Android Corner

Motorists are being warned to mind the gap over specialist insurance that protects the price of new cars.

Many insurers replace a stolen or damaged car at the full market value in the first year of ownership – but some dealers and gap insurers are selling policies that earn them lucrative commissions to do the same job.

The problem is, the policies won't pay out because the other insurance already covers the loss, so the premiums are wasted.

Taking out the useless policy can cost some motorists up to £100, say gap insurers 

Now, some gap insurers are warning drivers that a deferred policy that does not start until the first 12 months of ownership have run out is a better deal.

Gap insurance is an extra policy that makes up the difference between the replacement value of a car and the actual claim paid by an insurer.

“Replacement cover on a motor insurance policy used to be a fairly standard," said a gap insurance spokesman.

"If a new vehicle is deemed a ‘total loss’ by an insurer in the first year from purchase, then the insurer will replace the vehicle with a new equivalent."

Gap insurers are urging motorists to check their car insurance before buying a gap policy as many dealer products start from the day of purchase and car owners are paying twice for the same cover.

Fully comprehensive car insurance cuts off new car replacement after the first year of ownership.

From then, the policy only covers the market value, so motorists have to make up the shortfall of buying a replacement new car from their own pockets.

Insurers are likely to pay the market value, which sits between the trade and retail price.

Gap insurance pays the difference between the market value and the cash owner forked out to buy the car.

Different gap insurers often offer varying deals, so motorists should shop around or go to a broker rather than a dealer to find the best policy – the dealer will have a tie in with one company rather than comparing the market.

18 Apr, 2013