Buying a car can be an enjoyable experience, from looking at different models to picking out the right spec. However, if the worst happens and your car is stolen or written off, you could really end up out of pocket as well as having no car, therefore it is certainly worth thinking about taking out GAP Insurance.
Guaranteed Asset Protection insurance (GAP) protects your financial interest in your vehicle, whether it’s a new car, second hand or if you already own it.
GAP is designed to give you a bit of extra help to get back on the road by paying out the difference between what you paid for the car and what you may receive from your insurer following a claim - in insurance terms, it’s known as your total loss settlement.
A total loss settlement generally tends to be what your car is worth at the time of the incident, which is likely to be much less than you paid. According to the AA, new cars can lose up to 40% of their value after their first year therefore if you’re buying your car on finance, or through a lease agreement, you’ll be particularly interested in GAP insurance.
Do I really need it?
Here's an example of when GAP insurance comes in handy:
You bought a car a year ago at £15,000 but you needed a loan to buy it. You are then involved in an accident and your car was damaged badly and has been written off.
You make a claim with your car insurance provider, but they only offer you the current market value of your car which is now £10,000 even though you bought it at £15,000 – leaving you £5,000 out of pocket.
GAP insurance takes care of the £5,000 so you are still able to pay your loan.
Key Information
- Your vehicle is a car, registered in the UK and under 10 years old.
- You are the owner or registered keeper of your vehicle or, if your vehicle is on contract hire or on a finance agreement, you are named on the agreement.
- You are a permanent resident in the UK or UK registered company.
- Your vehicle must be covered by a current and valid comprehensive motor insurance policy. (Please note Motor Trade insurance policies are excluded).
- Your vehicle is not used as a taxi, chauffeur, courier, emergency vehicle, driving school or for racing/rallying/speed testing or any competitive event.
- Your vehicle has NOT been changed in any way from the vehicle manufacturer's standard specification which enhances the performance of the vehicle.
- Your vehicle is not insured on an agreed value basis under your motor insurance policy.
- Your vehicle does not already have a GAP insurance policy in place.
- Your vehicle has not been declared a total loss and returned to the road before this policy has been purchased or renewed or your vehicle has not been the subject of a claim which could render it a total loss prior to the start date of this policy.
- GAP Insurance willgive you back the invoice price for up to a 4-year period from date of purchase.
- GAP Insurance allows you to change your vehicle without having to cancel your GAP policy.
- You can renew your policy annually so this can run in line with your car insurance policy.
- GAP Insurance covers your excess up to £750 in the event of an at-fault claim.
- The maximum GAP will pay (sum insured) following a claim is £1000,000.
- GAP Insurance pays any amount owed to a finance company (finance shortfall protection) following a total loss.
- GAP Insurance includes a dealer fitted accessory contribution up to £2500.
