Why do I need Car Gap Insurance?

Having just taken delivery of your new car from the dealership the last thing that's going to be on your mind is what happens if you have an accident or if the car is stolen and you find yourself in the position that your insurance company writes off the vehicle. Most people assume (often wrongly) that the insurance payout will be enough to cover the cost of replacing their vehicle like for like, unfortunately when a new car leaves the dealership depreciation is at its highest level and more often than not the amount paid by the insurance firm will be significantly less than the price you paid for your new car, this difference is known as the “gap” or alternatively negative equity. The insurance company will pay you what the vehicle is (currently) worth, and that is not necessarily the same as what you paid for the car, or what you owe on finance (if you financed it).

Invoice GAP Insurance

As a result of your car being written off, Invoice GAP Insurance will pay the discrepancy between your Motor Insurance Payout and the amount that you originally paid for the car.

Invoice GAP Insurance is offered to cover New or Used vehicles with a worth of up to £100,000 and is required to be taken out no later than 90 days following delivery of the vehicle.

If we say you purchase a new car for £19,995.00

Two years later, your Motor Insurance Company declares the vehicle a write off and they only offer you £10,000.00.

As a result of this happening, Invoice GAP Insurance would pay the £9,995 difference between your Motor Insurance payout (£10,000) and the original invoice price you paid for the vehicle (£19,995).

If the vehicle was purchased by way of a Finance Agreement, in most cases (not all), receiving the total original invoice price back will allow you to clear the outstanding balance of your Finance Agreement and have funds left over to put towards the new vehicle.

(Subject to the overall policy claims limit that you select when you take the policy out)

Retail Value GAP Insurance

In the event of your vehicle being written off, Retail Value GAP Insurance will pay the discrepancy between your Motor Insurance Payout and what was the original Retail Value of your car (according to Glass' Guide) on the day you purchased the policy.

Retail Value GAP Insurance is offered to cover New or Used vehicles with a Retail Value of up to £100,000 and can be taken out at any time, the only condition is the car is no more than 6 years old.

Let's say you're purchasing a vehicle privately, or you already own a vehicle with a Retail Value today (according to Glass' Guide) of £15,000, and you also purchase Retail Value GAP Insurance today.

Twenty-four months later, the car is written off and your Motor Insurance Company offer you only £10,000.00 as a settlement figure.

In these circumstances, Retail Value GAP Insurance would pay the £5,000 difference between your Motor Insurance payout (£10,000) and what was the Retail Value of your car (according to Glass' Guide) (£5,000).

As long as the vehicle is no more than 6 years old, this policy can be purchased whether you already own the vehicle, or are purchasing the vehicle privately.

(Subject to the overall policy claims limit that you select when you take the policy out)

Replacement GAP Insurance

In the unfortunate event of your vehicle being declared a write off, Replacement GAP Insurance will pay the disparity between your Motor Insurance Payout and the equivalent cost of replacing the vehicle new for old. Even if the replacement vehicle is more expensive than the original price you paid for the vehicle.

Replacement GAP Insurance can only be used to cover brand new vehicles at first registration with a value of up to £100,000 and must be taken out no later than 90 days after you become the registered keeper of the vehicle.

If we say you purchase a new car for £19,995.00.

After a period of twenty-four months, the vehicle is declared a write off and your Motor Insurance company offer you only £10,000.00, but not only that, the new model of the same vehicle now retails for £21,995.00.

In this event, Replacement GAP Insurance would pay the £11,995 discrepancy between your Motor Insurance payout (£10,000) and the cost of replacing the vehicle New for Old (£21,995).

Just to clarify, if your vehicle is declared a write off, Replacement GAP Insurance will pay you the difference between your Motor Insurance payout and the equivalent cost of replacing the vehicle New for Old - even if the replacement vehicle is more expensive than you initially paid for it.