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Gap Insurance - Non-Regulated vs Regulated Finance Agreements


There has been a lot of misinformation regarding the differences between regulated and non-regulated finance agreements and what this can mean if you have a finance agreement and a gap insurance policy.


Whilst we can only ever comment on how our policies would perform in the event of a claim, we wanted to set the record straight so that policyholders and website visitors can make their own informed choices.


A regulated finance agreement is protected by the Consumer Credit Act 1974. The act was enacted nearly 50 years ago, and much has changed.


What, how and when we buy has changed beyond recognition.


HMRC also recognised that the Consumer Credit Act needed to be revisited and, in 2022, agreed to conduct a consultation, which was carried out in 2023, to see if the act was still protecting consumers and what, if anything, needed to be changed.


This means that it comes with lots of nice extras and protections. 

  1. You have the right to settle your agreement early and get a refund of the interest charges. ( the exact amount of rebate can vary )
  2. You have the legal right to terminate your agreement. This is often referred to as the halves rule. (You can end the contract by returning the car if you have paid over 50% of the total payable under the contract terms. It must be in good order and within wear and tear guidelines.- (It will not affect your credit rating ) 
  3. The policy falls under the rules and guidance of the Financial Conduct Authority.
  4. There are clear and concise rules about how your finance agreement is laid out and what vital information is displayed. For example the APR must be shown..


So why would anyone want to source a vehicle using a non-regulated finance agreement?


Given the choice, we don't think that anyone ever would.

Why would you ever not want to have extra protection?

However, the Consumer Credit Act 1974 does not apply to everyone, hence the need for non-regulated agreements.


So, who is potentially not covered under the Consumer Credit Act?


Depending on what you buy, how much it costs, and even if you buy as a business, you may not have a choice if your finance agreement is regulated or non-regulated.


Examples of reasons why you may have a non-regulated finance agreement.

  1. If you are a business buying a vehicle to use for business purposes.
  2. Loans of £60250 are not covered via an amendment to the act made in 2010, although some finance providers may still offer one.
  3. If you are classed as a person of high net worth - i.e., you have an income of more than £150,000 after tax and national insurance.

From a gap insurance perspective, the fact that you may or may not have a regulated or non-regulated agreement is not important. Our Gap Insurance policies will perform the way regardless. 


Depending upon the level of cover you choose, you can protect

  1. The amount outstanding on your contract or lease hire agreement
  2. The amount outstanding on your finance agreement is linked to your car or the original invoice price you paid.
  3. The amount outstanding on your finance agreement, which is linked to your car, the original invoice price you paid, or the replacement cost of another vehicle that is the same as yours, was on the day of collection. 


As always, terms and conditions apply.

For example, we can not cover negative equity, and we can not cover late payment charges and areas.

For a full list of what our Total Loss Gap Insurance policies will and will not cover, please see our policy documents.