We try to cover every aspect of Gap Insurance on this website. GapInsuranceTV was launched just over a year ago, and since then our site contributors have crammed our bandwidth full of information on all kinds of gap insurance pointers.
However, it dawned on us that we have not really put together a ‘do’s and don’ts’ list of points, which in our opinion, will help you get the best policy, at the very best price for you.
So here it is, the GapInsuranceTV ultimate guide to choosing your Gap Insurance cover.
Gap Insurance top tips
1 – The Insurer – This is THE most important aspect of any Gap Insurance policy by a country mile. This is the company who underwrites the policy, and who authorises the administrators to settle your claim.
To clarify this point further, the insurer is not necessarily the motor dealer or online broker who sold you the policy. Your policy may have been bought from ‘XYZ Gap’ on the internet, and the policy may be branded ‘XYZ Gap’, but it will be the insurer who makes the payment to you.
You need to check the insurer is on the FSA register, as well as the administrators and indeed the ‘retailer’ who sold you the policy.
Be aware also that many insurers are based in Europe these days. Companies such as Allianz (the German insurer who back schemes for BMW), Mapfre Abraxas (who back many main dealer schemes, and who have a Spanish parent company) and Enterprise Insurance PLC (who back many AA Warranty schemes and some online brokers) are all based outside the UK. However, they will still be registered with the FSA in the UK.
Remember also, to read the terms and conditions of the gap insurance policy carefully. It is these ‘rules’ that the policy is bound by. The retailer could make promises, switch supplier or even cease to trade, and if you make a claim it is the ‘t’s and ‘c’s’ of the policy that will determine you claim.
If you are looking for a well known insurer, simply put their name into google and see what comes up about them.
2 – Get the right type of cover – it is easy to forgive consumers for believing that there is only one type of ‘Gap Insurance’. This is simply because if they have been introduced to Gap Insurance by a motor dealer, the motor dealer may only have one type of Gap Insurance to offer them . Usually this is a simple Return to Invoice style gap. However, some online brokers have up to 10 different styles of Gap Insurance available to them. Every type of vehicle purchase is different, so there are different styles of Guaranteed Asset Protection available to you.
3 – Cover length and Claim limit – this really follows on from the previous point. Again, many motor dealers simply offer a fixed 3 year policy, so if you are buying a vehicle on a 2 year PCP finance agreement, then you are simply wasting a year. Also, they often have a fixed £10,000 claim limit, so if you are buying a £30,000 car, would that really be enough. Online Gap Insurance brokers can offer up to 5 year policies and up to £50,000 claim limits, for those who need extra flexibilty.
4 – Policy features – this point will take a little time for you to check on each policy. We will highlight a few policy features that you may want to look for.
Transferability of the policy, if you change your vehicle during the period of your gap cover, many policies allow you to transfer the remainder to another vehicle. If you have a period left that is worth transfering, then this can be a great feature.
Defer the start date – many motor insurers actually offer you replacement cover for the first 12 months on a new vehicle. If you have a gap insurance policy too, the gap cover can be a waste of money for the first year, as you simply have ‘double cover’. Some insurers will offer you a free transfer if your own insurance replaces the vehicle, which is fine, but you have still paid for, and been unable to use that first 12 months of gap cover. Some policies offer you the chance to defer your start date for 12 months, thus eliminating the ‘double cover’.
Vehicle Value – if you buy a Return to Invoice type cover, you would assume that the full invoice price is covered. However, you may find that your particular policy will not cover dealer fitted options, even though they form part of the invoice price. Even if they do cover dealer options, they may still exclude items such as paint and fabric protection and tyre insurance. However, some policies will include these items.
5 – Premium Price – once you have checked all the aspects above, got the policy you want, then the last thing to get is the best deal possible!
We have explained many times why online brokers will offer gap insurance policies at far lower premium prices than a motor dealer. There are just some reasons why motor dealers simply cannot compete on price.
However, that said there are indications that the competition offered by online brokers, has forced motor dealers into a rethink on Gap Insurance prices. There really are not too many dealers who will charge £400 for a 3 year policy these days. If your dealer is one of them, then you will be able to find gap insurance cheaper elsewhere I promise you!
Gap Insurance cheaper and better than before
With the added competition of independent insurance brokers, and more insurers offering products in the market, the choice for gap insurance has got better.
This is a great position for consumers, meaning better cover at more affordable prices. Remember with Gap Insurance, the policy relies on the fact that your vehicle is written off. The chances of this are around 3% per year, so not very big, but the financial loss you may suffer can be substantial when it happens.
In our opinion, if you follow our basic guide here, you can find the very best cover, best suited to you at the best gap insurance premium price possible!