GAP insurance helps to make sure you’re not in a situation where you’re out of pocket by potentially thousands of pounds in the event your car is stolen, damaged or involved in an accident and written off by your car insurer.
If you’ve taken out a loan, lease or finance agreement for a new car, or you’ve bought one outright, it’s worth having the protection of GAP coverage while the amount you owe is more than the value of your car. Bearing in mind that the value of new cars can depreciate very steeply in the first three years of ownership, some GAP coverage can be incredibly helpful.
While GAP insurance is very beneficial for a lot of car owners, it’s not always necessary and you may find that you no longer need your coverage before your policy term is over. This article will guide you on the cancellation process for GAP insurance and your refund entitlements.
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The most common reason for wanting to cancel GAP insurance is if the car value exceeds the finance owed, or if they have paid off the finance altogether. This doesn’t mean that GAP insurance is no longer needed. Apart from leased cars, it’s primarily to cover depreciation and so even if there is no finance on a car, GAP insurance will almost always still be useful. You might also want to cancel if you manage to pay off your loan earlier than expected, or if you decide to trade or sell your vehicle.
Always consult your Policy Wording document before making any decisions. However, you’re entitled to cancel your GAP insurance coverage at any time as long as you do not have any claims pending. There are two cancellation periods and you need to know which one you’re in before you contact your insurer.
The first is the cooling-off period , which is within 30 days of the start date on the schedule or receipt of the policy document , whichever is later. The second is after this cooling-off period. So, any time after 30 days of the start date on the schedule or receipt of the policy document .
To cancel your policy with us, you should contact us directly.
It’s worth mentioning that, if you fail to pay your GAP insurance premium when it’s due, your policy will be cancelled from the date marking the end of the period to which this last payment is related. No further payment will be due after this but there will also be no cover in place . ALA will give you at least 14 or 30 days’ notice (depending on a range of factors) from the date of default before we cancel your policy . We will attempt to contact you in every way we can if you have missed a payment several times before presenting you with a 14 day notice of cancellation.
It’s important to remember that, while you can cancel your policy any time, you will always be able to have a refund. But the fee may cancel out any credit. We will never ask for payment if the credit is less than the cancellation fee . You also need to check with your insurance provider if there will be a cancellation fee.
If you cancel your ALA GAP insurance policy within the 30-day cooling-off period and have not made a claim, you can expect a full refund. Once those 30 days have passed, your entitlement to a refund changes. If there have been no successful claims made on the GAP insurance policy, you can get a pro-rata refund proportionate to the number of full unexpired days remaining during the Period of Insurance.
If you have made a successful claim, you will not get a refund .
ALA provide a range of GAP insurance policies to suit different needs. Whether your vehicle is new or old, paid for outright, through finance or on a contract hire/lease agreement, you can find the perfect GAP insurance policy for you. We even have a policy for vehicles bought from private sellers—see our Agreed Value GAP insurance if your car wasn’t purchased at a VAT-registered dealer.
All of our GAP insurance policies are underwritten by Financial & Legal Company Limited, who are protected by the Financial Services Compensation Scheme, for your peace of mind. Where most insurers only allow a standard 30 days to make a claim, ALA give you up to 120 days to claim. Having to make a claim after an accident can be difficult, and this gives you a more time to get things in order.
With ALA GAP insurance, you will also be offered a pro-rata transfer of any unused premium if you decide to change your car. This transfer does not carry any hidden administration fees, making it a no-brainer. We also don’t use market value clauses in our policies, which are used by some insurers to limit how much you receive from your GAP policy if your motor insurer underpays.
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