Gap Insurance - claim limit?

[andyfromembsay]

As you may know this is the first car I've actually bought in about 20 years (new chairman, company cars are evil etc) so I've been looking into gap insurance. Now I understand that "gold plated" is replacement vehicle cover - that basically increases the level of cover as the car gets older (and as the insurance company's value reduces). But what's confused me slightly is the standard "maximum claim" of £5k - because by my reckoning if I write this car off in year 3 the insurance value will be about £20k or less, and the replacement value will be about £45k.

So why would I not put £25k as the max claim? The premium difference doesn't seem that big. The cost for 3 years seems to be about £230 for £25k of cover.

Have I missed something?

[Mrjon]

If you are thinking of getting GAP you should be able to get it a bit cheaper as your volvo insurance includes GAP for year 1 of the cars life.
I'm not sure what figure I'm meant to insure the car for, the list price or the price I can replace it for, ie 44K or 37K, any ideas?

[deathrider311271]

right GAP insurance is exactly what it says, it makes up the difference between what the insurance pays out and what is owed on finance on the car, u do not have to take it out with the finance company or the supplying garage. You can get much better deals online.

hope this helps

simon

[andyfromembsay]

Thanks Simon - there's 3 options - pay off the finance, "back to invoice" or replace the vehicle. Now to my mind the second and third options get riskier for the insurer as time goes by, as the amount covered by the main insurer goes down. Vehicle replacement is the riskiest as they have price inflation to deal with as well.

But i just don't get how on a 40k vehicle a claim limit of 5k could ever be regarded as adequate!

[deathrider311271]

Originally Posted by andyfromembsay

Thanks Simon - there's 3 options - pay off the finance, "back to invoice" or replace the vehicle. Now to my mind the second and third options get riskier for the insurer as time goes by, as the amount covered by the main insurer goes down. Vehicle replacement is the riskiest as they have price inflation to deal with as well.

But i just don't get how on a 40k vehicle a claim limit of 5k could ever be regarded as adequate!

TBH i have never heard of the £5k limit, the only limit i had ever heard of was upto 65% of the vehicle cost when new, even tho it would never get to that unless you had an obscene finance rate. However as you have stated there are 2 further options.

If i were taking it out on a new car i would take the highest one available so it costs me as little as possible whether i had finance on it or not. Also if there is this £5k limit on the other 2 plans i would be looking elsewhere anyway

simon

[844PHW]

Originally Posted by andyfromembsay

As you may know this is the first car I've actually bought in about 20 years (new chairman, company cars are evil etc) so I've been looking into gap insurance. Now I understand that "gold plated" is replacement vehicle cover - that basically increases the level of cover as the car gets older (and as the insurance company's value reduces). But what's confused me slightly is the standard "maximum claim" of £5k - because by my reckoning if I write this car off in year 3 the insurance value will be about £20k or less, and the replacement value will be about £45k.

So why would I not put £25k as the max claim? The premium difference doesn't seem that big. The cost for 3 years seems to be about £230 for £25k of cover.

Have I missed something?

First thing would be to check if your normal insurance includes replace with new for the first year. I've no idea where the 5k limit comes from.

[andyfromembsay]

Originally Posted by 844PHW

First thing would be to check if your normal insurance includes replace with new for the first year.

It does (Volvo insurance) - but the premium for Gap doesn't seem to reflect that - I'm looking at a one off payment of just over £230 for £20k worth of cover, which if it means I get a brand new car if it's written off in year 3 seems a pretty good price.