GAP or Guaranteed Asset Protection insurance, protects you from significant financial strain after a total loss. Even with comprehensive insurance, you may only receive the market value settlement after a total loss, which can leave you to cover the rest of the costs of replacing your vehicle, car finance repayments, or lease fees.
GAP insurance is available for new, second-hand and commercial vehicles. ALA offers a number of policies tailored to each vehicle type so you can choose which insurance type is right for you. This article explains the four main types of GAP insurance – Back to Invoice, Vehicle Replacement, Contract Hire and Agreed Value. We also discuss insuring commercial vehicles and getting complete GAP coverage with excess protection.
This is the most common type of GAP insurance, also called Return to Invoice insurance (RTI GAP). After a total loss, Back to Invoice insurance will pay the difference between the comprehensive motor insurer settlement and either the original invoice price of the car or the outstanding finance, whichever is higher.
Back to Invoice Plus Insurance can cover cars worth up to £150,000, as long as it is less than ten years old. You must have purchased it from a VAT-registered car dealer. You will need comprehensive car insurance to take out a policy. This policy doesn’t cover professional, competition or tuition vehicles. Only right-hand drives and drivers with a license to drive in the UK can be covered with Back to Invoice Plus Insurance.
You might want to choose Back to Invoice insurance if you paid for your used or new car from a dealer with car finance, Hire Purchase, or bought outright. This kind of policy can be helpful for fast-depreciating vehicles or if you expect to cover a lot of miles. Read more about Back to Invoice Plus Insurance.
Vehicle Replacement Plus Insurance
This kind of GAP policy is similar to Back to Invoice insurance; except, in this case, we pay the difference between the car insurance settlement and the cost of a replacement vehicle or the outstanding car finance loan, whichever is higher.
To qualify for Vehicle Replacement, your vehicle must be worth £150,000, less than four months old, and have covered fewer than 1,500 miles if owned for 60 days or less. You must also have comprehensive car insurance coverage. Read about Vehicle Replacement policies.
Vehicle Replacement Plus Insurance can benefit anyone concerned about the cost of replacing their vehicle increasing over time. This GAP policy is ideal if you bought your car at a discount.
Contract Hire Plus GAP Insurance
If you use a car leasing scheme with no option to buy your vehicle at the end of the rental term, you must choose a Contract Hire policy. This type of GAP insurance will pay the difference between the market value settlement, the amount owed to the lease company, and any outstanding rental payments. You can also recover up to £3,000 in rental deposit.
To be eligible for this policy, you must have collected the vehicle no more than 365 days ago, and the car must be worth under £125,000. A comprehensive car insurance policy must already be in place. A Contract Hire policy is excellent for avoiding a financial shortfall if your lease vehicle suffers a total loss.
Van and Commercial Vehicle GAP Insurance
Running a business is stressful enough without the pressure of covering financial losses due to a vehicle write-off. This is where van and commercial vehicle GAP insurance comes in. You can choose to insure your commercial vehicles on either a Vehicle Replacement, Contract Hire or Back to Invoice GAP policy. We make it simple to insure several vehicles at once, making managing your finances more manageable.
To get this type of policy, your vehicle must be less than ten years old, delivered up to 180 days before getting a policy, and weigh less than 3.5 metric tons. Contact one of our advisers today to ask about insuring your commercial vehicle or read more about Commercial GAP insurance policies.
Agreed Value GAP Insurance
This type of policy is available for anyone who has bought a vehicle over 365 days before purchasing a GAP policy. It is also available for those who purchased their car through a private seller rather than a VAT-registered motor dealer.
Agreed Value GAP insurance cover pays the difference between the comprehensive car insurance settlement and the agreed market value of the car at the time of starting the policy. This market value settlement is based on Glass’s Guide valuation.
This policy is ideal for drivers who wish to cover their car’s depreciation since purchasing a GAP policy but are not eligible for Back to Invoice, Contract Hire or Vehicle Replacement Plus GAP Insurance. Your car must be less than ten years old and with less than 100,000 miles on the clock. The value of the vehicle must also not exceed £75,000. As with all other GAP insurance policies, you must have comprehensive car insurance before getting GAP coverage.
Excess cover from your GAP insurance provider
You can still suffer a potentially significant financial shortfall even with comprehensive cover. Not only will you only receive a market value settlement from your car insurance company, but you will have to pay your agreed excess too. With ALA, £250 of your excess is covered as standard but you can choose to add extra excess coverage up to £1,000 for an additional premium. Excess cover further protects our customers from an unexpected financial shortfall.