Latest news with #GAPinsurance
The Sun
17-06-2025
- Automotive
- The Sun
Little-known car insurance could save you £5,000 if your car is written off in accident – everything you need to know
A HIDDEN car insurance trick could save you £5,000 if your vehicle is written off. Motorists claiming on this insurance stand to gain big - as average payouts have tripled in the past four years. 2 The average payout for Guaranteed Asset Protection - or GAP insurance - has soared from around £1,600 in 2021 to nearly £5,000 this year. This little-known insurance hack is rarely used - with a Financial Conduct Authority probe revealing that the average driver with GAP insurance makes a claim just once every 300 years. This product is mainly used to cover a potential shortfall between a car's value and the amount owed on finance if the vehicle is written off or stolen. Drivers who need to make a claim are likely to receive larger payouts, as those who've financed their cars currently face several financial risks. GAP insurance is used not only by those with financed cars but also by owners who bought cars outright—they can claim if the insurer's payout is less than what they paid for the car. Several factors have contributed to the soaring cash value of GAP claims. These include the fast depreciation of certain vehicles - especially EVs - and a rise in insurance write-offs caused by soaring repair costs and parts shortages. Rising motor thefts, targeting models like Range Rovers, have also driven up the cash value of GAP claims. Experts say GAP insurance has shifted from a 'nice-to-have' policy to a 'vital financial safeguard' for today's car buyers. The increase in the value of payouts "underscores the growing financial risk faced by car owners" in 2025, according to MotorEasy, a leading car ownership platform. Ford is forced to immediately shut down factories and halt car production as CEO admits 'day to day' struggle for brand However, this type of insurance has been controversial in the past, as it's often sold by dealers alongside cars - sometimes with limited explanation or inflated prices. It's usually cheaper to buy GAP insurance through brokers. The increase in the value of payouts "underscores the growing financial risk faced by car owners" in 2025, according to MotorEasy, the leading car ownership platform. MotorEasy says the rise in average claim amounts is linked to the lasting effects of Covid-19. However, since so few motorists were using GAP policies, the Financial Conduct Authority launched an investigation in 2023 over concerns about their value. This led to many policies being withdrawn, with about 80 percent of products pulled from the market. Experts now advise car buyers to compare policies carefully and consider brokers rather than accepting dealer offers. Meanwhile, insurance experts have shared eight tips to help drivers slash the cost of covering their cars. Tom Banks, a coverage expert for told SunMotors that one effective way is to choose a higher excess. This means you agree to pay more out of pocket if you make a claim, which lowers the amount the insurer has to cover. Tom explained: "You want to make sure that you will be able to afford to pay it should you need to make a claim. "But it's worth bearing in mind that choosing a higher voluntary excess will usually bring your car insurance premium down." What is car insurance? Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for... Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident. As a minimum, it protects you against any damage you case to other road users, the public or their property - these are called third parties. You only need to claim on your car insurance when an accident is your fault. If another motorist is to blame, their insurance should pay out instead. Car insurance, unlike home insurance, is a legal requirement and if you don't have it you can be fined up to £1,000. You can also have your vehicle seized and destroyed. However, you don't need to insure your car if it is classed as "off-road", or holds a statutory off road notification (SORN). The vehicle has to be kept on private land and not a public highway though. 2
Daily Mail
17-06-2025
- Automotive
- Daily Mail
The little known car insurance that could save you £5,000 as payouts TREBLE
Motorists who claim on a little-known car insurance product are finding it more valuable than ever, as average payouts have trebled in four years. The average payout from Guaranteed Asset Protection - better known as GAP insurance - has jumped from around £1,600 in 2021 to almost £5,000 this year, according to MotorEasy. But the product, which is primarily used to cover a potential shortfall in a car's value compared to what must be repaid on a finance agreement, in case it is written off in an accident or stolen, has proved controversial in the past. However, owners who have bought cars outright can also get cover for the difference between the price paid and what insurer deem the value at the point of a claim. The Financial Conduct Authority launched a probe in 2023 after it was revealed that the average driver with GAP insurance claimed once every 300 years, raising doubts over whether the policy was worth having at all. However, new data exclusively shared with This is Money suggests those who do need to make a claim are likely to see far more substantial payouts due to the current cocktail of financial risks faced by drivers who have borrowed to buy cars. Rapid depreciation suffered by some cars - especially electric vehicles - combined with more insurance write-offs, linked to higher repair costs and parts shortages, as well as rising motor theft, have seen the cash value of GAP claims soar. Experts say the increase in value of claims has shifted GAP insurance from a 'nice-to-have' policy to a 'vital financial safeguard' for those buying cars. One of the reasons why GAP insurance has proved so controversial in the past is due to it often being sold by dealers alongside cars. This can lead to higher costs and those taking out the cover can often pick up considerably cheaper GAP insurance from a broker. MotorEasy, the leading car ownership platform, which offers GAP Insurance, believes the increase in value of payouts 'underscores the growing financial risk faced by car owners' in 2025. It says the combination of factors that has tripled average claim amounts can be traced back to the impact of Covid-19. The pandemic brought about a period of unusual appreciation in used car values, but prices have since declined to levels seen before the outbreak. However, for EV, value retention has dropped off a cliff edge, with battery cars now typically losing more than half of their value in just two years. While used car prices have been falling, purchase costs for new, more technically advanced vehicles have risen, further increasing the gap between the purchase price and the current market value - thus pushing up GAP insurance payouts. MotorEasy told This is Money it has seen claims exceed £20,000 for some luxury EV instances. An ongoing supply chain issue for spare parts triggered by factory closures and the outbreak of conflict since the pandemic, coupled with the more complex nature of modern vehicles and costlier components, has also prompted an increase in insurance write-offs. This has both triggered an increase in usual volumes of claims but also means owners face a larger financial shortfall if their relatively new car is deemed a total loss. There have also been high payouts on theft-related claims, with significant financial losses accrued by some models that have been targeted by criminal gangs and suffered from lower residual values as a result. MotorEasy said 41 per cent of GAP claims over £15,000 have been for stolen Range Rovers, which have been the focus of the recent motor crimewave and - for a period - caused values of some Range Rovers to tumble. 'Our latest data paints a clear picture; the financial risks associated with car ownership are escalating,' said Duncan McClure Fisher, CEO of MotorEasy's parent company, Intelligent Motoring. 'Making matters worse, economic pressures are leading drivers to delay maintenance and repairs, increasing the risk of mechanical failure and potential write-offs. 'In such cases, the depreciated value of a poorly maintained vehicle further widens the gap covered by GAP insurance. 'The combination of so many influential factors has created a 'perfect storm' where GAP insurance is no longer just a nice-to-have, but an increasingly vital financial safeguard.' GAP insurance is typically sold as a standalone policy or as an add-on to other sorts of financial deals, like car insurance. It is usually offered to new car buyers at the point of purchase along with a number of additional products, including additional bodywork protection and cover for interior damage. However, with very few motorists using these policies - or even knowing they have one at all - and huge commissions made by sales staff selling them as add-ons, the Financial Conduct Authority (FCA) in 2023 launched a probe into them. Following the investigation, the watchdog raised concerns that the product is 'failing to provide fair value to some consumers,' which saw some 80 per cent of GAP insurance deals pulled from the market. Car buyers are advised to compare GAP insurance prices through a third part, rather than simply taking out cover through a dealer.
CBS News
07-06-2025
- Automotive
- CBS News
Police cast wide net in probe of defunct North Texas car dealership's business practices
Desire Godfrey said it was time for a vehicle upgrade. The Lancaster mother had her eye on a Lexus. "I had a baby, so I'm looking for something reliable for me and a baby," Godfrey said. She searched online and found what she thought was the right vehicle at The Reserve Auto Group in The Colony. She described the sales process in May 2024 as a positive experience. Warranty and GAP insurance issues But an unexpected oil change six months later changed everything. Godfrey, 33, said a Lexus dealership informed her the vehicle was not under warranty. She also discovered her GAP insurance policy didn't exist. "They (Reserve Auto Group) never paid the warranty company the money they were supposed to pay to activate this warranty and this GAP insurance," she said. Car loan charges continue Godfrey said the costs were included in her car note. She filed a report with The Colony Police Department — and she's not alone. Police said they received their first complaint on Jan. 31. According to a news release, police have been investigating multiple fraud claims connected to the dealership since 2023. The business shut down in December 2024, but complaints continue to come in. Alleged auto fraud pattern Investigators said customers were allegedly instructed to write separate checks for aftermarket warranties or GAP insurance policies. Those payments were supposed to go to third-party providers, but police said the dealership allegedly cashed the checks and never forwarded the money — leaving customers without coverage. Another victim comes forward A second alleged victim, who spoke to CBS News Texas anonymously, said she and her husband also bought a Lexus from the dealership. She provided a non-activation letter from DOWC Administrative Services LLC, a company that offers GAP insurance and warranties. The letter stated: "Please be advised that Reserve Auto has failed to remit payment to Us as the Administrator and Provider for your Contract. Consequently, the Contract was not activated in our system." Investigation still ongoing Police have not made any arrests or publicly identified anyone associated with the allegations. Officers said they are continuing to vet additional alleged victims. CBS News Texas is not naming the person listed as the dealership's owner, as police have indicated he did nothing wrong. He spoke briefly by phone, saying he wanted to schedule an appointment to discuss the claims further because he believed "we did not have all the facts." When asked for clarification, he said he didn't have time to explain. Legal team responds Two emails followed the call, and attorneys from Herrin Law introduced themselves. "We have no comment at this time. Thank you for your interest in our client's side of the story," attorney Benjamin Palatiere said. He requested that all future inquiries be directed to him. Buyer left without coverage Meanwhile, Godfrey said the vehicle itself has not had any issues. But she continues to pay for a warranty and insurance that don't exist. "So nobody wants to refinance the loan. Nobody wants to give me GAP insurance," she said. "It's just more so like I'm going to take it or leave it. If I wreck the car, then I would have to figure out a way to pay that car off." Godfrey said she hopes to recover the money one day.
