4 Myths about GAP Insurance
If you know what GAP insurance is, but not if you need it, then you’ve come to the right place. Keep reading and we’ll explain some of the common mis-conceptions that we hear.
With over 2 million new and used cars purchased under finance each year in the UK, GAP insurance is quickly becoming a hot topic for car owners. But what exactly is it?
GAP insurance provides a type of cover that ensures you won’t be left with a financial shortfall after an insurance claim. GAP actually stands for Guaranteed Asset Protection, so when you take a GAP insurance policy, you’re guaranteeing the value of your car to a pre-agreed level.
Here are some common myths:
Gap Insurance is only for cars on finance
Myth! GAP Insurance can actually be purchased for any vehicle, whether purchased outright, through a bank loan, or any other form of finance agreement.
Gap Insurance only provides one level of cover
Myth! Interestingly there are actually 5 levels offered, from low to high they are:
- Finance – This is the simplest and cheapest level of cover, and it is designed to cover any outstanding finance on a vehicle following an accident.
- Lease – This covers any costs incurred as a result of writing off a lease car. For example early settlement charges, and contract closure charges.
- Return to value: This policy type tops up your insurance claim to what the original amount that you paid for the vehicle was.
- Return to invoice: This pays the difference between the original cost of your car and what your insurance company are paying you for your claim.
- Vehicle Replacement: This is the highest (and most expensive) level of cover, and gives you funds to purchase a brand-new version of your vehicle.
Gap Insurance is only for brand new cars
Myth! There are many insurers out there who offer GAP insurance for second-hand vehicles, although some may only provide it for cars under a certain age and mileage. For example admirals policy is designed for vehicles under 5 years old and under 50,000 miles.
My Car's on Finance So I Need Gap Insurance?
Myth! As it stands in the UK, you are not legally obligated to take out a GAP insurance policy on top of your standard car insurance policy, regardless of whether your vehicle is on finance or bought outright. You may decide that you want the peace-of-mind to know that if you do have an accident, you won’t be left out of pocket.
If you do decide to opt into a policy, make sure you chose the right policy that fits your personal circumstances, as they are all designed to suit different needs.
I've had an accident, where does GAP Insurance come into it all?
There are a few things you’ll want to arrange following a car accident to ensure the process runs smoothly and you get the most money from your claim:
- Notify your insurer of your accident promptly and submit your insurance claim application
- If your insurer says your vehicle is likely to be written off, find out how much is a fair amount to be paid for your claim by using our car insurance write-off calculator.
- If you do have GAP insurance, you’ll need to notify them of your claim, and provide them with the settlement statement from your main insurance policy, so that they can process your claim.
Can I Still Buy-Back My Car After Processing A GAP Insurance Claim?
Yes you can! Your gap insurance policy is peripheral to your main insurance company, who are solely responsible for handling your accident claim.
Almost all car insurance policies in the UK give you the right to buy-back your write-off car from your insurer, even if it’s on finance. You’ll just have to make sure that any outstanding balance owed to your finance company is paid off.
To find out how much extra you could make by selling your write-off car to us, enter your registration details into our car insurance write-off calculator tool.
A little bit about us
If you’re going through a car insurance claim currently, then you’ve come to the right place! Have a look through our articles on how best to manage your insurance claims process. We specialise in helping our customers earn more money from their cars when they’re being written-off by their insurer. Find out how we do it here!
Otherwise check out our A-Z Guide for absolutely everything that’s insurance claims related. You’ll pick up all the insider tips to get the most from your insurance claim.