GAP insurance
If your car is stolen or written-off, with comprehensive insurance you will receive a payment that covers the total loss cost of your vehicle. This payment is based on the market value of your car at that particular time; this could be a lot less than what you paid for it. This may not be a problem if you have already fully paid for your car, but if you are making payments through a finance package you may find yourself out of pocket. If the current market value of your car is less than what you paid for it, your insurance may not cover the repayments you still owe. This is where GAP insurance comes in.
- GAP insurance could give you additional payment for any outstanding credit you owe on your vehicle that a comprehensive policy would not cover.
- There are generally 2 types of GAP insurance you can get for most types of vehicles:
- Shortfall Insurance - This type of insurance will cover the difference between the amount you owe on your vehicle and the amount that your insurance company will pay.
- Return to Invoice Insurance - This covers the difference between the amount you paid for your vehicle and the amount that your insurance company will pay.
You can only take out GAP insurance if your car is covered by a comprehensive insurance policy.
Many insurance companies offer GAP insurance; make sure you check out what's on offer to find the best deal.