News and views from the automotive industry.
GAP insurance benefits both car retailers and their customers
Guaranteed Asset Protection (GAP) can be a valuable product for customers – providing peace of mind and protecting their investment should the worst happen.
Everyone knows a vehicle starts depreciating as soon as it’s driven off the forecourt and most motor insurance policies will only cover owners for the market value of their vehicle if they need to make a claim. GAP insurance helps to plug the gap between that market value and what the customer originally paid for the vehicle – ensuring they’re not left out of pocket.
The Financial Conduct Authority (FCA) has introduced new regulations governing the sale of GAP insurance, but its value to customers and your retail business remains. It is important to both parties, therefore, that GAP’s benefits and advantages are understood and conveyed clearly. Through improvements to the sale of GAP insurance, you will see:
- Improved customer satisfaction
- Greater retention rates
- Increased routes to market and revenue streams.
Want to learn more about providing GAP insurance to your customers?
Contact Car Care Plan on 0344 573 8000 or visit our website.
Why might a customer want GAP insurance?
- They know their vehicle will depreciate over time
- Their finance deal down payment was small
- There is a high interest rate on the vehicle
- They are paying the finance off relatively slowly
- Their finance agreement leaves them with a large balloon payment.
Understanding why a car owner might want to protect their investment is important but it also pays to understand why they may not want a GAP policy. For example:
- Their insurance policy offers a ‘new car replacement’ during the first 12 months
- They are covered for any shortfall by a specific clause in their finance
- They could afford to make up for any shortfall in the motor insurance pay out in the event of a total loss claim.
What are the FCA rules around the sale of GAP insurance?
The FCA introduced new rules to protect consumers and ensure they get a fair deal when buying GAP insurance. Those rules include:
- Supply prescribed information – a list of key details about your GAP policy must be provided to customers clearly and accurately – in writing. This includes the cost, features, benefits and exclusions, among other information. For a full list, download our eBook.
- Deferred opt-in period – A GAP policy sale cannot be concluded until at least two clear days have passed from when the customer received the product information. A customer can initiate a GAP sale sooner but this should not be encouraged by the dealer.
Download our FREE eBook – Get ready for FCA regulation changes from September 2015 – to learn more.