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Making GAP insurance claims are there any limits

If you’ve recently bought, financed or leased a new car, you may have heard about the abundance of benefits that come with GAP (Guaranteed Asset Protection) insurance coverage. If your vehicle is a total loss, GAP insurance will cover the shortfall between what you paid and what your car insurance company pays out. Each policy is different, depending on how you paid for your vehicle. However, like most insurance policies, there are certain limits to be aware of.

In this guide, we will explore what claim limits are, if they apply to your GAP policy, and how they are calculated. We will also look at vehicle value limits on GAP insurance coverage, and whether or not you should cover the full value of your vehicle.

What is a claim limit?

A claim limit is the maximum amount that an insurance provider will pay out. They are determined based upon how much your vehicle is expected to depreciate over a certain period of time. In the vast majority of cases, ALA will give you a vehicle value claim limit. For example, if your car is worth £12,000, your claim limit with ALA would be £12,000; so if, for some reason, your comprehensive insurer only pays £1000, we will pay you £11,000.

Do GAP insurance policies come with claim limits?

Our GAP coverage here at ALA comes with claim limits, but they will mostly cover the full cost of your vehicle. This is because GAP insurance covers the difference between the invoice price of your vehicle, the replacement cost of a new vehicle (or your finance payments, whichever is higher at the time of your claim), and your car insurance provider’s settlement.

When you build your quote with us, you will be asked to provide information such as how you paid/intend to pay for the vehicle, whether you bought the vehicle from a dealership, what date you bought the vehicle (or if you have at all), how old the vehicle is and how many miles it has completed. You will then be asked for the vehicle make, the invoice and how long you wish your GAP insurance policy to last. All of these details work together to provide you with a bespoke quote and level of cover.

You can start building your quote here.

How are claim limits calculated?

As previously mentioned, claim limits are calculated based upon how much your vehicle is expected to depreciate over time. This applies to Back to Invoice Plus (or Return to Invoice Plus) and Vehicle Replacement Plus policies. For Contract Hire Plus policies, claim limits are based on your potential contractual liability of up to 100%, but this may be lower.

We take into account all aspects of your vehicle listed above to provide you with a claim limit. However, all claim limits with ALA will cover the full cost of your vehicle, so you no longer have to worry about becoming out of pocket. There are still exceptions, which usually concerns cars worth over £50,000, and the length of the policy that has been taken out. *

If you would like to discuss claim limits with our team, you can get in touch today.

Is there a limit to vehicle value on GAP insurance policies?

Although GAP insurance covers most vehicles and instances, there are certain vehicles that won’t qualify for a policy, especially if they are over a certain value threshold. For each GAP insurance policy, there is a vehicle value limit:

  • Back to Invoice Plus: this policy will cover you if the invoice price of your vehicle is up to £125,000
  • Vehicle Replacement Plus: like Back to Invoice Plus, this policy will also cover you if your vehicle is worth up to £125,000, less than four months old, has done less than 1500 miles and has been purchased in the last 60 days
  • Contract Hire Plus: this policy will cover you if the initial list price of your vehicle is worth up to £125,000
  • Agreed Value: this policy has a slightly lower value limit, so vehicles that are bought from a private seller, or that don’t qualify for the other policies as they have been owned for too long, and are worth more than £75,000 will not be covered. This is based upon the Glass’s Guide’s retail value of your vehicle at the time that you purchased your policy.

There are also exceptions on which vehicles will be covered; if the car is an excluded vehicle (such as a Lamborghini or Ferrari), or it is a taxi or delivery vehicle, then it won’t qualify for a policy. You can find out more about our excluded vehicles here.

Should I cover the full value of my vehicle?

When it comes to your level of cover, your GAP insurance policy will cover the full value of your car. In the unfortunate event that your car is written off or stolen, car insurance companies will cover the market value of your vehicle at the time of the accident. Your GAP insurance provider will simply provide a “top-up” of the settlement.

The cover you receive on your GAP insurance policy will be enough to cover the invoice price of your car, the outstanding rentals, any shortfall in the market value of the settlement, or the cost of a replacement vehicle or the outstanding finance balance, whichever is higher at the point of claim. The cover you receive all depends on the policy you take out.

How ALA can help

GAP insurance can protect you if your car is a total loss, such as if it is written off or stolen, and is highly recommended for cars both new and old, so long as they are not more than 10 years old. With ALA, you can even choose optional coverage, such as key care, and tyre and alloy wheel insurance. To find out more about how our policies can benefit you, you can get in touch with us today to discuss your bespoke quote.

20 July 2023

Written by Simon England

|  5 Minutes

This article was written by our Founder & Managing Director.

Simon England

Simon has worked in the automotive and insurance industries for 40 years. He, alongside business partner and wife, Debra...