Gap Insurance included without consent?
August 18, 2014
Striking a deal for a new car can be complicated. Part exchange allowances, finance settlements, discounts, deposit allowances and so on, these are all added to the mix, and you can end up very confused at the end of the process. However, it is important to know what you are paying for, and this is never more important than in the case of Gap Insurance.

We have spoken to one of existing customers today, and he seems to be getting the rough end of the stick with his motor dealer. They have offered him a deal for a new car that 'includes' both Gap Insurance and a Paint Protection treatment in the deal 'at no extra cost'. Interesting.

You see the simple matter of fact is that Gap Insurance is not free, neither will the paint protection treatment. Both products are subject to tax (VAT for the Paint Protection and IPT for the Gap Insurance), and these must be calculated against the selling price of each. Now it could be that the dealer is just offering these products at cost, and perhaps reducing the original vehicle price by the same amount, hence 'at no extra cost', and that may be fair enough.

However, there is a twist.....................

The customer told the dealer that he did not want the Gap Insurance from them at all, as he could transfer the balance of his current policy with us to his new vehicle. However the dealer refused to take out the Gap Insurance from the deal, saying 'it was just a special deal', and it was 'the way they worked.'

We are sure the FCA may have something to say about that.

You see it simply breaks the rules to impose any insurance product in the way the dealer has anyway, and then to refuse to take it out of the deal too? It is like going back to the dark ages before the original FSA came into force.

So two points we would make:

  • Gap Insurance is not free, the dealer will pay for it and it is subject to tax on every sale.
  • If your dealer automatically includes Gap Insurance in your deal (very sticky ground already) and then refuses to take it out when you ask (this is 2014 isn't it?) then simply mention the FCA and they may change their tune very quickly.
If your dealer does include your Gap Insurance as part of the deal, and you do not want it from them, then even if you already have the vehicle, remember you have a 'cooling off' period of at least 14 days (the better policies are now 30 days). In this time you simply have to let them know you wish to cancel and they are obliged to give you a refund.


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