F&I and Showroom, December 2015

28 F I and Showroom December 2015 Finance Insurance GAP Is GAP Right Quick name a product you offer in F I that terminates upon the first claim Some of you old dogs may have immediately thought of credit life insurance Given my time in the box back in the early 90s I certainly would have Heck I even had a spinning tire in my office It came complete with an ice pick I used to demonstrate the rolling flat fixer I had on my menu for a few months Today our core products are vehicle service contracts VSCs and GAP which sit in the lead positions on most F I menus Neither is a generic one size fits all solution but for some reason many dealers F I managers and even their agents and product providers tend to treat GAP that way When I initially approach a potential dealer client I am often asked So how much is your GAP As with VSCs the answer depends upon a number of factors First and foremost is the amount financed but there are several additional factors to consider when pricing your GAP offering Value System For the purposes of this article we will limit our discussion to the differences among GAP waivers I understand that GAP insurance is still available in a couple of states Much of the information to follow will also apply to GAP insurance but there may be some important considerations that do not apply While I am making disclaimers let me also state that I am not an attorney so I am not offering legal advice One of the important differences among GAP waivers is the definition of actual cash value ACV which can vary greatly Since this amount along with the loan balance determines the GAP benefit it is very important you understand the difference Here are some common definitions you may see on a GAP waiver certificate Definition One The retail value determined by the primary insurance carrier on the date of loss a k a settlement gap Definition Two The retail value or sometimes the average of wholesale and retail value at the time of loss as determined by a national or regional used car guide which may not be specifically named This definition is commonly used to establish a value if there is no physical damage policy in force You may want to make sure this clause is included in the waivers you offer Definition Three A variation of the first two definitions often described thusly No consideration Too many dealers F I managers agents and even providers think of GAP as a one size fits all product Product expert explains why thats not the case By George Spatt ISTOCKPHOTO COM TWINSTERPHOTO