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Deferred GAP Insurance - Total Loss GAP 365


The scenario - with many motor insurers they can provide a replacement vehicle in the first year of ownership on a new car. So, car owners with this may not need GAP Insurance. 


The problem is that these car owners may intend on owning the vehicle for 2,3,4 or 5 years. If they want GAP cover for this period, then they will find that a policy must be purchased within a set timeframe of buying the vehicle. This is often between 90-180 days. 


The conundrum - if you have a 'new for old' replacement cover with your motor insurer for a year, then you may not need GAP Insurance for that period. But, if you leave it a year to buy GAP Insurance for further years you may find you have left it too late to buy GAP cover. 


The answer - Total Loss Gap 365


Motor Insurance new car replacement


Many online resources tell readers that they may not want GAP Insurance if their motor insurer provides new car replacements as well. 

This can happen when:

  • you are the first registered keeper for the vehicle (e.g., not a pre-reg or on a contract hire agreement)

  • the vehicle is written off in the first year of your ownership.

Big names like Moneysaving Expert, Go Compare, and the Money Advice Service all highlight this. 

Yet, and with respect to these experts, they all miss the fact that car owners are likely to own the vehicle for far longer than one year. 

So if something happened after the end of this 'new for old' cover, then without GAP Insurance, you could face a significant loss on the vehicle.  If you have a finance agreement you could also face a shortfall to pay. 


Deferred GAP Insurance

One way to get around this issue is to buy a GAP Insurance policy and defer the start date of cover. 

This means you could buy the policy when you buy the vehicle but simply set the start date to begin a maximum of 365 days from the date of the first registration of the vehicle. 

This means you can be covered by your motor insurance 'new car replacement' cover in year one. You can then select several years of GAP cover to follow. 

For more information on GAP Insurance options please see our COMPLETE GAP INSURANCE GUIDE


Issues to consider when choosing a 'deferred' GAP cover

  • Few GAP Insurance providers offer it. A few years ago, the option to defer a GAP policy was easy to find, particularly in the open market. Today, only a small number of providers offer this. The good news is that Total Loss Gap is one of them. 

  • The terms and conditions offered by your motor insurer for new car replacement may not be met. There can be some criteria that you would have to meet for your motor insurer to provide a new replacement vehicle if they write off your car in year one. These can include exclusions if the vehicle is stolen, a fault accident or a replacement vehicle is not readily available. 

  • Premiums for deferred policies can be higher when compared to premiums for cover from 'day one'. If you take a Total Loss Gap standard policy for three years, starting immediately, this will be cheaper than a Total Loss Gap 365 policy for three years, deferred for one year. This is because the deferred policy, even though it is for three years, effectively covers four years' worth of depreciation. 

  • You must normally be the first registered keeper for the vehicle, AND you must have a new car replacement cover with your motor insurer in year one. This normally excludes leased vehicles (perhaps some vehicles on HP, too; you would need to check with your motor insurer and finance company). It would normally exclude pre-registered vehicles also, as you are not the first registered keeper. 

  • You may switch motor insurers at renewal, and the new insurer does not cover you for a replacement vehicle, only 'market value'.


Total Loss Gap 365 - how does it work?

Our version of a deferred GAP Insurance policy is our Total Loss Gap 365 policy. The policy allows the same cover as our premium Combined Invoice and Replacement GAP

This is available to vehicle owners where:

  • they are the first registered owner of the vehicle

  • they can prove (at the time of claim) that they had new vehicle replacement cover with the motor insurer in year one

There are two options available for taking out cover. 

Option 1

You can set up coverage between 180 days and 365 days from the vehicle's first date of registration. You can set the start date no more than 365 days from the date of first registration. 

Option 2 

You can set up the Total Loss Gap 365 within 180 days of buying the vehicle and setting the start date no more than 365 days after the date of first registration. 

The advantage of option one over option two is that you secure your premium and policy terms for a policy starting in the future. Neither the policy terms nor the premium can change even if they do alter at the time your deferred start date starts. 


An example of how Total Loss Gap 365 can work

  • You buy a brand new vehicle on 1st September 2020 for £25,000. You have a new car replacement cover for the first year with your motor insurer. 

  • You select a Total Loss Gap 365 policy, selecting three years of cover with a start date deferred until 1st September 2021. This gives you a further three years of cover once your replacement cover with your motor insurer ends. 

  • Your vehicle is written off in December 2023. The motor insurer pays the market value to you at £12,000

  • The Total Loss Gap 365 covers between the motor insurer settlement and the higher of either the original price you paid OR the costs of the equivalent new vehicle at the time of claim.  

  • If we say the cost of the equivalent new vehicle was £27,000 in December 2023, then this is higher than the £25,000 you originally paid. 

  • In this example, the Total Loss Gap 365 would cover between the £12,000 your motor insurers pay and the £27,000 cost of the new car in 2023. 

So if you have a new car, replacement cover in year one with your motor insurer, AND you are looking for further GAP cover for more years, then Total Loss Gap 365 may be a great option.