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Paying for your GAP insurance policy | What to do if you change your mind

16 November 2023

Written by Simon England

|  6 Minutes

Although Guaranteed Asset Protection (GAP) coverage is more affordable than comprehensive car insurance , many see it as an unnecessary additional cost. However, GAP insurance could save you thousands of pounds if your vehicle gets written off, so you can afford a new vehicle with the settlement from your GAP insurance company.

The inconvenience of finding an affordable replacement vehicle would be much more significant than financing your GAP policy. This is made even easier because we offer two payment types: you can pay in one lump sum or in instalments. Furthermore, if you change your mind about your policy, you can always cancel it and receive a refund.

This article explores the different payment options available, how to get a refund and what you may be entitled to.

Can I pay for GAP insurance upfront?

You will be shown two figures through our simple quote calculator. On the left is the total if you paid upfront, and on the right is the total if you were to pay monthly. You can select how to pay for your policy when you proceed to ‘Buy Securely’ after you have entered the vehicle details and personal information.

A Man is sitting on a bench using his tablet. He is dressed smartly and is wearing glasses.

What are the benefits of paying upfront?

You will save money if you pay for your policy upfront because there is interest with monthly payments. If you are looking for the best GAP insurance deal and can afford to pay upfront, this option will be cheaper. If you are worried about paying upfront in case you change your mind, You can cancel during the 30 day cooling off period for a full refund , or a pro-rate refund after the 30 days (subject to underwriter cancellation fee of £35).

What are the disadvantages of paying upfront?

The most obvious disadvantage is cash flow. Especially given the cost-of-living crisis , many car buyers are watching their finances, and wan to avoid spending large sums of money upfront. As a result, there has been a rise in buy now, pay later schemes.

A couple laughing together in their car. The woman in the passenger seat has the window open and drinks a takeaway coffee.

Can I pay for GAP insurance monthly?

The alternative to paying upfront is to pay in instalments. Once you have completed your quote, you will see the total cost on the right if you pay monthly. Each monthly payment costs slightly more due to interest, but you benefit from splitting the payments over ten months.

What are the benefits of paying monthly?

We understand that GAP insurance is another cost involved in buying a car; and they all add up. To make it easier we offer a monthly payment scheme so that you can split the cost into affordable monthly payments which are less than the average your gym membership fee.

Moreover, if you choose to pay monthly, it’s all done by direct debit and the full premium for a policy lasting up to five years is paid after just ten months. Our GAP coverage is unlike a car insurance policy, where you pay monthly on a rolling basis. Our policy lengths are set, and you cannot renew your GAP policy.

What are the disadvantages of paying monthly?

The apparent disadvantage of monthly payments is the additional cost of GAP coverage. There is an additional fee of 12.95% if you opt to pay by direct debit . A basic credit search and affordability check is carried out for all paying monthly customers.

In an ideal world, you wouldn’t need to pay for services like GAP insurance monthly; however, monthly payment options make GAP insurance accessible to everyone. You can always choose to pay monthy, to manage outgoing when you first gert your car. Then, once your finances have settled, you can call the ALA team to pay the remaining balance without any of the remaining interest.

Refunding your GAP insurance coverage

Whether you have chosen to pay upfront or in monthly instalments, you have every right to cancel your GAP policy and get a refund if you change your mind. You don’t have to explain why you want to cancel if you don’t want to; just contact your insurance company over the phone to cancel in minutes .

A father and young son are in the front of a parked car, looking at a map on a tablet.

Can I get a refund for my GAP insurance policy?

We know that people change their minds about big purchases, so we have a 30-day cooling-off period. You have 30 days from the start of your GAP policy to cancel, and you will receive a full refund of your paid premium during this time, provided no claims have been made.

If you miss the cooling-off period, you could still cancel your policy. Instead of a full refund, you will receive a pro-rata refund of your premium minus the cancellation fee of £35. Our no-claims policy still applies here; if a claim is in progress or you have received a payout, you cannot claim a GAP refund from your insurance provider.

Which payment option should you choose?

The payment option that you choose will come down to your financial situation. For better cash flow, select monthly instalments. However, it’s cheaper to opt for the upfront payment. Despite the initial GAP fee, paying upfront leaves you with zero interest, and you needn’t worry about how you will pay for your coverage. Refer to the table below to help you decide:

Pay Upfront Pay Monthly
Initial Outlay Pay 13% Interest
No Direct Debit or Credit search Manage Cash Flow
No Interest Paid After Ten Months
No Accumulating Debts Protected by Direct Debit Guarantee

See how much your coverage would cost; get a GAP quote today!