What Happens If My Insurer Pays More Than Expected?

If your motor insurer pays more than expected for your car, your GAP Insurance may pay less, or nothing at all. GAP is designed to cover the difference between your insurer’s payout and the amount needed to clear finance, return to invoice price, or fund a replacement. If no difference exists, there is no GAP claim.

When GAP still applies · When GAP will not apply · Why insurers overpay · Related links

Not sure how GAP works with your insurer’s payout?

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With any insurance claim, as the policyholder, you cannot gain by making a claim. Doing so breaks an insurance principle called 'betterment'. You can only be put back in the same positions as you were before the claim. With GAP Insurance, you can clear your finance, recover the original purchase price, or receive the cost of an equivalent replacement vehicle. Anything more means you are put in a better position than you first started, and that is not allowed.

When GAP still applies

If your insurer payout is higher than expected, but still less than your original invoice price, GAP will cover the difference.
If you are on finance, GAP may still pay if the balance outstanding is more than the insurer’s settlement.
Vehicle Replacement GAP may still top up to the cost of a new equivalent car, even if the insurer’s payout is generous.

When GAP may not apply

If the insurer payout equals or exceeds your original invoice price, where no GAP is payable.
If the payout is enough to settle finance in full, no finance shortfall exists.
If the payout is higher than current replacement cost, there is no gap to fill.

Why insurers sometimes overpay

They may include new-for-old replacement in the first year for new cars. In this case, you get a replacement vehicle from your motor insurer, and your excess cover from GAP may still apply. You should also be able to transfer the remainder of your GAP policy to the new vehicle, or cancel and get a refund.
Market conditions can raise used car values, leading to higher settlements. This happened in the period of, and after, the COVID pandemic, for example.
Some insurers are more generous with extras, options, or valuation sources.

Tip: GAP Insurance is a safety net. If your insurer pays more than expected, that’s good news, it simply means the gap is smaller or non-existent.