What is Gap Insurance?

Having your car or van stolen or written-off can be worrying enough without having to grapple with your insurer over your claim. Worse still, with insurers usually paying out the current market value of your vehicle – not the price you paid for it – you can find yourself out of pocket, especially if your vehicle was brand new.

Guaranteed Asset Protection, more commonly called Gap insurance, is designed to work alongside comprehensive insurance to help you cover the shortfall.
There are many different types of Gap insurance, ranging from products that help you get back what you paid for your vehicle, to those that help you pay off any outstanding loans on the vehicle

 

Types of Gap

There are 4 types of policy available for cars and vans depending on how and when you bought your vehicle. Your vehicle must also be;

  • insured under a Comprehensive policy
  • less than 8 years old

 

1. Lease GAP

  • How did you buy? – Contract hire or lease hire.
  • When did you buy? – In the last 90 days.

Our Lease Gap Insurance pays the difference between your insurance settlement and the amount your leasing company requires to settle your lease agreement.

John’s Story

  1. John leases a car worth £12,000 over 3 years
  2. After 10 months the car is stolen and declared a total loss
  3. The insurer agrees to pay the market value at the time which is £10,200
  4. The leasing company provide a settlement figure of £12,000 which they require to end the agreement
  5. John will need to pay the different of £1,800
  • If John had Gap Insurance, the ‘gap’ amount of £1,800 would have been covered.

2. Purchase Price Protection (PPP) GAP

  • How did you buy? – From a car dealer or private seller.
  • When did you buy? – In the last 90 days.

Our purchase Price Protection (PPP) Gap Insurance pay the difference between your insurance settlement and your original invoice purchase price. This will allow you to purchase a replacement vehicle of the same value.

Paul’s Story

  1. Paul leases a car worth £10,995 cash
  2. After 14 months the car is hit by a third party and declared a total loss
  3. The insurer agrees to pay the market value at the time which is £7,500
  4. Paul will need to pay the different if he wishes to buy a similar replacement car
  • If Paul had Gap Insurance, the ‘gap’ payout would be £3,495 – the difference between the insurer settlement and the original price paid.

3. Combined PPP GAP

  • How did you buy? – Bank loan, hire purchase OR Personal Contract Purchase (PCP).
  • When did you buy? – In the last 90 days.

Our Combined PPP Gap Insurance pays the difference between your insurance settlement and the original net invoice price of the vehicle or early settlement amount, whichever is greater.
If you have PCP you may be wondering why you need GAP. PCP protects you in so many ways because the depreciation on the vehicle is the finance company’s responsibility and not yours. This is true, but only at the end of the PCP agreement. What would happen if the vehicle was written off BEFORE the end of the agreement?

Sarah’s Story

  1. Sarah buys a car worth £17,995 paying a deposit then enters into a PCP agreement
  2. After 18 months the car is involved in an accident and declared a total loss
  3. The insurer agrees to pay the market value at the time which is £10,410
  4. The PCP company provide a settlement figure of £13,000 which they require to end the agreement
  5. Sarah will need to pay the different of £2,590
  • If Sarah had Gap Insurance, the ‘gap’ payout would be £7,585 – the difference between the insurer settlement and the original price paid.

4. ‘Top Up’ GAP

Our ‘Top Up’ Gap Insurance provides cover if you purchased tyour vehicle more than 90 days ago regardless of how you paid for it. This cover provides a ‘top up’ to the insurer settlement amount in event of a total loss. The amount paid out will be 25% of the insurer market value settlement amount up to a max of £10,000.

Insurer Settlement Amount = £10,000

‘Top Up’ by 25%

Top Up amount paid is £2,500

 

Find Your Local Branch for a Quote

 

Exclusions

1. Finance from another vehicle  – Negative equity.
2. Where a vehicle is replaced under the new car replacement extension.
3. If a vehicle if it has been modified outside of manufacturers specification.
4. Vehicles that are used for track days, rallying or competitive events.
5. Any claim where your vehicle has not been declared a total loss.
6. Any amount deducted from the motor insurer settlement as a result of failure to properly maintain/service the vehicle.
7. Vehicles insured under a motor trade policy.