Today we were alerted to the fact that the ABI (Association of British Insurers) had recently published a “Guide To Making Sense Of Gap Insurance”.
Given the recent wider industry focus on Gap Insurance by the likes of Which? and Defaqto, we were eager to discover the ABI’s take on this form of Insurance.
The guide in general is a good read and certainly well intentioned. Consequently we’d recommend that anyone interested in Gap Insurance should let their eyes take a gentle stroll over its content.
However we wouldn’t recommend that those same people pay a great deal of attention to the descriptions of the various policy types, nor the tables claiming to show examples of how a claim might break down financially, because, sadly, they’ve got some pretty fundamental issues wrong.
For example, they claim that “RTI Combined Gap Insurance”…
…pays the difference between the vehicle’s market value at the time of loss and the amount you initially paid for the vehicle (the invoice amount), which could cover any outstanding finance you have left to pay.
The key word here is “could”, because what they’re actually describing is a normal Invoice Gap Insurance policy that pays no specific attention to any finance that may or may not be present, but which could (if the payout was substantial enough) allow some or all of the outstanding finance to be cleared. A truly Combined Invoice Gap Insurance policy (such as ours, but we don’t bother having “Combined” within the policy name) works somewhat differently, as follows:
…pays the difference between your Motor Insurance payout and the greater of either, the original price you bought your vehicle for or, the amount outstanding on finance at the time of claim.
We could also point out here that the ABI guide refers to somewhat inferior Gap Insurance policies that permit the (Gap) Insurer to reduce their payout if the Motor Insurer pays out less than the Market Value of the vehicle at the time of loss – whereas our policies don’t penalise the consumer in this way. We *could* point this out, but we won’t. Oh? We did? 😛
Unfortunately this means that whilst intending to be a guide to “Making Sense” of Gap Insurance, we feel it’s actually more likely to cause confusion. Perhaps the ABI were limited to only discussing the Gap Insurance policies provided by ABI members, or perhaps they just haven’t researched the market too thoroughly. We don’t know why the guide is the way it is, but if the ABI would like our assistance in revising the document and removing these errors, we’d be more than happy to assist. ABI, do get in touch!
In the meantime, if you’re interested in Gap Insurance and are suitably confused by all the different policy types, terminology and intricate workings, would appreciate some clear advice with no obligation, call us on on 01484 490095 or email us via our website here.
