At CarsVansandBikes.com we are regularly told we ask too many questions but we do so to make sure you get the very best unbiased advice when buying your next car.
Let's have a look at GAP Insurance, which has caught the eye of the Financial Conduct Authority (FCA) resulting in a three month probe to ensure that firms offer fair value to consumers.
Unless you have arranged a policy at some point you will probably ask what is it.
Without oversimplifying GAP Insurance is an insurance policy that the motorist may arrangeto cover the monetary difference between the motor insurer pay out and the amount needed to pay the outstanding balance on your finance settlement.
With the FCA probe, insurers have been given three months to prove customers are getting a fair deal on guaranteed asset protection insurance (GAP insurance), and it has been argued that there could be a case for banning car dealerships from selling the product when they make a vehicle sale.
It's been noted that the typical motorists with Gap insurance claim just once every 300 years (figures from the FCA show that only 0.34 per cent of add-on Gap is claimed on every year - meaning the typical driver claims once every 294 years) - and now they are stepping in to ensure consumers are not being ripped off.
Not only is the Financial Conduct Authority (FCA) worried that barely any Gap policies are claimed on, it is now asking serious questions about commissions of up to 70 per cent that bump up premiums - without any apparent reason.
There were 567,895 add-on Gap policies and 1.8million standalone deals sold in 2022 - a total of 2.4million, meaning one in every 16 drivers has such a product.
The average Gap premium is around £126 a year for standalone cover, and £131 as an add-on.
GAP insurance accounted for total retail premiums written of more than £308.4 million in 2022 and with average 70% commissions being sold this means that over £215 million is being paid back to sellers of this type of insurance every year.
Insurers have been given three months to prove customers are getting a fair deal on guaranteed asset protection insurance (GAP insurance), and it has been argued that there could be a case for banning car dealerships from selling the product when they make a vehicle sale.
According to FCA analysis of 2022 insurance data:
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