What Is GAP Insurance?
GAP Insurance could potentially save thousands of pounds if your car is written-off. Don't get caught out with a massive shortfall. This guide will explain what GAP Insurance is and why you need it.
GAP Insurance provides financial protection and offers peace of mind for a stress-free motoring experience for the entire length of your contract.
If your vehicle is declared a total loss because of an accident, theft or natural disasters such as a flood or fire, there is a possibility that your motor insurance company will not pay the full amount owed on the vehicle to settle your contract.
If this happens you will be responsible for paying the remaining figure, or 'gap' between what the insurance company has paid and the remaining contract balance. During this time you may find yourself without a vehicle for a long period as you figure things out.
GAP Insurance means that the financial burden of having to pay the remaining figure is completely eliminated and gives you complete peace of mind.
Check out our YouTube video below for a quick rundown on GAP Insurance:
Key Benefits of our GAP Insurance
✓ Stress-free motoring and peace of mind knowing that you are financially protected in the event of an accident, theft or natural disaster that writes off your vehicle
✓ Pays the shortfall, the 'gap' between the settlement and the insurance pay-out
✓ Contributes up to £250 to motor insurance excess
✓ Fully transferable to another vehicle and cancellable on a pro-rata basis in the event of no claim being made in the event of a total loss
✓ Vehicle covered for the duration of your lease, up to a maximum length of 48 months, unless the vehicle is sold or finance is terminated
Our GAP Insurance Exclusions
You won't be covered by our GAP Insurance protection if the following exclusions apply:
✕ The vehicle was involved in an accident and written off whilst being driven illegally under the influence of alcohol or drugs
✕ The vehicle was not insured under a comprehensive UK motor insurance policy for the duration of the GAP Insurance term
✕ The vehicle was stolen by a person who has access to the vehicles keys
✕ Any insurance premiums, road fun licence, warranty charges and any dealer fitted extras and accessories
✕ The vehicle has been modified in any way from the manufacturer's specification
In the case of a total write-off, GAP (Guaranteed Asset Protection) Insurance pays the shortfall between your insurance payout and your finance settlement figure.
Typically, motor insurers will provide "new-for-old" cover for new vehicles during the first 12 months of ownership. This simply means that, if your vehicle is declared an insurance write-off during the first 12 months, your insurance company will provide a like-for-like replacement vehicle. If an insurance write-off occurs after the first 12 months, things are more than likely going to get expensive.
Insurance companies will only pay out the market value for a written-off car, which is normally around the trade price. Don’t forget, as soon as you drive a new car off the forecourt it starts to depreciate in value – especially in the first few years. However, during the early stages of any finance agreement you are paying off mainly interest (much like how a mortgage works). So, you could find yourself owing more to settle the finance than the car is worth!
Steve is involved in a crash (don’t worry, Steve’s fine) and his insurance company have declared his beloved VW Golf GTI a total write off! Bad times. Steve’s insurance company have decided that the market value of his car is currently £15,000. To settle his finance agreement, including any early termination fees, Steve needs £20,000. Very bad times!
So, Steve has a shortfall (or GAP) of £5,000 that his insurance company aren't prepared to pay out even though he needs it to settle the finance agreement. Normally, Steve would need to make up this shortfall himself… but, fortunately, Steve took out GAP Insurance.
Steve’s GAP Insurance (Guaranteed Asset Protection) company will meet any shortfall between what the motor insurance company payout and what is required to settle any outstanding finance agreement. This means that Steve isn’t out of pocket and it allows him to lease another new car. Good times!
Why would I need GAP Insurance?
GAP insurance pays the shortfall between the motor insurance payout and the finance settlement. Potentially saving you thousands.
Want to learn more about our GAP Insurance package?
If you're still unsure of what Stable Vehicle Contracts GAP Insurance package can do for you, feel free to get in touch with our friendly advisors today. You can contact us by phone on 0151 728 4711 or simply email us at email@example.com. You can also submit a contact form by visiting our Contact Us page.
Hopefully, this guide will have answered any questions you have about GAP Insurance. If not, please feel free to call us on 0151 728 4711. If you would like to view our latest Audi and Volkswagen contract hire offers please click here.
This guide is accurate as of 20 April 2021. This article does not constitute advice, it is for information purposes only. You should contact the finance company for personalised advice for your specific circumstances.