Imagine writing off your car, only to realise you owe more on your car finance agreement than your car insurance company pays you.It’s the worst of all worlds. You can’t afford to pay your outstanding debt, so you can’t afford to replace your car without borrowing more.Unfortunately, due to high depreciation costs on cars and falling resale prices, this is an increasingly common situation for car owners to find themselves in – often through no fault of their own.But there is a solution – GAP insurance.
Mind the GAP
GAP insurance, otherwise known as Guaranteed Asset Protection Insurance, exists to cover the difference in the amount your car insurance pays out for your written-off car and the money you still owe on any loans or finance – or the sum you have to pay to replace the car.There are four main kinds of policy offered by GAP insurance providers. These are:
- Return to Invoice (RTI) GAP insurance. For cars aged up to 7 years old, this must be bought within 3 months of buying your car. It covers the difference between your car insurance claim settlement amount and what you paid for the car – i.e. the invoice amount.
- Return to Value (RTV) GAP insurance. For cars aged 3 months to 7 years, this covers the difference between the insurance claim amount and the value of your car when you took out the policy.
- Finance GAP Insurance. This pays out the difference between the settlement amount and the sum outstanding on your loan or finance agreement.
- Replacement GAP Insurance. This covers the cost of replacing your car with the same make and model (or equivalent) as the car you originally bought.
Choosing a GAP Insurance Provider
With these different products on the market, who do you turn to when you need GAP insurance?It will depend on your circumstances, but we believe these companies offer some of the best available GAP insurance deals.
GAP Insurance provider 1: Click4GAP
Click4GAP offers you RTV, RTI and Replacement GAP Insurance and offers lots of good deals on its website.At the time of writing, Click4GAP is offering £5 off to the first 700 customers each week, and you can choose flexible cover up to eight claim limits, lasting one to four years.Better still, the website’s ‘Build Your Own Quote’ function makes it simple to create a GAP insurance quote that’s tailored exactly to your needs.Oh, and there’s a 21-day money back guarantee – so buying GAP insurance is completely risk free.Visit Click4GAP now »
GAP Insurance provider 2: ALA
ALA has one of the broadest GAP insurance ranges on the market, not only offering the most common forms of GAP insurance cover, but also providing specialist GAP insurance for motorcycles, commercial vans and fleets of company vehicles.Its site is also an informative resource if you’d like to learn more about GAP insurance, and it’s easy to get a quote – you just answer a few questions and it’ll direct you towards the most appropriate products.ALA works in association with Auto Trader, Exchange and Mart and JCB – and it’s particularly worth checking out if you have specialist GAP insurance requirements.Visit ALA now »As with other mainstream insurance policies it’s likely to be worth you taking the time to compare quotes to get the best deal. Do make sure you also take the time to fully understand the policy you are buying – having insurance cover in place could prove to be of little value if you haven’t bought a policy that really does meet your needs.If in doubt seek professional advice, an insurance broker for example will be able to help you.