If You Buy Gap Coverage With One Lender Do You Have to Buy It Again With the Next

What is Gap insurance?

Gap insurance is a blazon of embrace you lot can buy to protect you when you buy a new car. It is designed to cover the divergence between the amount your machine insurer would pay out if your motorcar was stolen, or written off, and the price y'all paid for your car.

Suppose you've merely lavished £xv,000 on a car, or have taken out finance to that corporeality. You drive the car dwelling house, and so a calendar week later information technology's stolen – or written off in an accident.

Your car insurer hands you a bank check for £x,000. You paid the dealer £fifteen,000 – just by the insurer's estimates, £10,000 is what the car is really worth, equally cars depreciate notoriously chop-chop.

This leaves yous £5,000 down – or even worse – potentially in debt to the tune of £5,000 (plus interest) to your machine finance company for a motorcar you no longer own.

Where your car is a total loss, 'Gap' insurance (curt for guaranteed asset protection), is designed to work aslope your standard car insurance – topping up the divergence between what they will pay, and what you'll actually need to go back on the road.

Our short video guide explains how information technology works.

Will Gap insurance replace my car?

Gap insurance won't directly supervene upon your machine.

Instead, depending on the blazon of insurance you purchase, information technology will ensure you have the amount you lot demand to clear off your finance debt, or purchase a replacement of the same brand and model.

It tin can besides assistance to bridge the divergence betwixt what your main insurer has paid and what you paid to buy the car in the first identify.

Detect out more: the best car insurance providers

When is Gap insurance needed?

We think Gap insurance can be useful and is therefore worth thinking virtually – simply it won't make sense for everyone.

Generally speaking, Gap is likely to be worthwhile in the following situations:

You used a large loan to buy your vehicle

Gap insurance tin can offer a means of paying off outstanding finance on your auto, which means if your machine'due south stolen or damaged beyond repair you lot won't have to continue to make payments on information technology.

You're concerned nearly the depreciation of your vehicle

The quicker your car loses its value, the less your insurer will pay later on a total loss incident, compared to what yous paid for it. Gap insurance ways you'll get more than dorsum.

Your auto is on a long-term charter

If you take a long-term rental agreement for a vehicle with a mileage allowance, a write-off could leave y'all without a car and a beak for thousands of pounds. Gap insurance tin help protect against this.

What well-nigh the 'new auto replacement' cover in my motorcar insurance?

Most car insurers offer 'new motorcar replacement', which means that if your automobile is brand new, the insurer will provide a like-for-like replacement if it's stolen or written off in its first year.

Gap insurance tin usually only be bought up to a year later your machine, but some providers permit you to defer your cover until year two if you lot'd adopt to rely on your new car replacement cover during year ane.

If you're considering this, bear in listen that new car replacement comprehend is subject field to conditions and doesn't fully replicate the protection of Gap insurance. In some scenarios you could nevertheless potentially face a cash shortfall.

Your car insurer may revert to paying a greenbacks settlement if a like-for-like replacement isn't available, or if the costs of damage to the motorcar aren't high plenty (typically 50%-60% of the motorcar's list price). The settlement won't necessarily be the same amount you paid for the machine or borrowed on finance.
If you lot're using finance to pay, the finance provider doesn't take to have a replacement vehicle from the car insurer. They may insist on you paying off the full finance amount in cash.

Advisedly check your car insurance T&Cs and your finance provider'south policies on replacement vehicles to be sure you have cover that yous're comfortable with.

Where can you lot purchase Gap insurance?

Many people are introduced to Gap insurance in a car dealership, equally information technology'southward usually offered as function of the bundle of 'extras' sales staff volition try to get you lot to buy.

While Gap insurance is a worthwhile product, your dealership probably isn't the all-time place to buy it. It can often exist found far more than cheaply online – sold direct by insurers and brokers, or via comparison sites.

Concerned that dealerships were selling overpriced Gap insurance to customers distracted by negotiations around buying the machine, the Financial Carry Authorisation (FCA) gear up out rules in 2015.

Dealerships selling Gap insurance must tell you the following before you buy a policy:

the total premium for the Gap insurance
the length of the policy
the features, benefits, unusual exclusions and limitations of the production
that the product can be bought elsewhere from standalone providers
whether Gap insurance is an optional or compulsory addition to the sale of the vehicle.

In addition, dealerships can't sell y'all Gap insurance on the same day they sell yous a automobile. There must exist at least a two-day break, unless you determine to waive the waiting menstruum.

If you practise wait two days or longer, the provider should become over the detail of the policy again. The decision to waive the waiting catamenia must be initiated by yous; information technology can't be suggested by the dealership.

How to shop around for Gap insurance

As with standard automobile insurance, y'all can compare Gap insurance policies online to find the cheapest deal for you lot.

Whatever policy you cull, grasp the primal features before you buy. The following are just some of the of import elements yous should look out for:

Length of the policy
Excess
Whatever significant exclusions
The value of your vehicle
How to claim on your policy
How to cancel your policy if you no longer need it

Our cost comparison figures below show just how much you can save by shopping around.

Which kind of Gap insurance is best for you?

In that location are many types of Gap insurance product, with unlike providers offer their own unique spin, or combinations of encompass.

While some are more basic than others, they're suitable for different purposes. Which one is all-time for you depends on your purposes.

Finance Gap insurance

I of the virtually basic products on the market (and quite often a characteristic of other types of Gap encompass), this helps you pay off any outstanding loan payments on your auto if it'southward written off.

However, this commonly won't include payments for negative equity. See beneath.

Negative equity Gap insurance

If your finance settlement (the corporeality you've borrowed) is higher than the toll of your car, the extra sum is referred to as 'negative equity'.

This usually comes about if you'd function-exchanged a previous machine prior to paying off its finance, transferring the remaining debt from that loan to your current car. A Finance Gap insurance payout won't cover this older debt. Negative equity Gap Insurance will.

Return to invoice Gap Insurance

Return to invoice Gap insurance tops up the claims payout from your car insurer to the corporeality y'all bought the vehicle for.

Vehicle replacement Gap insurance

Rather than helping y'all reach the amount yous paid for the car, vehicle replacement cover bridges the distance betwixt your car insurance payout and the cost of replacing your vehicle with a new one.

Return to value Gap insurance

Render to value Gap is similar to render to invoice Gap insurance, but instead of helping y'all get exactly what you paid for the car, it pays the difference betwixt your car insurance settlement and the value of the vehicle when it was first purchased.

This could testify useful if you bought the car second mitt, or you lot have had the vehicle for a long time.

Lease gap insurance

If you leased your car rather than buying it outright, lease Gap insurance helps you lot pay the rest of your contract and whatever fees that may apply for cancelling your lending agreement early on.

Gap insurance reviewed

The tables below bear witness the costs of vehicle-replacement and return-to-invoice Gap policies for three different cars bought brand new.

We also list some cardinal elements of embrace provided by the the policies. These include:

Backlog: how much your Gap insurance policy will pay towards your car insurance excess
Maximum level of encompass: how much embrace you can take out
Embrace availability: how long you lot can accept out the Gap insurance for
Age of vehicle: the age limit of the vehicle that each Gap insurer will cover
Maximum value of vehicle that each Gap insurer will cover
Finance: whether the Gap volition embrace your outstanding payments for your car if yous bought it on finance

Vehicle replacement Gap cover

Return-to-invoice Gap cover

How to claim on your Gap insurance

In one case your car insurer has offered your settlement, you tin can make your Gap insurance claim.

But it's worth checking your Gap insurance terms and conditions beforehand. Come across whether there are whatever time limits in submitting your Gap merits, what your excess is and what information you'll need to take gear up for them.

Call your Gap provider

It'south best to speak to your Gap insurer before you lot take any settlement from your car insurance provider. Many Gap providers insist yous speak to them before like-minded a claim.

If you have finance every bit part of your Gap insurance policy, it'southward worth discussing how any outstanding loans are settled, and whether this will automatically be paid on your behalf.

Unsatisfied with the response? Complain

If your Gap insurer doesn't handle your case in a fair and timely manner, don't be agape to complain. Details of how to do this should exist listed on your policy document.

If yous've exhausted the insurance company's complaints procedure and your claim has non been settled, contact the Fiscal Ombudsman Service (FOS).

You unremarkably have six months from the time y'all reach deadlock with the insurer to make a FOS complaint.

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Source: https://www.which.co.uk/money/insurance/car-insurance/gap-insurance-explained-aspmb4u9mhvz