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GAP insurance explained: documentation

Buying a car is an important financial and lifestyle decision. Naturally, you want to protect your new purchase as much as you can, but the reality is that its value begins to depreciate as soon as you drive the car off the forecourt. You also can’t predict the future and, unfortunately, car theft and road accidents are common, so having the right safety nets in place is always wise.

Your comprehensive car insurance will support you to a certain extent. However, if your vehicle is declared a total loss, your motor insurance settlement may only pay out for its current market value. This could be a much smaller amount than what you initially paid for your vehicle, and may not even be enough to cover any outstanding finance you have. This leaves you paying out for a vehicle you can no longer use.

Guaranteed asset protection (GAP) insurance is designed to cover this shortfall, so you’re not stuck in a financial nightmare if your vehicle is written off or stolen. In the event of a claim, it will pay the difference between what your motor insurer will provide and the original purchase price of your car or your outstanding finance, whichever is higher.

This article will discuss the documents that are required for a GAP insurance policy and GAP insurance claim, and explain the wording of these documents.

GAP insurance policy documents

The main GAP policy documents you need to know about are the Policy Wording and the Insurance Product Information Document (IPID). The IPID contains the key points about whichever insurance policy you’re looking at, while the Policy Wording document contains all the terms and conditions.

With ALA, there’s a different Policy Wording and IPID document for each type of GAP insurance we offer. Within these policies, the specifications of the documents will be different depending on how long your car has been in your ownership before you purchased your GAP insurance (ranging from 60 days to 365 days).

Person signing various documents

Understanding your GAP insurance documents

You should read the IPID for the GAP insurance policy you’re thinking about purchasing to get to grips with what the policy offers. This will tell you what the policy does and does not cover, where you are covered, any coverage restrictions and your contractual obligations. You can use the information in the IPIDs to compare different policies and decide which one will be the most useful to you. See our sample IPID for Back to Invoice Plus GAP insurance as an example.

Although the Policy Wording document can seem confusing, it’s important to read it to understand exactly what the policy involves, what your rights and obligations are as a policyholder, and ALA’s obligations to you as the insurance provider. The ALA team are on hand to answer any questions you may have about this document.

The Policy Wording document is split into multiple sections, including eligibility requirements, policy exclusions and restrictions, the claims process, how to cancel your policy, how to make a complaint, details of the financial services compensation scheme, data protection, and definitions of key terms. See our sample Policy Wording for Back to Invoice Plus GAP insurance as an example.

Documents required for a GAP insurance claim

Once your comprehensive motor insurer has offered you a settlement, you can make a GAP insurance claim. First, you should check your policy’s terms and conditions to confirm the requirements for submitting your claim. For example, for any of our policies you must submit your claim within 120 days of the date of the total loss of the insured vehicle.

Next, you should call ALA. You should speak to your GAP insurer before accepting any settlement from your motor insurance company, as we may try to negotiate a higher settlement on your behalf.

If you don’t make your claim within the required timeframe, ALA’s payment to you may be delayed or reduced. However, you can get an extension period if you request one in writing and give a reasonable explanation for the delay.

Documentation that ALA may ask you to provide when making a claim include:

  • Your vehicle purchase order and invoice
  • A copy of your finance agreement if applicable
  • The settlement statement of your finance agreement (with a breakdown of any arrears, interest on the arrears or interest rebate) if applicable
  • A copy of your motor insurance certificate
  • A copy of the statement from your motor insurance company (containing the details of how they calculated the settlement)
  • Your GAP insurance policy schedule and Policy Wording document
  • Any relevant third-party details and police correspondence

For example, if you’ve purchased the Vehicle Replacement Plus Policy and your car is declared a write-off, but you decide you don’t want a replacement vehicle, ALA will pay either the difference between the settlement you receive from your motor insurer and the original purchase price of the vehicle, or the difference between the settlement you received and any outstanding balance on your vehicle, whichever is the greater amount. In order to decide this, ALA needs your vehicle purchase order and invoice, a copy of your finance agreement, and a copy of the statement from your motor insurer.

Frequently asked questions

How old can your car be to purchase Back to Invoice GAP insurance?

Your car can be a maximum of 10 years old to be eligible for Back to Invoice GAP insurance (also known as Return to Invoice GAP insurance).

Can you still get GAP insurance if you bought your vehicle from a private individual?

If you have bought your vehicle from a private seller and instead of a VAT-registered car dealer, you may still be eligible for our Agreed Value GAP insurance policy.