How Do You Know if You Have Gap Insurance on Your Car

What is Gap insurance?

Gap insurance is a type of cover you can buy to protect y'all when you buy a new auto. It is designed to cover the difference between the amount your car insurer would pay out if your car was stolen, or written off, and the cost you lot paid for your car.

Suppose you've just lavished £fifteen,000 on a motorcar, or take taken out finance to that amount. You drive the car home, and and then a week later information technology's stolen – or written off in an accident.

Your car insurer hands you a cheque for £10,000. You paid the dealer £15,000 – but past the insurer's estimates, £10,000 is what the machine is actually worth, as cars depreciate notoriously quickly.

This leaves you £5,000 down – or even worse – potentially in debt to the tune of £5,000 (plus interest) to your car finance company for a machine you no longer own.

Where your car is a total loss, 'Gap' insurance (short for guaranteed asset protection), is designed to piece of work aslope your standard automobile insurance – topping up the difference between what they will pay, and what you'll really need to get dorsum on the route.

Our short video guide explains how information technology works.

Will Gap insurance replace my machine?

Gap insurance won't directly replace your car.

Instead, depending on the type of insurance you buy, it volition ensure you accept the amount you lot need to clear off your finance debt, or purchase a replacement of the same make and model.

It can as well aid to bridge the difference between what your main insurer has paid and what you paid to purchase the machine in the kickoff place.

Find out more than: the all-time machine insurance providers

When is Gap insurance needed?

We think Gap insurance tin be useful and is therefore worth thinking about – but information technology won't make sense for everyone.

Generally speaking, Gap is likely to be worthwhile in the post-obit situations:

Yous used a large loan to purchase your vehicle

Gap insurance can offering a means of paying off outstanding finance on your machine, which means if your auto's stolen or damaged across repair you won't accept to keep to brand payments on information technology.

You're concerned nearly the depreciation of your vehicle

The quicker your motorcar loses its value, the less your insurer will pay after a total loss incident, compared to what you paid for it. Gap insurance means y'all'll get more back.

Your car is on a long-term lease

If you accept a long-term rental agreement for a vehicle with a mileage assart, a write-off could get out you lot without a car and a bill for thousands of pounds. Gap insurance tin help protect against this.

What about the 'new motorcar replacement' cover in my machine insurance?

Well-nigh car insurers offer 'new auto replacement', which means that if your auto is brand new, the insurer will provide a similar-for-like replacement if it'due south stolen or written off in its first yr.

Gap insurance can usually only be bought up to a year afterwards your automobile, but some providers allow you to defer your embrace until year two if you'd adopt to rely on your new car replacement cover during year one.

If you're considering this, behave in mind that new motorcar replacement cover is subject to weather condition and doesn't fully replicate the protection of Gap insurance. In some scenarios you could withal potentially confront a greenbacks shortfall.

Your car insurer may revert to paying a cash settlement if a like-for-similar replacement isn't available, or if the costs of damage to the car aren't high enough (typically l%-sixty% of the car'southward list toll). The settlement won't necessarily exist the same amount you paid for the car or borrowed on finance.
If you're using finance to pay, the finance provider doesn't have to accept a replacement vehicle from the machine insurer. They may insist on y'all paying off the total finance amount in greenbacks.

Carefully cheque your machine insurance T&Cs and your finance provider's policies on replacement vehicles to exist sure you lot have comprehend that you're comfy with.

Where can you buy Gap insurance?

Many people are introduced to Gap insurance in a machine dealership, as it'south commonly offered as part of the package of 'extras' sales staff will endeavour to get yous to buy.

While Gap insurance is a worthwhile production, your dealership probably isn't the best place to buy it. It can often be found far more than cheaply online – sold straight by insurers and brokers, or via comparison sites.

Concerned that dealerships were selling overpriced Gap insurance to customers distracted by negotiations around ownership the auto, the Financial Bear Dominance (FCA) fix out rules in 2015.

Dealerships selling Gap insurance must tell you the post-obit earlier you buy a policy:

the total premium for the Gap insurance
the length of the policy
the features, benefits, unusual exclusions and limitations of the product
that the production tin be bought elsewhere from standalone providers
whether Gap insurance is an optional or compulsory add-on to the sale of the vehicle.

In addition, dealerships can't sell you Gap insurance on the aforementioned twenty-four hour period they sell you a car. There must be at to the lowest degree a 2-day suspension, unless you decide to waive the waiting period.

If you do wait 2 days or longer, the provider should go over the detail of the policy again. The determination to waive the waiting period must be initiated by you lot; it can't be suggested by the dealership.

How to shop around for Gap insurance

Every bit with standard car insurance, y'all can compare Gap insurance policies online to notice the cheapest bargain for yous.

Whatever policy y'all choose, grasp the cardinal features before you buy. The post-obit are just some of the important elements you should look out for:

Length of the policy
Excess
Whatsoever meaning exclusions
The value of your vehicle
How to claim on your policy
How to cancel your policy if you no longer need it

Our toll comparison figures below prove just how much you tin can relieve by shopping around.

Which kind of Gap insurance is best for you?

There are many types of Gap insurance product, with different providers offering their own unique spin, or combinations of cover.

While some are more basic than others, they're suitable for different purposes. Which 1 is best for you depends on your purposes.

Finance Gap insurance

One of the most basic products on the market (and quite frequently a feature of other types of Gap cover), this helps you pay off whatsoever outstanding loan payments on your car if it's written off.

Nevertheless, this unremarkably won't include payments for negative equity. See below.

Negative equity Gap insurance

If your finance settlement (the amount you've borrowed) is higher than the cost of your car, the extra sum is referred to as 'negative disinterestedness'.

This usually comes about if you'd part-exchanged a previous car prior to paying off its finance, transferring the remaining debt from that loan to your current car. A Finance Gap insurance payout won't cover this older debt. Negative disinterestedness Gap Insurance volition.

Return to invoice Gap Insurance

Return to invoice Gap insurance tops up the claims payout from your car insurer to the amount you bought the vehicle for.

Vehicle replacement Gap insurance

Rather than helping yous reach the amount y'all paid for the car, vehicle replacement embrace bridges the distance between your motorcar insurance payout and the cost of replacing your vehicle with a new one.

Return to value Gap insurance

Return to value Gap is similar to render to invoice Gap insurance, but instead of helping you get exactly what you paid for the car, information technology pays the difference between your auto insurance settlement and the value of the vehicle when it was get-go purchased.

This could evidence useful if you bought the car second hand, or you take had the vehicle for a long fourth dimension.

Lease gap insurance

If you leased your car rather than buying it outright, lease Gap insurance helps you pay the residual of your contract and any fees that may apply for cancelling your lending understanding early on.

Gap insurance reviewed

The tables below show the costs of vehicle-replacement and return-to-invoice Gap policies for iii different cars bought brand new.

We too list some key elements of encompass provided past the the policies. These include:

Excess: how much your Gap insurance policy will pay towards your motorcar insurance excess
Maximum level of cover: how much cover you can accept out
Cover availability: how long you tin can have out the Gap insurance for
Age of vehicle: the age limit of the vehicle that each Gap insurer will encompass
Maximum value of vehicle that each Gap insurer will cover
Finance: whether the Gap will cover your outstanding payments for your car if you lot bought it on finance

Vehicle replacement Gap encompass

Render-to-invoice Gap cover

How to claim on your Gap insurance

One time your car insurer has offered your settlement, you can make your Gap insurance claim.

Only it's worth checking your Gap insurance terms and conditions beforehand. Run across whether there are any fourth dimension limits in submitting your Gap claim, what your excess is and what data you'll need to have ready for them.

Call your Gap provider

It's best to speak to your Gap insurer before you accept whatsoever settlement from your auto insurance provider. Many Gap providers insist you speak to them earlier agreeing a merits.

If you have finance equally part of your Gap insurance policy, it'southward worth discussing how whatever outstanding loans are settled, and whether this will automatically be paid on your behalf.

Unsatisfied with the response? Complain

If your Gap insurer doesn't handle your case in a fair and timely manner, don't be afraid to complain. Details of how to do this should be listed on your policy document.

If you've exhausted the insurance company'south complaints procedure and your merits has not been settled, contact the Financial Ombudsman Service (FOS).

Y'all unremarkably have six months from the time yous reach deadlock with the insurer to make a FOS complaint.

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Source: https://www.which.co.uk/money/insurance/car-insurance/gap-insurance-explained-aspmb4u9mhvz