What is Gap Insurance? | How does it work? | Do you need Gap Insurance? | Is Gap Insurance worth it?
There are a million and one different questions to ask before purchasing a form of Gap Insurance and that's why we have created the ultimate Gap Insurance guide, to answer all of your questions. If you have any further questions or queries to ask, please don't hesitate to contact a member of our award winning customer service team, who will be more than happy to help!
If you would like to contact Customer Services, please call on either 0800 195 4926 | 0151 647 7556 or email any questions to email@example.com.
Gap is short for Guaranteed Asset Protection. This form of insurance is designed to protect you financially should your vehicle be declared a total loss. This might be as a result of an accident, fire, theft or flood damage for example but there are numerous different scenarios in which a vehicle may be declared a total loss. As your own motor insurance company would only ever give you the market value of the vehicle at that moment in time (depending on the terms of your motor insurance policy) the figure paid may be less than the insured first paid for the vehicle.
Gap Insurance will then step in and bridge the financial shortfall under those circumstances. However, the way in which it performs depends on the type of cover you select.
Depending on which type of Gap protection you choose, it will pay the difference between your own motor insurers settlement figure in the event of a total loss (i.e accident, theft, fire and flood etc.) and either:
It is not a legal requirement for you to buy Gap Insurance as it is to buy comprehensive motor insurance for your vehicle. Gap Insurance cannot be imposed on you during the purchase process of the vehicle in the UK and instead you should be introduced to the product separately.
No, you don't need to buy GAP, however, as your own motor insurance company would only ever pay the market value of the vehicle at the point of total loss and the average vehicle depreciating by as much as 50% over a three year term, you can see why it might be a good idea to have that financial peace of mind. Whether you can see the value in the product or not, is yours to decide.
Please Note: Other reports into the sale of Gap Insurance may highlight that you may not need Gap Insurance, as your motor insurer will pay for the replacement car and if the car is less than 12 months old, replace it with a brand new one. This isn't the case for all. Yes, with some motor insurance policies you may have the ability to replace the vehicle with another brand new one, if the vehicle is declared a total loss within the first 12 months.
However, this is dependent on the insurance company themselves and the terms and conditions attached to that feature. This feature is commonly known as 'new for old' and typically, the car has to be a brand new car and you have to be the first registered keeper. There may also be terms and conditions that prevent the replacement of the vehicle, this could be based on the mileage, usage or even the way in which the vehicle was purchased. Therefore, be sure to double check before assuming that you would be covered.
This does depend on a number of factors, the price of your vehicle, the length of cover you would like and also the policy type you select. As you can imagine, the more expensive the vehicle, the more room for depreciation and therefore the more expensive the policy may be. That said, depending on where you buy your GAP from will also have an impact on the price you pay.
At Shortfall.co.uk we aim to be amongst the best price you'll find on the market, however, if you are quoted within the dealership it tends to be a lot more expensive. Most recently, Martin Lewis Money Saving Expert has released a report on Gap Insurance and the difference in price between online independent suppliers such as ourselves and dealerships. For the past 6 years, we have been featured within the Which? consumer magazine's report on Gap Insurance, which again highlights the difference in price between ourselves and other online suppliers. Recently updated in October 2018, the report has once again indicated that Shortfall.co.uk are one of, if not the best priced provider of Gap Insurance in the UK.
If you would like to purchase the most comprehensive forms of Gap Insurance, you tend to have a maximum of up to 180 days from when you have taken delivery of the vehicle to take the cover out. If you are outside of the 180 days, you have a number of options depending on the circumstances and the level of cover required.
At Shortfall.co.uk you have up to 180 days to take the most comprehensive options. However, we act in a similar way to a broker and our sister brands Gap Insurance 123, Easy Gap and Totallossgap.co.uk may be able to offer an alternative level of cover should we be unable to. We would always advise you to give a member of the team a call and we can run through the options with you.
No. In fact we provide Gap Insurance for any age of vehicle as long as the vehicle has less than 80,000 miles on the clock before purchasing the policy. Other providers may be limited to 8 years of age or 10 years of age, again providing you fit the other criteria, you may still have the ability to protect yourself with GAP.
There are a couple of things to consider when answering this question. First of all, the fact that you will typically pay more for a new vehicle than a used one, results in an increase in the depreciation rate of the vehicle, i.e the vehicle may lose more in terms of value or at least depreciate at a quicker rate. That said, it does depend on the make and model, as well as the physical purchase price you have paid.
Due to the rate of depreciation on new vehicles, the need for Gap may be greater, however, that's not to say that if you have purchased a used vehicle, you won't be subject to depreciation because that's not the case. Gap Insurance can be just as effective for used vehicles, as it is for vehicles purchased brand new. Again, other reports into Gap Insurance may suggest that purchasing Gap Insurance for a used vehicle may be 'worthless'. However, there are thousands of drivers who have made a claim on a used car purchase who would beg to differ. Used cars will still depreciate at an alarming rate, yes the lower the price of vehicle, the less it will depreciate, however, it will still depreciate. Whether the Gap is £2,000 or £20,000, ask yourself whether that would make a difference to you financially.
As you can see above, there are a number of different types of Gap Insurance for you to choose from, however, depending on a number of different circumstances, one policy may be more suitable than another. When you click through to obtain a quotation, our system will point you to the different types that you are eligble for. But, which is the most suitable for you, is down to your expectations of Gap Insurance and what you would like it to protect in the event of a claim, as well as what policy you may be eligible for.
Strictly speaking, the policy with the most ability is a Combined Vehicle Replacement policy. This type of Gap Insurance will not just protect the price you have paid for the vehicle, if the cost to replace it, with another 'like for like' as when you first purchased it, was more expensive at the point of total loss. This policy will take you back up to the replacement cost of the vehicle instead. Because it has the ability to take you above the purchase price of the vehicle, this is seen as the policy with the most ability. That said, it may not be the most suitable for you depending on your purchase circumstances.