We all hope to avoid a vehicle write-off. A total loss can leave you with a significant financial shortfall to cover, especially if your car has depreciated or you still have a high auto loan balance. GAP or Guaranteed Asset Protection insurance helps cover the shortfall between the comprehensive insurance payout and the vehicle’s original cost (or the outstanding finance, whichever is higher at the time).
It’s essential to understand the ALA claims procedure; knowing your policy limits will help you avoid being out of pocket after a total loss. Here, we explore whether GAP insurance covers you if you’re at fault, the circumstances where you may not be able to claim on GAP insurance, the limitations of ALA GAP policies and what to expect from your GAP payout.
Accidents on the road usually involve more than one driver, and determining who is at fault can be difficult. If you are at fault for a car accident, your motor insurer will have to pay out; however, if you are not at fault, or the responsibility is shared, the other party’s or both insurance companies pay out .
Can you claim on GAP insurance when the total loss was your fault?
Yes, you can. GAP insurance will almost always pay out if your comprehensive insurance company offers a settlement unless they offer to replace your insured vehicle new for old.
Can you claim on GAP insurance when the total loss was not your fault?
The other party’s insurance will pay out if the total loss is not your fault. You will still be able to claim on GAP insurance, but you will have to claim using the settlement from the other party’s comprehensive insurance. If the total loss was the fault of an uninsured driver, your car insurance might not pay out, so neither will your GAP insurer . It is essential to check with your motor insurer whether they cover this.
What are the exclusions on your GAP insurance policy?
You must have a comprehensive motor insurance policy.
Track/racing cars and courier/taxi vehicles are excluded
The policyholder must have a valid licence to drive in the UK
Only right-hand drive vehicles can be insured
In addition to these initial requirements, there are some cases where your insurance provider cannot offer you GAP coverage, or there will be certain coverage limitations.
GAP insurance will not pay out if your comprehensive insurance doesn’t pay out.
GAP insurance does not offer liability coverage.
GAP insurance doesn’t cover modified vehicles if the modifications go against the manufacturer’s guidelines.
ALA doesn’t cover a total loss resulting from a criminal or deliberate act.
ALA doesn’t cover negative equity – auto debt carried over to a new finance agreement from a previous vehicle.
If you turn down an offer for a new for old replacement from your comprehensive insurer. ALA will not pay out.
You cannot claim if you have another similar GAP insurance policy.
What are the limits to your GAP insurance policy?
You may want to be aware of some additional insurance coverage limitations. ALA’s policies have generous payout limits. You are entitled to up to the original price of your vehicle in GAP cover. For example, if your car were worth £30,000 when you bought it, the ALA payout limit would be £30,000. Back to Invoice GAP insurance pays the difference between the market value settlement from your comprehensive car insurer and the original amount paid for the vehicle. If your £30,000 vehicle were worth £15,000 at the time of the total loss, GAP insurance would pay £15,000. If your car were worth £10,000 when written off, GAP insurance would pay £20,000, up to the limit of £30,000.
The policy limits for each ALA policy (regarding vehicle value) are listed below:
Back to Invoice Plus /Vehicle Replacement Plus – these policies can cover vehicles up to the value of £150,000
Contract Hire Plus or lease GAP insurance – this policy can cover cars worth £125,000
Agreed Value – vehicles bought from a private seller can be covered if worth less than £75,000 at the time of GAP policy purchase. This is based on Glass’s Guide’s market value of your car at the time that you purchased your GAP policy.
How much will your GAP insurer pay out?
Since GAP insurance is only available for policyholders with comprehensive auto insurance, your GAP insurance provider will only pay out if your comprehensive insurance company pays out.
What will you receive?
You will receive a payout from your GAP insurer based on one of the following factors, depending on your policy type: the original cash value of the car when you bought it or the amount owed on car finance (if this is higher) – for Back to Invoice Insurance. Your payout could be based on the cost of a replacement vehicle (for Vehicle Replacement Plus) or the market value of the insured vehicle at the time of purchasing your GAP policy (for Agreed Value GAP). The payout value will also depend on the settlement by your comprehensive motor insurer based on the market value of the car at the time of the total loss.
You will receive the following, based on your policy:
The difference between the settlement by your comprehensive insurer and the original price paid for the car or the amount owed to your finance provider, whichever is higher at the time. For Back to Invoice GAP insurance policies only.
The difference between the settlement figure from your comprehensive motor insurance provider and the cost of a new for old replacement vehicle – even if this is higher than you originally paid. For Vehicle replacement Plus policies only.
Up to 100% of the remaining payments on your lease agreement for your contract hire vehicle. Only for Contact Hire GAP insurance.
Frequently Asked Questions
When will you receive your GAP settlement?
Once your car is written off, the excess is paid, and your car insurer confirms their settlement, the cash settlement can be paid. You will also need to provide policy information before the settlement can be issued.
Why documents do you need to file a GAP insurance claim?
To make a valid GAP insurance claim, you will need to provide your vehicle purchase order and invoice, a copy of your finance agreement and the settlement statement of your finance agreement (if applicable). You will also need a copy of your motor insurance certificate, a copy of the settlement from your motor insurance company, any relevant third-party details and police correspondence. Read more on the required documents.
Do you need GAP insurance if you have full coverage
Comprehensive coverage car insurance still only covers you for the market value of your car at the time of the total loss, unless you have new for old replacement within the first year. GAP insurance will pay the difference between your market value settlement and the original amount you paid for the car (or outstanding finance) for Back to Invoice GAP insurance.
If you are interested in taking out a policy with ALA, check your eligibility and get a quote today