Blog
Benefits of selling GAP insurance correctly
Benefits of selling GAP insurance correctly
GAP insurance is a great product for the customer, but it is often not taken up because the customer might have been put off by the hard sell.
Drawing graphs and giving the customer lots of information about all the add-on products you have on offer all at the same time could be confusing and may lead them to think the product is more of a benefit to you than it is to them.
The FCA is proposing a shake-up in the way that add-on products are sold, so it is more important than ever to start getting this right. Why not download our eBook to find out how the changes may affect you?
GAP insurance is a great product for some customers so it is important that you are clear when you introduce it.
Keep it to the key facts
GAP insurance is designed to cover the difference between what the motor insurer pays out and:
- What the customer paid for the vehicle; or
- What the customer still owes on a finance agreement.
Why might the customer need GAP insurance?
- They have a car that will depreciate
- The down payment on the finance deal might have been small
- The car could be one that loses value quickly
- There could be high interest on the vehicle
- They might be paying the debt off relatively slowly (example over three to five years)
- The finance agreement leaves them with a large sum to pay at the end – “balloon payment”
It is just as important to point out the reasons why the customer might NOT want to take out GAP insurance, which could include:
- If they have bought a new car without finance and their insurance policy may offer a ‘new car replacement’ during the first 12 months
- They might be covered for any shortfall by a specific clause in their finance
- They could afford to make up for any shortfall in the insurance pay out
Be clear on what product you are offering. Which type of GAP insurance is it, and the costs involved:
- Finance GAP insurance
- Return-to-invoice insurance
- New car/vehicle replacement GAP insurance
Making these points clear to the customer allows them to make an informed decision on the product. We believe that you should always put your customers at the heart of your business. Check out our eBook to see how well you are doing.