Jan 092017
 

For many of us, our car is one of our most prized possessions and one of the most expensive purchases we’ll ever make.  Despite how careful we might be whilst driving and how well we look after our cars both on and off the road, anything could happen.  Being unlucky enough to have your car stolen and not recovered, or to be involved in an accident where your car is written off, is never beyond the realms of possibility.

In addition to the emotional strain these eventualities can put you under; there will inevitably be financial implications.  However comprehensive your insurance policy might be, if your vehicle is declared a “total loss” and you make a “total loss claim” to your insurer, most insurers will only pay out the current market value of your vehicle at the time of incident.  This could leave you with a shortfall of thousands of pounds in comparison to the purchase price of the car, meaning that if you want to replace it with a like-for-like you’ll have to make up the outstanding balance.

To guard against this potential cost in the event of a total loss claim, you can cover yourself with a GAP (Guaranteed Asset Protection) insurance policy, to cover the difference.

How GAP insurance works:

When buying a new car for, say, £20,000, a consumer takes out both a comprehensive motor insurance policy and a GAP insurance policy. Over the course of the first three years of ownership, which is when a new car depreciates the most, the market value of the car may fall to, say, £12,000.

If an accident then happens or the car is stolen but not recovered, a total loss claim would need to be made. When the claim is approved, the motor insurer would pay out the market value of the car (the £12,000) and GAP insurance covers the outstanding balance of £8,000, which covers the remaining amount of the car’s original purchase value.–

What cover is available:

There are commonly three types of GAP insurance available, and at Warranty Direct we pride ourselves on arranging flexible policies that can cater to new or used cars either purchased from a dealer or privately*. The three types of policies offered by Warranty Direct are:

  • Vehicle Replacement Insurance (VRI) – this covers the difference between what the motor insurer pays out and the cost of a brand new car of the same make, model and specification. This policy gives you cover even if the manufacturer’s prices have increased since buying the original car.
  • Return to Invoice Insurance (RTI) – this covers the difference between what the motor insurer pays out and the original invoice price paid for the car.
  • Return to Value Insurance (RTV) –this covers you  for the difference between what your motor insurer pays out and the value of the car at the time when the GAP policy was purchased (which doesn’t need to necessarily be when you bought the car)

 

Other factors to consider:

As with most insurance policies, there are some limitations to Warranty Direct’s GAP Cover Insurance which you should be aware of before taking out a policy. Below are the most significant ones:

  • If your motor insurer doesn’t pay out on your total loss claim then you will be unable to claim on your GAP insurance, as the two go hand-in-hand.
  • Your GAP cover will be invalidated if the vehicle is written off due to an accident where the driver is under the influence of alcohol or drugs.
  • Warranty Direct’s GAP Cover insurance isn’t available for electric cars, motorbikes, vehicles modified from the manufacturer’s specification or vehicles which are used for pacemaking, speed testing, other competitive events, or for hire or reward.
  • The incident leading to the total loss of the insured vehicle must occur within Great Britain, Northern Ireland, Isle of Man, Channel Islands or the European Union.

It is of course important to consider the pros and cons of any policy of insurance and make sure you read the full terms and conditions in order to understand exactly what the policy entails and see whether it is right for you. You can obtain a copy of Warranty Direct’s full GAP policy terms and conditions from our website. Carefully considering all the factors such as the ones above will give you the freedom to pick a policy you know is right for you and prevent ill-informed decisions, which could lead to costly consequences.

Why Warranty Direct:

We’ve been providing GAP insurance since 2011 and are one of the leaders in the industry. With the cost of our GAP cover starting from just £136 for three years**, we aim to provide competitive and affordable cover which will help you avoid being out of pocket in the unfortunate event that your car is written off or stolen and not recovered.

Find out more about our policies here, so you can plan how best to cover yourself from potential financial loss.

* Types of product available subject to car eligibility criteria. See www.gapcoverinsurance.co.uk for more information.

**Price is based on a 3 year Return To Invoice policy for a Ford Focus 1.6 TDCI with a £5,000 claim limit.

Warranty Direct’s GAP Cover Insurance policies are underwritten by LAMP Insurance Company Limited, whose registered office is Suite 934 Europort, Gibraltar, company number 93562. LAMP Insurance Company Limited is licensed and regulated by the Gibraltar Financial Services Commission under the Financial Services (Insurance Companies) Act. Policies are administered by Warranty Direct Limited, Quadrant House, 20 Broad Street Mall, Reading, RG1 7QE, company number 3233010. Warranty Direct limited is authorised and regulated by the Financial Conduct Authority.

Oct 062016
 

When it comes to buying a car there are numerous factors to consider, and ultimately we all want to get good value for the money we put into a purchase. Value for money when buying a car doesn’t just involve the price you pay when you buy it though – more often than not we need to consider the value we’ll get from re-selling it in the future.

Depreciation is one of the biggest factors to be assessed when making this decision, but it can frequently be overlooked in favour of style and desirability at the time.

Most cars depreciate at a rate of around 20% per year over the first three years of ownership, but there are a number of things to take into consideration which could help you retain as much value as possible thereafter.

The Key Factors:

The general reliability of your car is crucial in reducing depreciation – certain manufacturers have a reputation for unreliability so a bit of brand research is a must. The less you have to spend after services and MOTs, the better it is at the time and in the long run. In terms of MOTs and services, it is key to maintain a full service history to illustrate reliability as well.

Fuel type and MPG can have a significant impact on depreciation. Typically, diesel cars are more economical but the gap is closing as petrol engine efficiency improves, so newer petrol models should maintain value well. Looking ahead, hybrid and alternative energy vehicles will be a good option as, due to increasing demand, value will be more solidified. In addition to economy, overall mileage has a huge effect on value as the higher the mileage, the lower the value.

By-and-large, the bigger the car the higher the running and maintenance costs will be, so the resale value for superminis and hatchbacks is usually very good. Buying a car with lower running costs, including fuel, will in turn lead to a lower road tax which is highly desirable in a second-hand car.

A car’s value also affects insurance – for a lower value car an owner could consider third party or third party fire and theft policies to reduce their premiums. Insurers also study information on estimated cost of repairs and potential repair time, so reliability and depreciation has a major bearing on the overall cost of insurance.

The original cost of the car is worth bearing in mind, as if you take into account 20% depreciation per year during the first three years, a car worth £60,000 will depreciate by £12,000 per year as opposed to a £20,000 car retaining far more of its value by losing £4,000 per year.

Minimising Depreciation / Maximising Value

  • Maintenance – taking good care of your car on and off the read is key. Damaged bodywork and interiors will decrease value, as will worn out engines that have been aggressively driven. Buying a Haynes manual for your car is a great way of helping to reduce running costs too.
  • Don’t buy brand new – buying a ‘nearly-new’ or a five-year-old car will help you avoid the stage where the most depreciation occurs. Buying an eight to ten-year-old car is also an option, as this won’t depreciate any more than it already has, but this needs to be weighed up against potentially higher repair costs.
  • Don’t modify, choose extras wisely – ‘boy racer’ modifications such as spoilers, noisy split exhausts and flared wheel arches tend not to be desirable in the second-hand car market. However, options such as sat-nav, leather seats and air con are highly desirable and will be valuable additions.
  • Consider GAP insurance – because your car starts losing value the moment you drive off the forecourt, a GAP insurance policy is worth investing in if you’re paying for the car on finance. So, if you’ve bought a relatively new car and anything unforeseen happens to it the GAP insurance will cover the value lost by depreciation.
  • Leasing – this can be a good option in terms of keeping the running costs and repairs down, as they are generally included in your fixed monthly payments. Particularly useful for those that will have high mileage, but keep an eye out for mileage limits in the contract as they can be very costly.

Depreciation is something we all have to tackle if we’re buying a car, but hopefully with these tips you can make the most out of what is for many people, not just a means of getting around, but a great way of having fun and extension of their personality.

Jul 052016
 

Many motorists are taking up the opportunity to get GAP insurance upon the purchase of a new vehicle; even if it’s a used car. GAP Insurance is a product just as popular and sometimes more desired than a car warranty.  So why should car owners consider this insurance cover?

Nearly half a million cars are written off each year through accidents and around 150,000 cars are stolen*.  For those unfortunate enough to experience this situation, they may find themselves in a tricky situation, finding cash, to replace their lost motor. Motor insurers will commonly not pay out the full original value of the motor and instead only pay out a settlement equal to the value of the car at the time of the accident.

So if a brand new car costing £20,000 depreciates in three years to £10,000 and is then written off due to accident or theft, the motor insurer will only pay out the £10,000. The trouble now is finding the additional £10,000 to purchase a for-like motor and this is where GAP insurance plays its key role.

GAP insurance adds that extra protection to the depreciation of a motorist’s vehicle. As the name indicates, it will cover that missing gap of money to meet the actual value of the car at the time of purchase. So with GAP insurance taken out against the vehicle, that additional £10,000 doesn’t become so hard to find.  That is GAP insurance in its simplest form**.

The appealing factor of GAP insurance is that it available for brand new or used cars brought through dealers and used cars purchased privately in a variety of options.

Return to Value: This GAP insurance option pay the difference between what the motor insurer pays and the value of the car when GAP insurance is taken out.

Return to Invoice:  This GAP insurance option covers the different between what the motor insurer pays and the original invoice price paid for the car.

Vehicle Replacement: Designed for new cars, this option pays the difference between what the road insurer pays and the cost of a brand new car of the same make, model and specification. Even if manufacturer’s prices have increased since your original car was purchased.

Ultimately, having a car written off can be a distressing experience for anyone without having to think about how to replace it. GAP insurance can help bring that extra element of security so if the worse possible scenario with your car happens – getting back on the road will be easier.

Warranty Direct’s GAP Cover Insurance options have been designed to be flexible to motorists’ requirements whether you have a brand new or used car brought from a dealer or privately. With wide claims limit range and a dedicated team, Warranty Direct’s GAP Cover Insurance is designed to protect motorists from the pitfalls of a “total loss.” Call today on 0800 097 8838 or visit gapcoverinsurance.co.uk .

* – Based on stats provided by Honest John and LV=Car Insurance Report 2014

**- Terms and conditions apply.

Warranty Direct is an Insurance Intermediary authorised and regulated by the Financial Conduct Authority. Our FCA Register Number is 309075. Warranty Direct Limited is a company, registered in England and Wales No. 3233010 at Pinnacle House, A1 Barnet Way, Borehamwood, Herts, WD6 2XX. Policies are subject to English Law. 

Nov 082011
 

GAP CoverLeading warranty provider, Warranty Direct, has introduced an all-new product to help car owners guard against financial shortfall in the event of an insurance claim.

Depreciation can result in more than 60% of a car’s value being lost in just three years – and sometimes up to 30% as soon as it is driven off the forecourt – leaving owners and lessees vulnerable to a shortfall. Typically, the more valuable the car, the greater the risk.

With over 700,000 cars stolen or damaged beyond repair annually, GAP Cover Insurance pays the difference between the insurer’s contribution and the true value of the car.

Motorists who suffer the misfortune of having to replace their car are often forced to buy a cheaper vehicle because the ‘gap’ is so great. In some circumstances, if the owner is leasing their car, they may end up in debt and without a vehicle.

Available at www.gapcoverinsurance.co.uk, the latest product from the long established UK firm offers owners the reassurance that if their pride and joy is stolen or written off they won’t be left with an inferior replacement.

Warranty Direct Managing Director, Duncan McClure Fisher, says: “We’ve seen some pretty shocking examples of owners having to stump up many thousands of pounds through no fault of their own.

“Our new product is a cheap and effective way of saving a lot of cash if a car’s stolen or written off and a shortfall remains.”

Three levels of cover are available: Return to Value (difference between value at start of cover and insurer’s payment); Return to Invoice (difference between dealer’s invoice value and insurer’s payment) and Vehicle Replacement (difference between insurer’s payment and list price of similar brand new car).

For more information, please call 0118 971 9700 or visit www.gapcoverinsurance.co.uk.