Featured within the Which? Report on Gap Insurance.
Protected by the Financial Services Compensation Scheme.
We understand that with any form of insurance there are a million and one questions to ask before buying. Working closely with our customer service team, we have outlined the top 5 most frequently asked questions when it comes to Gap Insurance. The majority of people will have some form of understanding of what Gap Insurance is, however, what you may not know is that there are different types that perform in different ways.
1. What is the difference between Return to Invoice GAP and Vehicle Replacement GAP?
When looking for Gap Insurance online, you will mostly come across a choice between two different policy types, Return to Invoice and Vehicle Replacement, but what is the difference between the two?
Return to Invoice Gap Insurance is designed to bridge the 'gap' between your own motor insurance settlement figure, in the event of a total loss and the original invoice price you have paid for the vehicle. This means that the very maximum the GAP policy would top you back up to, is the original invoice price you have paid.
Vehicle Replacement Gap Insurance on the other hand, has the ability to take you back up and above the invoice price to the cost to replace the vehicle with another 'like for like' model. For example, if you have purchased a brand new car for £20,000, if we had to purchase that car again in three years time, another brand new 'like for like' model, the chances are it would cost more than the price you originally paid. Due to inflation, changes in exchange rates and manufacturers just increasing prices, the chances are that the cost to replace the vehicle with another 'like for like' may be more expensive.
With a Combined Return to Invoice & Vehicle Replacement policy at Total Loss Gap, you don't have to decide which policy is better, instead we simply top you back up to whichever figure is the highest, the original invoice price or the cost to replace the vehicle.
2. What is a claim limit & which one is most suitable for you?
With most GAP providers online, you will have the ability to select a maximum claim limit, but what is a claim limit and how do you know which one is best for you?
A claim limit is the maximum amount you would ever be able to claim from the Gap Insurance policy. Remember, that this amount is on top of what your own motor insurance company pay for the vehicle. For example, if you have purchased a vehicle for let's say £10,000 and your motor insurance company pay out £5,000 a claim limit of £5,000 would be sufficient to return you back up to the £10,000.
In terms of choosing a claim limit, the average vehicle can depreciate by as much as 50% over a three year term, however, some will lose more and some will lose less. If you have taken a Combined Vehicle Replacement policy, you always have to consider any inflationary aspect to the cost of a replacement vehicle as well as the rate of depreciation. Unfortunately, no-one can predict how much your vehicle may lose and how much the cost of a replacement vehicle will increase.
However, at Total Loss Gap, we take the guess work out of Gap Insurance by providing you with a policy with no upper claim limit. Therefore, you no longer have to worry about whether or not the claim limit would be sufficient for you.
3. What price should you be paying for Gap Insurance?
Dealership GAP prices can start at £399 for three years cover whereas online you can get it for less than £99, but what should you be paying?
When buying any product or service, we automatically assume that the price quoted is an indication of quality. However, when buying Gap Insurance it's not quite as easy as that. The price you pay for a policy isn't an indication of quality, instead an indication of where you purchased it from. There have been a number of industry reports carried out into GAP by the likes of Which? Consumer Magazine, Martin Lewis Money Saving Expert and even the governing body the Financial Conduct Authority themselves. All reports highlight the difference in price when buying GAP and the fact that you should be shopping around in order to get the best deal for you.
Compare the features and the general ability of the product to find out what you should be paying for this form of protection, we are sure you'll be pleasantly surprised.
4. Is Gap Insurance a good idea?
This is really down to whether or not you can see the value in Gap Insurance. If the vehicle was declared a total loss, your own motor insurance company would only ever give you the value of the vehicle at that moment in time. Due to depreciation, the value of your vehicle is likely to be a lot less than the price you have paid. If the vehicle is on a form of finance, this could leave you with a shortfall on the finance and therefore you're left paying for a vehicle you no longer have.
Even if the vehicle isn't on a form of finance, you could still be left short of the original invoice price of the vehicle or the cost of replacing the vehicle with another 'like for like' model. Rather than just getting back the value of the vehicle on the day, you have the ability to protect either the original purchase price of the vehicle or the cost to replace it with another 'like for like' model with Gap Insurance.
5. Is Gap Insurance transferable?
Yes and No. It depends on which policy type you have and where you have purchased the policy from. Our policies are amongst the most comprehensive in the UK today, with our Combined Return to Invoice & Vehicle Replacement policy, you have the ability to transfer the policy over to your next eligible vehicle completely free of charge.
However, other policies may not be as comprehensive or the policy type might be specific to that vehicle or finance agreement and therefore may not be transferable.
Your policy is fully FCA regulated and backed by the Financial Services Compensation Scheme.
We are here to help! Search our help centre for any questions you may have.