Finance Gap Insurance is probably the oldest type of vehicle Gap cover on the market today. With its roots firmly found in the leasing markets of 1980’s USA, the product was widely included in contract hire leases in the UK for many years.

However, in recent times the rather limited appeal of Finance Gap has seen its sales figures fall increasingly when compared to the more comprehensive forms of Gap Insurance, like Return to Invoice or Vehicle Replacement cover. Indeed many online providers do not even offer Finance Gap as a ‘stand alone’ product anymore, as the product parameters do not often meet consumers requirements.

Finance Gap – the original form of Gap Insurance

The basis of Finance Gap is that it will cover the difference between the market value (covered by your motor insurer) and the outstanding finance settlement. In other words, for Finance Gap to be relevant then there has to be a chance that the vehicle value may be less than the outstanding finance settlement at point of claim.

Over the last few years many of the various Gap Insurance providers in the market have added a few nice features to the basic Finance Gap cover. It is now pretty much universal that you can protect the first £250 of your motor insurance excess, if the vehicle is deemed a ‘total loss’ by your motor insurer and they deduct this from your settlement.

It has been recognised by some providers that consumers may not need Finance Gap for all of the period of the loan. This is because the ‘negative equity’ that may be created may be specific only to the earlier parts of the loan and ownership of the vehicle. We have seen some of the prominent providers now allow the purchase of a Finance Gap policy at any point of the vehicle ownership. This gives distinct advantages of flexibility that other styles of Gap Insurance may not provide.

Gap Insurance

Finance Gap Insurance about to tick more boxes?

However, it has to be said that some of the higher types of Gap Insurance can be purchased with a range of features not often seen on Finance Gap. Probably one of the most important ones in 2013, is the ability to defer the start date of your policy in order to avoid paying twice in the first year when your own motor insurer may be providing replacement cover anyway.

Finance Gap Insurance ready to change?

This is not a feature we have found currently on any UK provider’s Finance Gap Insurance policy, however we do understand this position may change in the not too distant future. It is our understanding at GapInsuranceTV that a new Finance Gap product will become  available that contains the ability to defer your start date, as well as the option to transfer remaining c0ver, if you change your vehicle early.

As with any developing markets, competition can drive evolution, and in the world of Finance Gap Insurance this could provide much more comprehensive policy options in the not too distant future.

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