GAP insurance: who it covers

Many car owners overlook the fine print that details how a standard car insurance policy will only cover the car’s current market value at the time a claim is made. This realisation can come as a shock, especially if the driver has incurred additional costs after an accident.

Guaranteed asset protection (GAP) insurance is designed to avoid these kinds of financial shortfalls by bridging the difference between a motor insurer’s market value settlement and a vehicle’s original invoice price or outstanding finance balance in the event of a write-off. So, if this sounds like something you think you could benefit from, how can you be sure you will be eligible for cover?

In this expert guide, we’re going to take a look at who can (and can’t) be covered by a GAP insurance policy and how to use this information to help you choose a suitable policy for you.

Who can be covered on a GAP insurance policy?

To be eligible for GAP insurance coverage, you need to have valid provisional or full UK driving license. You must be the registered owner and/or keeper of the insured vehicle.

You also need to be a permanent resident of the United Kingdom, Isle of Man or the Channel Islands. Companies can also purchase GAP insurance, as long as they’re registered in these territorial limits.

You need to have a comprehensive motor insurance policy at all times throughout the policy term, either in your name or the name of the vehicle’s authorised driver. Additionally, anyone driving your vehicle will be covered by your GAP policy as long as they are a named driver on your policy with your comprehensive motor insurer. A GAP insurance policy from ALA will automatically cover all named drivers on the comprehensive motor insurance for the vehicle you are purchasing the GAP policy for. However, this excludes motor trade insurance policies, but does cover fleet policies.

If you are leasing the vehicle you want to insure, you can buy a Contract Hire GAP policy.

Who can’t be covered on a GAP insurance policy?

You cannot buy GAP coverage if you don’t have a valid UK driving license. Additionally, anyone driving your vehicle under their own motor insurance policy or a temporary/short term policy will not be covered by GAP insurance.

If you use your vehicle for road racing, rally driving, speed testing, or any other competitive event, you won’t be eligible for GAP insurance. Similarly, you won’t be able to get cover on a GAP insurance policy if the vehicle you want to insure is for emergency response services (such as an ambulance), a courier, taxi or private hire service.

Choosing the right GAP insurance for you

GAP insurance isn’t a legal requirement, and it won’t always be necessary. But whether you bought your car outright, on finance or through a contract hire/lease agreement, GAP insurance is a worthwhile investment to ensure you don’t lose any money because your car has depreciated in value since you first purchased it.

If you have a brand new car, GAP insurance is especially recommended because of the rapid rate of depreciation in the first few years of ownership. Similarly, a GAP policy could be beneficial for a used car that you are paying for on finance over a number of years.

At ALA, we have four main types of GAP insurance that you can choose from. These are:

Back to Invoice Plus GAP insurance

In the event that your vehicle is declared a total loss, Back to Invoice Plus will pay the difference between the motor insurance settlement and the amount you originally paid for the vehicle or the outstanding balance , whichever is higher when you make your claim.

Vehicle Replacement Plus GAP insurance

Vehicle Replacement Plus GAP insurance will pay the difference between the insurance claim settlement figure from your motor insurer and the replacement cost of an original

Contract Hire GAP insurance

Contract Hire Plus GAP insurance will cover up to 100% of your outstanding rental payments and any shortfall in the market value settlement from your motor insurance provider. You can also boost your protection on this policy with up-front rental cover for an additional premium.

Agreed Value Plus GAP insurance

If you bought your vehicle from a private seller instead of a VAT-registered dealer, you could still get GAP insurance in the form of an Agreed Value policy. This cover is also suitable for vehicles purchased from dealerships but time restrictions mean Back to Invoice Plus or Vehicle Replacement Plus are no longer available.

GAP insurance with ALA

ALA are market leaders in GAP insurance, and our policies can be completely tailored to fit your requirements. This includes your term and level of cover, as well as additional policies such as Scratch and Dent Insurance, Tyre and Alloy Insurance, Excess Cover and Keycare.

Our policies don’t have market value clauses, meaning you won’t be left with a shortfall if your comprehensive insurer pays less than your vehicle’s listed retail value in Glass’s Guide. We offer free pro-rata policy transfers, so you won’t have to pay admin fees if you change your vehicle at any point during your GAP policy term.

For more information about our GAP insurance policies or to discuss your options in more detail, contact a member of the ALA team today.