What Happens If My Insurer Pays Less Than Market Value?

If your motor insurer pays you less than the true market value, your GAP Insurance settlement can still be based on that figure. Providers have different rules and processes to follow, but many GAP Insurance providers can help ensure there is no 'gap' in your payment. However, there are some circumstances where your GAP Insurance won't help. Read on to find out more.

How GAP works with payouts · Why insurers underpay · What you should do · Related links

Worried about being underpaid?

Check your GAP Insurance options

Why is this a problem, and what should you expect?

As we have mentioned above, GAP Insurance providers approach this differently. Some say that if your motor insurer offers less than the market replacement valu,e then the GAP Insurance settlement will be based on the market value and not the actual settlement you get from your motor insurer.

Some GAP Insurance providers say that if you are offered lower than the market value AND you accept this lower offer before starting your GAP claim, then they will base the settlement on the higher market value instead of the price you accepted.

Some GAP Insurance providers say they will pay from the motor insurer's settlement, even if this is lower than the market value, subject to the motor insurer's offer not being due to negligence or being underinsured.

Is this fair?

Having two insurers to cover your loss is not uncommon. However, the insurance principle of 'contribution' means that each insurer should only pay their fair share. Your motor insurer should be paying you the market replacement value of the vehicle (assuming you gave insured it correctly). The GAP Insurance should cover the cost from that figure. That is how the premium has been calculated and underwritten.

How GAP works with insurer payouts

GAP starts with your motor insurer’s settlement figure. This should be what it will cost to replace the car, age and mileage accepted, at the time of loss.
GAP Insurance then pays the difference to your invoice price, finance balance, or replacement cost (depending on cover type).
If your motor insurer underpays, GAP Insurance will want to understand why and can help you challenge your motor insurance settlement.
GAP Insurance providers differ on how they approach this situation; it is important you understand this before buying and claiming.

Why motor insurers underpay

They may use trade guides that differ from retail prices.
They may decide your vehicle was not insured correctly, or you have breached your policy terms.
They may not include factory-fitted options or dealer extras.
Initial offers are sometimes lower in expectation of negotiation.

What you should do

Gather evidence of your car’s true value, adverts, valuations, or dealer quotes.
Lodge your GAP Insurance claim BEFORE you accept your motor insurer's settlement.
Challenge your motor insurer’s settlement, if necessary.
Do not accept that a GAP Insurance claim 'will just pay' from your motor insurer's settlement in every case.

Tip: Do not accept your motor insurer's settlement before you have lodged your GAP Insurance claim. This allows the GAP Insurance claims team to verify your motor insurer's offer and challenge it if necessary.