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GAP Insurance policy rules | What are your obligations as a policyholder?

16 November 2023

Written by Simon England

|  5 Minutes

When you take out a GAP insurance policy with ALA, there are certain exclusions and limitations, which mean that we’re not always able to provide cover. Meanwhile, policyholder obligations outline what ALA needs from you. As an insurance provider, we are obliged to protect your money (through the Financial Services Compensation Scheme and the Financial Conduct Authority). As the policyholder, compliance with the terms of your policy is essential to ensure that your cover remains valid and you are protected.

In this article, we cover a policyholder’s general obligations and the obligations that specifically relate to making and settling a total loss GAP claim. Finally, we explain our rights as your insurance provider in circumstances of misconduct and other relevant details.

General policyholder obligations

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The following list sets out the policyholder’s obligations throughout the policy term and applies to both making or settling a claim:

  • Notify your insurance company representatives as soon as any personal details change during your policy term or update the relevant information on your account. Incorrect information can make it more challenging to process your claim.
  • Update us by phone or email if your payment information changes, for example, if your debit or credit card expires or you need a replacement.
  • Ensure you pay your premium in time to avoid cancellation of your GAP policy. If you are having issues with paying your due premium, contact one of our friendly team who may be able to help you resolve the issue. You will be given considerable notice before we end your policy due to missing payments.
  • When purchasing your policy, you will be asked to read, agree and comply with the terms and conditions of your GAP Insurance policy. We strongly recommend you thoroughly read the sample documents before purchasing your policy and your policy documents once you receive your GAP contract.

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Policyholder obligations when making a claim

Should you need to make a claim , there are some obligations on the policyholder to ensure your total loss claim can be processed, and you don’t lose your cover. These are:

  • When we ask questions regarding your claim, take reasonable care to answer correctly, accurately and to the best of your knowledge of the incident. Deliberately providing false information is considered fraud and may result in losing your GAP coverage without a refund and could lead to legal action.
  • Ensure you don’t accept a settlement from your comprehensive car insurance company until we give you the go-ahead. Your car insurer is legally required to provide a fair settlement, and we can liaise with them directly to ensure this happens.
  • Provide proof of ownership of your insured vehicle when making a claim. This needs to be a copy of the original invoice detailing the motor dealer’s name, address and VAT number; it must also show the total cost of the motor vehicle and a full breakdown of any items.
  • Provide a copy of a valid UK driving license.

Policyholder obligations when settling a claim

Below are the policyholder’s obligations for settling a claim once it’s successful.

  • We will settle directly with your finance company for finance agreement settlement claims. However, if there is any auto loan balance remaining, the policyholder must settle this amount separately.
  • Starting your GAP claim before accepting your motor insurer’s settlement is essential. We would make every effort to avoid this; however, if you accept a low settlement, we may be unable to cover the shortfall.
  • Our policies do not cover finance carried over from another vehicle – negative equity. If you have negative equity, you will need to cover this shortfall.

Our rights as the insurance provider

In the event of non-compliance with the terms and conditions of your GAP policy , we have the right to end your vehicle cover if necessary. However, we will try and resolve any issues before ending cover or pursuing legal action.

Failing all attempts to resolve issues, your policy will be cancelled (following at least 14 days notice ) if we do not receive payment of your insurance premium. In fraud cases, your policy may be ended without notice or a refund. If you have received a settlement on the back of a fraudulent claim, the insurance company can take legal action to pursue these benefits.

Read our policy documents or build an ALA quote today!