Many people believe that Gap Insurance is a relatively new idea, well how wrong they could be! Originally developed in the USA to give consumers protection against finance shortfalls on lease agreements, this style of insurance has spread and developed over the last 20 years.
Today, Gap cover is available from a wide range of motor dealers in the UK. The styles of Gap protection have changed too!
Gap Insurance development
The primary forms of Gap were developed to provide cover between the vehicle ‘write off’ value and the amount outstanding on the lease agreement. This form is still around today, and Contract Hire Gap Insurance is still hugely popular on such lease agreements.
A very similar form of Gap cover is Finance Gap Insurance, which covers the shortfall on Hire Purchase or PCP agreements from your motor dealer.
Return to Invoice Gap Insuranceis suitable for both finance and cash buyers, as it will cover between the vehicle value and the original invoice price paid. This not only covers the outstanding finance settlement, but also any deposit placed on the agreement. If you have paid cash, the RTI Gap Insurance protects all your original investment, by covering back to the original price you paid.
- How long has Gap Insurance been around?
The newest form of Gap Insurance is Vehicle Replacement Insurance. This type of Gap protection covers back to the cost of the equivalent vehicle at today’s prices. So if the 1 year old Ford Fiesta you bought 3 years ago was £10,000, if the equivalent 1 year old Fiesta is now £12,000, then VRI Gap Insurance can protect to the price now.
Further changes with Gap Insurance
The other key difference with this product is how you can buy it today. Traditionally, the only source of Guaranteed Asset Protection was through your car dealer. However, today you can find far better premiums from specialist Gap Insurance brokers. These prices are often 70-80% cheaper than your motor dealer or finance company will offer you.
How Gap Insurance has changed!