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How does GAP Insurance work for a pre-registered car?
Pre Registration vehicles can be an excellent buy. In many ways, you are buying a new car at far less than normal new car prices. Chances are you will still be the first user (except for general garage driving which involves the Pre Delivery Inspection etc) and it will most likely have a nominal, delivery mileage.
The major difference for you is normally the price.
Other differences may include the fact that you are the second registered keeper on the V5 document (aka the 'logbook').
You may also lose the period of time the vehicle has already been registered, until the time you buy it, from the manufacturers' warranty, roadside assistance and 12 months road tax normally provided at first registration.
You may find that your motor insurer provides different options for protection when comparing a new vehicle and a pre-reg car. With a new vehicle, many motor insurers provide 'new car replacement' cover in the first 12 months of ownership. This means if the car is written off in that period that the motor insurer gives you a brand new replacement. As one of the conditions for this is often that you are the first registered keeper for your vehicle then this feature may not apply with a 'pre-reg' car.
From time to time garages and motor dealers are encouraged to register the vehicles. This can be from the manufacturer themselves with the aid of substantial bonuses or simply to hit targets. The garage then has to sell the cars. As they have normally had such a sizable bonus, in order to meet the target, they normally sell them at a vastly reduced price.
For Example: As of October 2017, we found readily available, a number of Ford Fiesta ST Line 3 DR models for sale as pre registered cars for £13,999 and they weren't the best price we found. Ford advertises the same car at £16,145 with metallic paint. Two thousand pound discount due to the fact it has already been registered.
How does Gap Insurance work with Pre Registered vehicles?
Depending on the method of purchase, you would usually have a number of different types to choose from, two of which would perform in the exact same way whether the vehicle is brand new or not. However, the Vehicle Replacement type of Gap Insurance is slightly different. The two types that would perform the same way any are the Combined Return to Invoice GAP and the standard Finance and Contract Hire GAP. This is due to the age of the vehicle not being used when calculating the settlement figure. Therefore, you're still returned to the invoice price or the finance is cleared, depending on which policy you choose.
However, the type of Gap Insurance that performs slightly different with a Pre Registered car, is Vehicle Replacement Gap Insurance. This is because the age of the vehicle is taken into consideration during the claims process. At Total Loss Gap, we take all the guesswork away from you and in fact combine all three of the above types of GAP into one all-inclusive comprehensive policy. Simply put, we pay the difference between your motor insurance settlement and the HIGHER of either:
Therefore, when working out the replacement cost, we would look at the cost to replace the vehicle with another 'like for like' pre-registered model, the same as the vehicle you originally purchased. We wouldn't look at the cost to replace the vehicle with a brand new model, as legally it's not a brand new vehicle, despite you having all the benefits of a brand new vehicle.
If you simply want to protect the price of your invoice, then from February 2020 Total Loss Gap also offers the more basic Combined Return to Invoice cover as well.
If you have purchased a pre-registered vehicle, our policy settlement will be based on another pre-registered model at that same stage in time. However, we must remember the only other real difference between pre-registered vehicles and brand new cars, is that legally you'll not be the first owner and the car may not be sold until a few months after it was first registered. You can still appreciate the benefits of the Vehicle Replacement policy because the chances are that another pre registered model will still be more than the price you originally paid for the vehicle.
During the claims process, the claims team will have a look at the figures and see which one is going to be most beneficial to you. When calculating which figure is the highest, they will contact a minimum of three suppliers and ask for a price of a vehicle the same age, mileage and condition as yours was. It will be very close to the replacement cost of a new car but never quite as much, due to it being another pre registered model.
For Example, if your car was 4 months old and had 27 miles on the clock when you bought it, then any replacement settlement figure calculated, would be based on those same circumstances. Just to confirm, the only way in which your GAP policy would perform differently with a pre registered vehicle compared to a brand new one, would be when calculating the replacement cost.
Your policy is fully FCA regulated and backed by the Financial Services Compensation Scheme.
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