Should you buy gap insurance for an off-shore provider?
If you do buy gap insurance from a provider not based in the UK are you still protected?
Is your gap insurance still backed by the FSCS?
There are those who will tell you or lead you to believe that buying any insurance policy from an insurer based outside the UK is an unsafe practice, however is this really the case?
If you consider some of the huge insurers with overseas roots who sell millions of gap insurance and other general insurance policies in the UK each year then you would say the answer is an emphatic no! Allianz for example, are one of the most respected insurers in the world, and they are German. Car dealer products are often underwritten by the likes of Mapfre Abraxas and Ageas, who have Spanish and Belgian roots respectively. Indeed even the likes of Admiral, one of the biggest motor insurers in the UK today, have part of the insurance business registered in Gibraltar.
When it comes to Gap Insurance then some of the leading brands are underwritten by offshore based insurers, such as Gap Insurance 123.co.uk, and some by UK insurers, such as Easy Gap insurance .co.uk. Indeed the two brands mentioned are owned by the same company, Aequitas Automotive Ltd, who clearly have little issue with the origin of the underwriter.
Why would someone suggest to you than offshore gap insurance insurers are not to be trusted?
Well possibly to gain a perceived advantage over a rival brand, but is their any truth at all in the safety of foreign insurers? The argument may centre around whether the insurer is authorised and regulated by the UK FSA or a version of a similar body in their country of origin.
Many insurers could be authorised to provide cover in the UK, but be regulated by their own home body. Even if this was the case, many of these insurers would transact business in the UK under ‘passported permissions’. This means that there terms of business, and conduct would be to mirror the requirements of those insurers governed by the UK FSA.
What to check with an offshore insurer
The single most important check to make is that the policy you purchase is covered by the Financial Services Compensation Scheme in the UK. This means that you could be covered if the insurer (wherever they are from) fails, and cannot meet its obligations.