Guaranteed Asset Protection (GAP) insurance is a type of policy you can take out in addition to the usual car insurance you are legally required to have. It isn’t just a policy for new cars either; gap insurance also covers second-hand vehicles.
If the car is written off or stolen soon after you bought it, your car insurance policy may not pay out enough to cover what you paid for the car, or what you owe in the finance agreement. GAP insurance can bridge that gap so that you are not left out of pocket.
There are different types of GAP insurance policies, each of which is best suited to certain types of drivers. In this article, we will go over the types of GAP insurance ALA provides and give you a rough idea of what they might cost to help you with planning for your own needs.
How much is GAP insurance?
Like car insurance, GAP insurance costs will vary depending on who is providing it, the type of vehicle being insured and the type of policy you take out. Many people end up paying more than they should for their GAP insurance as they buy it directly from the dealership where they buy their car, when they could save money from shopping around. There are some key points that all drivers considering GAP insurance should bear in mind, in order to cover themselves and their vehicle.
The average GAP insurance policy from a dealer costs far more than it needs to. Dealerships are notorious for encouraging customers to spend as much money with them as possible, so it is always wise to shop around before accepting any of the optional extras they offer you, including GAP insurance.
Not all GAP insurance policies are created equal. At ALA, you can take out a Back to Invoice Plus, Vehicle Replacement Plus, Contract Hire Plus or Agreed Value policy. Each of these is designed to provide the best cover for different vehicle owners, and you can get the following approximate quotes based on a £19,000 on-the-road cash price from a dealer and a three-year policy length:
Back to Invoice Plus: £175
Vehicle Replacement Plus: £207
Contract Hire Plus: £175-£210
Agreed Value: £200
When generating a quote for these policies, you will need to let the insurance provider know some key information about the vehicle. These things will include where you bought the vehicle from, the manufacturer, its age and mileage, the level of cover you need and the policy term. These will all have an impact on the quote you get, but ALA always aim for complete transparency and fair pricing on every policy offered, and we can even inform you of the current value of your vehicle.
Which type of GAP insurance should I get?
As previously mentioned, the four types of GAP insurance offered by ALA aim to cover drivers in different circumstances. Back to Invoice Plus is aimed at people who own their vehicle outright or on finance and the vehicle is less than 10 years old. It should be taken out within 180 days of delivery.
Vehicle Replacement Plus is aimed at helping you purchase a replacement vehicle if yours is written off or stolen by topping up the amount you receive from your car insurance. It is suitable for cars owned either outright or on finance and up to seven years old or with maximum 80,000 when the policy is bought .
Contract Hire Plus is aimed at helping you pay off your outstanding rental payments as well as any shortfall in the vehicle market value in the event of a total loss claim. This applies to contract hire and leased vehicles only.
Agreed Value GAP pays the difference between the comprehensive insurance settlement and the Glass’s Guide retail value of the vehicle at the time the policy is purchased. The car must have been bought from a private seller or VAT registered dealer more than 180 days ago.
The different GAP insurance policies offered at ALA will be best suited to people in different circumstances, so seek advice on which is the right type of cover for you.
GAP insurance with ALA
ALA Insurance stands among the largest independent providers of GAP insurance in the UK. Our approach is one of openness and honesty with all our customers. We value the highest standards of customer service, so our team is always friendly and helpful in ensuring every customer makes the right decisions for their needs.
Buying GAP insurance can be complex, so we aim to provide as much impartial information as we can. We are Financial Conduct Authority (FCA) authorised and regulated and are able to offer insurance policies developed with our expansive knowledge and experience of the market. No matter whether you own a new car or an old car less than 10 years old, we can find the perfect quote and GAP cover for you.
You can put your faith in our security and expertise in everything relating to GAP insurance cover. All our products are competitively priced and we offer free transfers, a 120-day limit for making a claim (instead of the standard 30), FSCS-protected underwriters and no market value clauses.
Frequently asked questions
Does GAP insurance cover negative equity from a previous finance agreement?
With ALA, the answer to this is no. However, there may be a GAP insurance company that will offer this.
If you sell your vehicle and have not claimed on your GAP policy, can you transfer your unused premium to your new vehicle?
With ALA, you can do this in the form of a pro rata rebate that you can put towards a new policy on your new vehicle. There will usually be some additional balance to pay on the new policy, but you will not be charged any admin fees. Alternatively, you can have the outstanding balance from your old policy refunded, but there will be a £35 cancellation fee.
How long after taking delivery of your vehicle should you get a GAP insurance policy?
This depends on the type of GAP insurance policy you are taking out. They all specify a period of time after taking delivery that you should take out your policy, so take the time to familiarise yourself with the details of each product. If you have any questions, you can always speak to our customer support team and we will help you understand what you need to know.