Occassionally I'm required to compare our GAP insurance policies with those provided by Motor Dealers. In taking part in another conversation thread on this forum, an opportunity arose to compare our policies against those offered by Audi in relation to a TT. I figured I'd publish the comparison here for all to see because some of you may find it useful.
For the record, I've compared our policy wordings with those of the Audi branded policy detailed here.
There are three main types of GAP insurance:
1. Finance GAP insurance: Pays the difference between Motor Insurance payout and finance agreement settlement figure
2. Invoice GAP insurance: Pays the difference between Motor Insurance payout and original invoice price.
3. Replacement GAP insurance: Pays the difference between Motor Insurance payout and the cost of replacing the vehicle with a new equivalent (assuming the original vehicle was bought brand new).
There are then combined versions of "Finance & Invoice GAP" and separately, "Finance, Invoice & Replacement GAP" which are designed to pay the policyholder the best of either type. E.g. the "combined" policy types are superior to standard versions.
- Audi: I'm comparing their Combined "Finance & Invoice GAP insurance" policy here, but they (Audi dealers) also have standard Finance GAP and standard Invoice GAP insurance policies available to them.
- GapInsurance.co.uk: Combined Finance & Invoice GAP insurance with an option to purchase the superior (yet still cheaper than Audi's policy) combined, Finance, Invoice & Replacement GAP insurance.
Cover for Motor Insurance Excess:
If you have an excess to pay as part of your Total Loss claim with your Motor Insurer, some GAP insurance policies will contribute a sum of money towards that excess amount.
- Audi: Will contribute up to £100 towards any excess you have to pay as part of your Total Loss claim.
- GapInsurance.co.uk: Will contribute up to £250.
Some GAP insurance policies require that you seek their approval to accept an offer of settlement from your Motor Insurer and will penalise you if you don't.
- Audi: You MUST contact the Claim Administrator prior to accepting a settlement offer from your Motor Insurer. If you don't and unwittingly accept an offer lower than what your vehicle is worth (according to Glass' Guide "Retail Value"), they won't cover any amount by which they will deem the Motor Insurer to have underpaid.
- GapInsurance.co.uk: No Pre-Approval clause. We'd LIKE you to contact us prior to accepting an offer from your Motor Insurer but we won't penalise you if you don't.
How long can you source cover for?
- Audi: Invoice GAP insurance element only lasts for a maximum of 36 months. Cover level drops to Finance GAP insurance only (where applicable) for a further period of of up to 24 months (making 60 months in total).
- GapInsurance.co.uk: Cover periods of 12, 24, 36, 48 or 60 months available with no early "drop" in cover level.
If you end up keeping the vehicle longer than the initial GAP insurance cover period, can you renew the GAP insurance policy?
- Audi: The policy can NOT be renewed upon expiry.
- GapInsurance.co.uk: Upon expiry, our policies can be renewed for 12 or 24 months, repeatedly up and until the vehicle reaches 10 years old. We can even offer a form of renewal for policies bought elsewhere (e.g. if you bought a policy from a Motor Dealer and it's approaching expiry but you're intending to keep the vehicle longer, we have a way that you can maintain cover in place!)
Some Motor Insurers will offer to replace your vehicle with an equivalent brand new one at the time of claim (assuming you originally bought a brand new vehicle) or an equivalent used one (if you you didn't buy the vehicle brand new) rather than offer a cash settlement. It may be that you don't want the vehicle they're offerinng and elect to take a cash settlement instead. Some GAP insurance providers will penalise by either reducing their payout, or not paying out at all if you decline the option to take a physical replacement vehicle from your Motor Insurer.
- Audi: If you decline an offer of a replacement vehicle from your Motor Insurer, the claim on their GAP insurance policy will be revised so that it pays the difference between the value of that replacement vehicle (potentially considerably higher than the market value of your written off car) and the original invoice price - E.g. it'll pay out substantially less money, possibly nothing at all!
- GapInsurance.co.uk: No such clause.
Policy Transfer - Replacement vehicle:
If you do accept the offer of a replacement vehicle from your Motor Insurer what happens to the remaining term of your GAP insurance policy?
- Audi: The remaining term of the policy can be transferred to the replacement vehicle for a fee of £20.
- GapInsurance.co.uk: The remaining term of the policy *can* be transferred to the replacement vehicle at no cost (but in reality it's rarely good practice to do so) OR, you can elect to cancel the existing policy, claim a daily pro-rata rebate of unused premium and carry the entire balance of premium forward against the cost of a whole new policy on the new vehicle. No cancellation, admin or transfer fees apply either way.
Policy Transfer - Sold vehicle:
If you sell your vehicle before the GAP insurance policy expires, what happens to the remaining term of the GAP insurance policy and can you get any refund upon cancellation?
- Audi: The policy cannot be transferred to any subsequent owner of the vehicle nor can it be transferred to a new vehicle. You'd have to cancel their policy, claim a pro-rata rebate (it's unclear whether this would be a daily or monthly calculation) and incur a £35 cancellation fee in the process.
- GapInsurance.co.uk: The policy cannot be transferred to any subsequent owner of the vehicle. You'd cancel the policy, claim a daily pro-rata rebate of unused premium and carry that balance forward against the cost of a whole new policy on the new vehicle. No cancellation, admin or transfer fees apply.
Cooling Off Period:
This is the amount of time after purchasing the policy, within which you can cancel it and claim a full refund.
Cancellation - Rebate/Fee?:
If you cancel outside of the Cooling Off Period, do you get any money back and do cancellation fees apply?
- Audi: "Pro-rata rebate" (unclear whether monthly or daily) less a £35 admin fee.
- GapInsurance.co.uk: Daily pro-rata rebate of unused premium that you can either have refunded or carry forward against the cost of a new policy. No cancellation, admin or transfer fees apply.
Timescale to supply documentation after opening a claim:
Once you inform the Claim Administrator of the intention to make (or possibly make) a claim, some policies require that all information is submitted within a specific time limit in order for the claim to be valid.
- Audi: 30 Days, unless you specifically request an extension or other undefined exceptional circumstances apply.
- GapInsurance.co.uk: Unlimited. Take as long as you need.
Market Value Clause:
Market Value clauses come in one of two forms (or both) whereby the GAP insurance provider reserves the right to:
1. Revalue the vehicle at the time it was purchased and refuse to pay any amount by which they deem you to have overpaid for the vehicle.
2. Not pay any amount by which they deem the Motor Insurer to have paid out less than that they think your car is worth at the time of claim.
- Audi: They reserve the right to revalue your vehicle if they deem that accessories/options fitted to your vehicle are deemed by their assessor to have increased the value of the vehicle. The Motor Insurer may not agree with this increased value and in such circumstances this usually leads to the GAP insurer refusing to cover what they subsequently deem an underpayment by the Motor Insurer.
- GapInsurance.co.uk: NO right to revalue the vehicle.
If you part exchange a vehicle and carry forward Negative Equity to the new vehicle most GAP insurance policies will not cover the sum of Negative Equity involved.
- Audi: Not possible to cover any Negative Equity brought forward from a previous vehicle.
- GapInsurance.co.uk: An additional premium can be paid to include cover for up to £2,000 of Negative Equity.
The Original Invoice Price:
The definition of the "Invoice Price" (usually referred to as the "Net Invoice Selling Price") and what is and isn't covered, varies considerably from one policy to another and can result in a substantial difference in the amount paid out by each policy at the time of claim.
- Audi: The OTR price that you paid for your vehicle after discount was applied including (up to an unclear limit - the limit is apparently detailed on each policy schedule/certificate) dealer fitted accessories/options. Excluding: road fund licence, new vehicle registration fee, fuel, paintwork and/or upholstery protection kits, insurance premiums, warranty premiums and any such associated cost.
- GapInsurance.co.uk: The total OTR price (e.g. including new vehicle registration fee) that you paid for your vehicle after discount was applied. Including: (so long as they're detailed on the original new/used sales invoice) paintwork protection applications and fuel. The cost of road fund licence, any Warranty and/or Service Plan detailed on the original New/Used vehicle invoice will be included on a pro-rata basis relevant to the unexpired duration (at the time of claim) only where the value of that unexpired duration cannot be transferred forward to a new vehicle or claimed back from the provider. Note too that Replacement GAP insurance, at the time of claim on a vehicle that was originally purchased brand new, is all about the full manufacturer's list price of the new equivalent vehicle not, the original (almost always lower) invoice price initially paid for the original vehicle
Must Be Purchased Within:
Within how long after taking ownership of the vehicle do you have to purchase GAP insurance?
- Audi: 60 days of taking ownership of the vehicle unless Abraxas give special permission otherwise.
- GapInsurance.co.uk: Within 12 months of taking ownership of the vehicle.
Ability To Defer Start Date: New-For-Old Cover:
In relation to a brand new vehicle, lots of Motor Insurance policies now offer New-For-Old cover during the first year of ownership (some, like SAGA and NFU will provide N4O cover for up to 2-years). In principle it means that if the vehicle is declared a Total Loss before the New-For-Old cover expires, the Motor Insurer will physically replace the vehicle with a brand new one rather than getting embroiled in a Market Value settlement.
It's not all plain sailing though and there are some pitfalls to watch out for (see this blog article here for more details) but in theory, having New-For-Old cover from your Motor Insurer during the first year *could* mean that you don't actually need to have GAP insurance in place at the same time.
What then are your options for avoiding having duplicate cover in place (particularly given you're normally restricted to buying GAP insurance within a limited amount of time after taking ownership of the vehicle (see above)?
- Audi: Unclear.
- GapInsurance.co.uk: Wait up to 12 months after taking ownership of the vehicle (note there's a minor price increase if you wait more than 6-months) and/or elect to delay the policy start date (at no additional cost) by up to 12 months from when the vehicle was first registered.
I hope this helps.
Any questions and/or comments are encouraged.