Purchasing a new car is an exciting experience. As you sit in the showroom finalising the paperwork, you might encounter an offer for GAP insurance. But what exactly is GAP insurance, and is it something you should consider?
GAP (Guaranteed Asset Protection) insurance is designed to complement your regular car insurance, ensuring you don't end up out of pocket if your car is stolen or written off.
In simple terms, it bridges the gap between what your insurance company will reimburse you for the car and its value.
Let's delve into the details of GAP insurance, and when you're ready to make your car purchase, Regit can assist you in securing the best deal through our new car search.
How does GAP insurance function?
The details of your GAP Insurance policy hinge on the coverage type you choose, but they all operate on a similar principle: bridging the divide between the compensation your insurer provides in the event of a write-off or total loss and the initial value of your vehicle.
For instance, let's say you buy a new car for £30,000, and a few years down the line, it's stolen or written off, with its value depreciating to around £10,000. In such a scenario, your insurance company would typically compensate you based on the current value, leaving a substantial gap. If you're still paying off a loan or leasing the vehicle, or simply intend to purchase the same model again, GAP Insurance becomes crucial to avoid financial loss.
Regit is pleased to collaborate with MotorEasy for GAP insurance. MotorEasy provides comprehensive GAP insurance for cars purchased from dealerships or private sellers, whether outright or on finance, covering scenarios like theft, accidental damage, and fire or water damage. Simply provide your registration plate and a few car details to receive an instant quote. Moreover, as a special offer for Regit customers, MotorEasy extends a 12.5% discount when you opt for GAP insurance with them.
What does GAP insurance cover?
The extent of coverage provided by GAP insurance depends on the type of policy you select.
Back to invoice GAP insurance:
This policy fills the gap between what your insurance company compensates you for the car and its original purchase price.
Vehicle replacement GAP insurance:
If you prefer replacing your car with a brand new one in case of a write-off, vehicle replacement GAP insurance ensures you receive adequate compensation to purchase a new car of the same model, regardless of whether it costs more or less than your original purchase price.
Return to value GAP insurance:
This option is relevant for second-hand cars. It covers the difference between your insurance payout and the car's value at the time of purchase, rather than its actual purchase price.
Finance GAP insurance:
This basic level of cover pays off any outstanding finance on your car if your loan balance exceeds the insurance payout. However, it won't cover negative equity if you owe more on the loan than the car's value.
Negative Equity GAP insurance:
If you've rolled over debt from a previous car with outstanding finance, resulting in negative equity, this insurance covers the entirety of the debt you owe on the car.
Lease GAP insurance:
For leased cars that are stolen or written off, lease GAP insurance assists in paying off the remaining lease payments and any associated fees for early termination.
What isn't covered by GAP insurance?
Similar to other insurance policies, there are limitations to GAP insurance coverage.
Modifications made to your car are not covered. GAP insurance requires fully comprehensive coverage; third-party insurance isn't sufficient. You can only claim if your insurer declares your car a total loss. Deductions made by your insurer, such as for missed payments, are not covered by GAP insurance.
Should you consider GAP insurance?
If you've financed your car with a substantial loan, GAP insurance is worth considering. In the event of theft or total loss, you don't want to be left with outstanding debt for a car you no longer possess. GAP insurance mitigates this risk.
Long-term leased cars can also leave you with significant debt if they're written off. In such cases, GAP insurance can help cover this expense.
Additionally, GAP insurance provides peace of mind for those concerned about depreciation. If you own a car model prone to rapid depreciation, GAP insurance ensures you receive adequate compensation even if the insurance payout falls short.
Where can you purchase GAP insurance?
Many people buy GAP insurance from the dealer at the time of car purchase. Dealerships typically offer this coverage and explain its details, cost, and level of coverage. However, GAP insurance isn't mandatory, so you're not obligated to purchase it when offered by the dealer.
Dealers are legally prohibited from selling GAP insurance on the same day of car purchase; a two-day cooling-off period is required by law, allowing you time to reconsider and explore alternative options.
You might find cheaper GAP insurance deals on price comparison websites or through independent brokers post-car purchase. Regit has partnered with MotorEasy, which offers GAP insurance for nearly all cars. Simply provide your registration plate and car details to receive an instant quote here. Additionally, MotorEasy extends a special 12.5% discount to all Regit customers opting for GAP insurance.
How much does GAP insurance cost?
GAP insurance is typically paid as a lump sum at the policy's outset, ranging from £50 to £150 per year based on various factors.
When shopping for GAP insurance, pay attention to the excess, i.e., the amount you pay before the policy kicks in. Higher excess amounts usually result in lower premiums, although the payout in case of a claim will be reduced.
The policy duration also influences the price. While most GAP insurance policies span three years, it's advisable to confirm with your provider.
FAQs
Can I get GAP insurance for a used car?
Yes, you can, but its value diminishes for second-hand cars since new cars experience the steepest depreciation.
Can I purchase GAP insurance after buying a car? The ability to purchase GAP insurance post-purchase varies by provider, but in most cases, it's not available for cars over three years old.
How do I claim on GAP insurance?
Once your insurer offers a settlement for your car, you can initiate the claim process with your GAP insurance provider. Review the terms and conditions for required paperwork and excess amounts. It's advisable to consult your GAP insurance provider before accepting the insurer's settlement offer.
Can I cancel my GAP insurance policy early?
Yes, you can. Within the first 30 days, you're typically entitled to a full refund minus any cancellation fees. Beyond that period, you'll receive a partial refund based on the policy's duration.