RAC GAP Insurance is a product offered by RAC Motoring Services to provide coverage for the difference between what your insurer pays out and the amount you still owe on your car finance in case of theft or write-off. The issue of GAP insurance mis-selling has been widely reported, with many consumers paying inflated prices at dealerships without being informed about more affordable alternatives available online.
What is RAC GAP Insurance?
RAC GAP Insurance provides protection against financial loss if your vehicle is stolen or written off by an insurer due to an accident or other covered event. The insurance covers the difference between the settlement amount provided by your car insurance policy and what you still owe on your finance agreement, which can often be substantial. RAC offers several types of GAP policies, including Return to Invoice (RTI), Vehicle Replacement (VR) and Contribution GAP.
How GAP Insurance Mis-selling Works
The Financial Conduct Authority (FCA) has found that GAP insurance was frequently mis-sold across the UK automotive industry. Consumers were often presented with inflated prices at dealerships when similar coverage could be obtained online for a fraction of the cost. Dealerships would sell policies under a discretionary commission arrangement (DCA), incentivising sales staff to push customers towards purchasing GAP insurance at point-of-sale, regardless of whether it was in their best interest.
In many cases, consumers were not given adequate information about cheaper alternatives available through brokers or direct providers online. This lack of transparency meant that buyers often paid between £300 and £500 for a GAP policy when the same coverage could be secured for as little as £50-£150 from an independent provider.
Pressure selling tactics were also common, with salespeople using aggressive techniques to convince customers to buy GAP insurance immediately. The FCA's investigation revealed that consumers frequently felt compelled to purchase policies they did not fully understand or need because of the high-pressure environment at dealerships.
How to Complain About a RAC GAP Insurance Policy
If you believe you have been mis-sold a RAC GAP Insurance policy, you can complain directly to RAC Motoring Services using their dedicated complaints page. This process is entirely free and does not require the involvement of any [claims management company](https://mlj.org.uk/guides/complaints-about-claims-management-companies) or solicitor. To initiate your complaint, visit https://www.rac.co.uk/complaints.
When lodging your complaint, it's important to provide as much detail as possible regarding when you purchased the policy and what led you to believe it was necessary. Including copies of documentation such as sales receipts, agreements, and any communications with RAC can also strengthen your case.
Your Cooling-off Rights
Consumers have a 14-day cooling-off period during which they can cancel their GAP insurance policy without incurring any fees or penalties. If you decide to exercise this right, it is essential to follow the correct cancellation procedure provided by RAC Motoring Services. Typically, cancelling within this timeframe will result in a full refund of your premium.
To initiate the cancellation process, contact RAC directly via phone or email and request a formal cancellation form if necessary. Ensure that you receive confirmation of receipt from RAC as proof of your cancellation request.
What to Do Next
After reviewing your policy details and considering whether it was mis-sold, take the following steps:
- Gather Documentation: Collect all relevant documents related to your GAP insurance purchase, including sales agreements, receipts, and any correspondence with RAC Motoring Services.
- Check Your Payment: Verify how much you paid for your policy compared to what would be available online from independent providers.
- Complain Directly: Submit a formal complaint through the dedicated complaints page on the RAC website or via phone/email. Include all pertinent documentation and detailed explanations of why you believe the sale was inappropriate.
- Follow Up: Keep track of your communications with RAC and ensure that they acknowledge receipt of your complaint and provide updates on its status.
By taking these steps, you can address any concerns about GAP insurance mis-selling effectively without needing to involve third-party claims management companies or solicitors.
Sources and References
- Financial Conduct Authority (FCA). "GAP Insurance Market Study." Link
- RAC Motoring Services. "Complaints Process". https://www.rac.co.uk/complaints
- Motor Finance Association. "Guidance on GAP Insurance Mis-selling." Link