Aug 17, 2018, 12:10 PM by Commercial Vehicle Direct
Gap insurance - a beginners guide
Gap Insurance is becoming a more common requirement especially for those of us who have newer registration vehicles through things like finance.
The Finance and Leasing Association’s (FLA) finance transactions data for June 2018 have shown a 1% rise in the volume of point of sale (POS) consumer new car finance business showing it is as popular as ever. Gap is a relatively inexpensive product for what you can gain back from it so really is worth further investigation. This guide tells you more.
What is GAP insurance
Gap insurance allows you to protect yourself against the negative financial effects that may arise if your vehicle is stolen or written off in an accident, as it protects the gap between what you paid for your vehicle and what your insurer says your vehicle is worth at point of claim.
How it works
Let’s say your vehicle is worth £26,000 now but you bought it for £40,000 - in the event of a total loss claim your insurance company will pay out £26,000 whereas the Gap Insurance will pay out the remaining £14,000 to cover the loss of vehicle value. It’s as simple as that.
Types of GAP Insurance
You can protect yourself regardless of how you financed your car. There are three common cover types.
- Return to invoice – this covers the difference between the insurers settlement value and the original value as long as you have the invoice which confirms the amount you paid at purchase.
- Finance and Contract Hire – if you’ve bought a car through finance or contract hire if there is a total loss claim some insurers will pay the finance provider rather than you. Taken out GAP insurance here means that you protect yourself again the debt that this situation may create.
- Agreed value GAP insurance – this will pay the difference between the insurer payout and an agreed % higher than the glasses guide retail value. This is great for people who have bought their vehicle privately or through a car dealer.
Is it just for new vehicles?
GAP insurance doesn’t just apply to newly registered vehicles which are over a certain value. You can purchase GAP insurance when your vehicle is worth as low as £10,000, this is good news for those with vehicles which are 2-5 years old as well as a vehicle which has just been purchased.
Who is it useful for?
Gap insurance is useful if you ride a motorbike, own a commercial vehicle or even drive a taxi, this product will cover you for any total loss claim that you may have.
How we can help?
At Commercial Vehicle Direct we believe Gap Insurance is a very important policy to have, we also believe in purchasing this product with ease. This is why we have developed an online service with which you can purchase this product in a matter of minutes. Try getting a quote today www.cvd-insurance.co.uk/gap-insurance