) and they won't allow you to choose the repaired even if the other party was at fault and their insurance company is paying. You can't even offer to pay the difference yourself as they flatly refuse.

As for the repairs... well I've posted about how bad they are, I've spent so much time stuffing around sorting out shoddy AAMI repairs that I'll never use them again.

The insurance company has a range for your car that you can use. I choose a figure almost at the top of the range. The accessories are listed on top. I went agree value because I wanted to add on genuine R32 wheels to replace my GTI wheels. The cost difference from Volkswagen is $800 ($100 per wheel extra over GTI and $100 per tyre) but if I added on the wheels at $800 they would only give me $200 if a wheel and tyre were stolen and $800 if all were stolen! So I'd be wasting money using market value. Agreed value means I get the price agreed to plus the payment for the extras

Interesting about AAMI - I'm currently talking to an insurance broker who utilies Affinity (Wesfarmers) - it's similar in vein to AAMI but more expensive - however you get to choose your own repairer and they offer signwriting coverage (big for me)....the only downside as I said is the cost - AAMI are almost half the cost, and even cheaper when we move to Lyndhurst - Affinty go the other way round.

Hmmm....not sure. I can go agreed for the cost of the vehicle ($32K), which I'm sure will get re-evaluated in Year 2, but Laidback - can you please PM me with some contact details for you and a bit more about what you do ?

I'm curious about Gap.

[Laidback]

I haven't heard of GAP insurance for years. I remember when I bought one of my first cars that it was suggested to me. As a private buyer, I always go with NRMA who replace my vehicle new for old in the first 2 years. From that point, I select an agreed value (which is generally in line or above the outstanding loan amount/value of the car). So in this situation I dont think its necessary - however I can certainly see the merit on a leased vehicle or for those using an insurer who do not replace new for old early on in the cars life.

This is the common misconception that the insurance company will pay out your loan as well as your car. Why would they pay you more than they have to? Ever heard of that happening?

Cars depreciate one way while banks recoup much of their interest component or charges up front. That is what creates the GAP. There is NO comprehensive cover that will payout your loan (including new for old because that concerns just the car) on the market. That is why we have GAP insurance. Quite often the comp won't cover many of the options you buy. Ie internal DVD players etc Particularly for 2nd hand cars. I passed on that website because I'd rather people buy through there as oppossed to not buying at all.

As I said I am a car finance broker and 9.5 out of 10 of my clients buy this cover. I always tell them that they don't have to buy it, but when I explain what it does they insist on having it. The other .5 either still don't understand what it does or are frugal which is fair enough. peter@myamb.com
POMI

[elisiX]

Laidback they are replacing the car - new for old. Why would they be paying out the finance? I still want my car. I have an accident so they replace the vehicle in the event of a total write off. The finance company is not paid out but the loan is secured against the new vehicle.

I can appreciate where this might be beneficial under a lease agreement or where the market value is well under the current outstanding balance of the loan, but in my situation, with the benefit of new for old, there is no requirement in the first 2 years.

This is something I may not know about and could be your point. In the event of a total loss, does the loan have to be paid out rather then simply securing the loan against the new vehicle? If not, then I can see why just about everyone would need this cover.

[Dubya]

There is NO comprehensive cover that will payout your loan (including new for old because that concerns just the car) on the market. That is why we have GAP insurance.

That ain't right.

New for old is exactly what you want. Works like magic: You get a new car and your finance just continues as it did before the loss. Beautiful!

Usually offered in first 24 months on new cars and in that period addresses any gap.

[elisiX]

That's what I thought Dubya.

[Corey_R]

Does the insurance company pay the stamp duty and onroad costs in the new for old replacement though? Cause remember the stamp duty is a state tax which goes to the RTA etc, not to the federal government (GST, LCT etc).