What is GAP insurance?
Guaranteed Asset Protection is designed to protect you when you buy a new car to cover the difference between the amount your car insurer would pay out if your car was stolen, or written off, and the price you paid for your vehicle.
In the event of damage to, or total loss of your vehicle, your car insurer will pay to put you back in the same position as you were at the time of the loss or damage, and will typically pay market value of the vehicle on the date of the loss. This can leave a financial shortfall if you have outstanding finance for the vehicle or if you are looking to replace your vehicle with a new one of the same specification.
Do I need this cover?
If you either used a large loan to buy your vehicle, or your car is on a long term lease, or you are worried about the depreciation of your vehicle, then you may want to consider a GAP cover.
There are several types of cover available to meet your specific needs;
- Vehicle replacement gap insurance: This covers the difference between the lump sum you get from your car insurer, and the amount your car would cost to buy new. This means you may get more than you paid to allow for the rising cost of cars.
- Return to invoice gap insurance: This covers the shortfall between what your car insurance policy pays out, and the exact amount you paid for your car, and can be used for both new and second hand vehicles.
- Return to value: This covers the difference between the insurance pay out and the market value of your car when you bought it. This could pay out more than return to invoice cover if you got a discount when you bought your car.
- Finance gap insurance: This covers any money you owe a finance company if the insurance pay out does not repay your debt. This means you will have no car or cash after you claim, but what you owe will be paid off.
Where can I buy GAP cover?
ProAktive are able to offer a competitively priced ‘Return to Invoice’ policy to fill the gap between the claim payment and the exact price paid for the vehicle. To speak to us about this please call us on either 01302 341 344 or 0114 243 9914.
By Sandy Lockwood Cert CII – Commercial Account Handler