Compare Cheap GAP Insurance Quotes
What is GAP Insurance?
Imagine that you have your car stolen or written off in an accident. Many motorists believe that their comprehensive or third party, fire and theft car insurance policy will pay for a replacement vehicle. What many drivers do not realise, however, is that insurers will base this payment on the value of the car at the time of the incident rather than on the price that was paid for the car when it was bought.
This is where GAP (“guaranteed asset protection”) insurance can help. Also known as car depreciation insurance, GAP insurance pays out in the event of a car being written off in a crash or if it is stolen. The amount paid out is the difference between the insurer’s payment to you and the value of the car when the GAP policy was bought.
For example, you paid £15,000 for your car and took out a £13,000 loan to finance it. Your car is stolen and your insurer has paid out £7,000 to cover the value of the car at this time. However, you still owe £10,000 to the finance company and are liable for the full repayment of this debt. Without GAP insurance you would have to find another £3,000 in order to pay off this debt. With it, this amount will be funded by your GAP insurance policy.
With over 200,000 cars stolen each year and over 500,000 cars written off, GAP insurance is an increasingly popular proposition for UK motorists.
Types of Gap Insurance
There are three different types of GAP insurance policies, each designed to meet different needs and vehicle criteria:
RETURN TO VALUE (RTV) GAP INSURANCE:
This is designed for cars under 7 years old, with less than 80,000 miles on the clock and that have NOT been bought from a dealer within the last three months. RTV GAP insurance pays the difference between the insurer’s payout and the value of the car when the GAP insurance policy was bought.
RETURN TO INVOICE (RTI) GAP INSURANCE:
This is for cars under 7 years old, with less than 80,000 miles on the clock and that have been bought from a dealer within the last three months. This pays the difference between the insurer’s payout and the original invoice price paid for the car.
VEHICLE REPLACEMENT (VR) GAP INSURANCE:
This is for new cars – those under 3 months old and with less than 500 miles on the clock. This pays the difference between the insurer’s payout and the cost of buying a brand new car of the same make, model and specification.