GAP is an acronym for Guaranteed Asset Protection
There are also different terminologies used for this cover such as Shortfall Insurance, Return to Invoice, Vehicle Replacement Insurance, Finance Gap, Agreed Value and just plain old gap insurance.
Actually it is very straight forward. The term gap covers all of the above. Gap is a depreciation insurance product for motor vehicles, new or used. You insure the difference between the insurance settlement at the point of total loss and an amount that you wish to protect. In the event that the vehicle is declared a total loss you do not suffer a financial disaster.
If you have the misfortune that your car is declared a total loss by your motor insurer (sometimes called ‘written off’), your insurer will offer you a final settlement based on the vehicle’s value on the day of the accident.
This is very unlikely to be the amount that you paid for the vehicle as the insurer will base the settlement on the second hand value of your car at the time of the accident. This limits your options for replacing it.
If you bought the car using finance or contract hire you will be expected to cover the outstanding payments or settle the hire agreement even if the vehicle is written off. Although motor insurance covers you, your insurer’s final settlement is based on the value of the vehicle when it becomes a total loss, and this is rarely enough to cover any outstanding finance payments or settle your obligations.
This is where gap insurance comes in. You can insure your car so that whatever happens you can settle any outstanding finance, or have a sum of money that will buy you a suitable replacement. Gap insurance covers the difference between your insurer’s payment and the outstanding amount needed.
We offer different policies and if you are interested please speak with our sales team when purchasing your new or new to you car. Get in touch for more information by calling 01738 622156.