Buying a new car or nearly new car is a huge investment, and you would naturally want to protect it against any eventuality. A car is stolen every minute in the UK and 500,000 cars are declared a total loss every year. In the event of a total loss caused by an accident, accidental damage, fire, flood or theft for example, your comprehensive car insurance policy may only pay out at the value of the vehicle at the time of the incident. This is where Guaranteed Asset Protection (GAP) insurance comes in.
In this article, you’ll learn how GAP insurance works, whether you’re eligible for a policy, how much you could save, and how to make the most of your policy documents and make a claim.
GAP insurance is a type of motor insurance that tops up your market value insurance settlement after a theft or write-off to help you afford a suitable replacement.
Since a brand new car can initially depreciate by thousands of pounds in the first year of ownership, you may run the risk of a huge financial shortfall in the event of a total loss. GAP insurance covers the difference between the payout by your auto insurance provider and the original price paid for the vehicle, or the cost of a replacement car. GAP insurance can also cover any outstanding finance, or car leasing payments, depending on your type of policy.
There are different types of GAP insurance with ALA, including, Back to Invoice Plus, Vehicle Replacement Plus, Contract Hire Plus and Agreed Value GAP insurance.
Back to Invoice insurance, also known as return to invoice, offers you the difference between the payout by your car insurer and the original cost of the vehicle (or it covers the outstanding vehicle finance, if this is higher at the time).
Vehicle Replacement Plus offers the difference between the payout by your normal car insurance provider and the cost of a replacement vehicle (or it covers any outstanding vehicle finance), even if the replacement vehicle costs more than you originally paid.
Contract Hire Plus, for car leasing, will cover the difference between the auto insurance payout and the amount that is owed to the lender, including fees and outstanding loan payments. Contract Hire GAP insurance pays up to £3,000 to cover your leasing deposit.
Finally, Agreed Value insurance offers the difference between the current market value (your comprehensive insurance settlement) and the agreed market value of the vehicle at the time of purchasing GAP cover, based on the Glass’s Guide retail value advisory. This policy essentially covers depreciation.
GAP insurance pays out after a total loss, which includes vehicle theft and damage beyond economical repair. This type of policy is only available for vehicles with comprehensive insurance. If you receive a payout from your car insurance claim, we’ll pay out 99% of the time – it’s as simple as that!
We are different to finance GAP insurance which only pays the finance shortfall while you’re in negative equity (owing more than the market value). Your maximum claim limit is your car’s initial market value.
Without GAP insurance, it can be challenging to find a suitable replacement vehicle with your market value settlement alone. Guaranteed Asset Protection gives you the peace of mind that a vehicle write-off won’t knock you off course financially.
We have a 99% insurance payout rate and we’re rated 4.9 stars
There are some general requirements for ALA GAP insurance and some more specific eligibility criteria for each type.
Your vehicle must be registered in the UK, must be right-hand drive and must be listed in the Glass’s Guide. GAP insurance with ALA excludes courier, taxi and tuition vehicles and luxury manufacturers, including, Bentley and Maserati and Ferrari. Your vehicle should have no modifications out of line with the manufacturer’s guidelines. Read the full insurance requirements.
Your vehicle must not have been declared a write-off prior to purchasing GAP insurance and the policyholder must also be the vehicle owner or the registered vehicle keeper. ALA requires that vehicle owners have comprehensive UK car insurance, and we request that you do not accept a write-off settlement from your motor insurer before contacting us first.
Back to Invoice GAP insurance, requires that your vehicle is less than 10 years old and has been insured within 180 days of being delivered (365 days if the vehicle is less than 12 months and is covered new for old by your motor insurer for that year). Back to Invoice insurance covers vehicles up to the value of £125,000 and vehicles must have been purchased from a VAT-registered car dealer.
A Vehicle Replacement GAP policy requires that your vehicle is less than 7 years old and the value of your vehicle must be less than £125,000. Your vehicle must not have exceeded a mileage of 80,000, and you must have collected the vehicle from a VAT-registered car dealership within 90 days of insuring with ALA.
You must be leasing your vehicle with no option to buy at the end of your contract; you must have collected your lease within 365 days and the vehicle is less than 10 years old. Eligible vehicles must be valued below £125,000.
An Agreed Value GAP policy is for vehicles purchased from a private seller, for those with an expired GAP insurance policy or those who have exceeded the required time restrictions of Vehicle Replacement GAP and Back to Invoice GAP. Your GAP insurance payout will be based on the vehicle’s depreciation since purchasing a policy, according to the Glass’s Guide
GAP insurance is calculated differently depending on which type of cover applies to your vehicle.
ALA GAP Insurance premiums are determined by factors such as vehicle type, age, original cost, ownership duration, and payment method. Different GAP insurance types influence premium calculations and potential savings.
A Worked Example
Suppose you bought a new car for £10,000 and it depreciates by 20% over 3 years before the vehicle is written off – you receive a market value settlement of £8,000. In that case, you could claim £2,000 from BTI GAP insurance.
A Worked Example:
Suppose you bought a new car for £10,000, write it off after 3 years with 20% depreciation – you receive a market value settlement of £8,000. However, the same model of similar age to when you bought it is now £12,000. In that case, you could claim £4,000 from VR GAP insurance.
A Worked Example:
Suppose you lease a car worth £10,000 and write it off after 3 years with 20% depreciation. Your market value settlement it £8,000 but you owe the lease company £1,500 in fees, insurance shortfalls, and outstanding payments. Moreover, you’ve lost your deposit of £1,500. In that case, you could claim up to £3,000 from lease GAP insurance.
A Worked Example:
Suppose you insure a second-hand car worth £10,000 at the time of policy inception, and after 3 years, you write it off, losing 15% to depreciation of your vehicle. You receive a market value settlement of £8,500. In that case, you could claim £1,500 from AVG.
Read more about GAP insurance calculations here.
We provide GAP Insurance for over 35 Manufacturers including Audi, BMW and Land Rover. You can also buy extra insurance benefits to add to your main policy, such as tyre and alloy wheel insurance and scratch and dent cover. Get your GAP insurance quote today.
ALA will provide you with two policy documents – your Policy Wording and an IPID. The Policy Wording includes comprehensive coverage of all the terms and conditions for your policy, including, eligibility, exclusions/restrictions, the claims and complaints procedure and cancellation. The IPID provides a summary of GAP coverage, restrictions, obligations and more. We recommend that you thoroughly read through both documents before beginning a policy with us so that you will understand your GAP insurance coverage, restrictions, and obligations once you begin your policy.
Read more about understanding your ALA policy documents here.
After a total loss incident and once your comprehensive car insurance company has provided an offer, you must contact your GAP insurer before accepting this settlement.
You must submit your claim to ALA within 120 days of the incident that resulted in a total loss. ALA may not fully pay out if you fail to claim within the required timeframe, however, if you need an extension, you may request one.
A non-exhaustive list of ALA GAP insurance claim requirements may be as follows:
To find out more about your GAP insurance policy, please get in touch with us today.
GAP insurance is valuable for fast-depreciating cars or ones paid for with finance or lease. Brand new cars depreciate the fastest – losing up to 20% of their value in the first year. GAP insurance can help you secure your next lease or financed car by covering financial shortfalls.
ALA GAP insurance offer policies lasting up to five years (Contract Hire GAP insurance)/ However, the average policy length is 3 years. Read about policy lengths.
You have 120 days from the date of your total loss to make a GAP insurance claim. Explore claims information for your specific policy.
Car Excess Insurance
Short Term Motor Insurance
Scratch and Dent Insurance
Tyre & Alloy Wheel Insurance
Cycle Insurance
Breakdown Cover
