Like you, I lead a busy life and will often look online for “expert” opinions and advice from the likes of Martin Lewis. Unfortunately, when I reviewed MoneySavingExpert’s GAP Insurance guide I felt the team missed a few crucial points for consumers which, as a Defaqto 5 Star rated GAP Insurance provider (more on that below) we’re regularly asked.
So rather than rely on Martin, I’ve detailed these below to help you find the GAP Insurance product that’s right.
GAP Insurance - What is it?
You’ve probably never had your car written off or given it too much thought until now. If you did, your car insurer would pay the “market rate” for your car. Unfortunately this is usually a fairly low figure, and certainly nowhere near enough to replace the vehicle with a similar spec car, meaning you need to downgrade or fork out. GAP Insurance covers this “GAP”, providing the funds required to replace the car.
NOTE: It seems odd in 2019, but car theft is increasing rapidly. Keyless entry systems have lead to the highest levels of car theft in nearly a decade - there’s been been a 45% increase since 2014.
On finance? When buying a car on finance it’s natural to consider only the monthly cost, without thinking of a write off event. Were this to happen, you’d be left owing the finance company an expensive lump sum to get you out of the agreement - something many drivers can’t afford. GAP Insurance essentially buys you out of this agreement, leaving you free to shop around for your next finance deal.
Is GAP Insurance Worth It?
In short, GAP Insurance is a fantastic product, costing not a lot (provided you don’t buy it from a dealer - if you do expect to pay 3 times as much!) and should you need it, usually it will be paying out thousands of pounds.
But, within the industry there are lots of nuances to pay attention to and, for a savvy consumer, lots of extra benefits to make the most of.
What GAP Insurance Do I Need?
New Car Gap Insurance - If the car you’ve purchased recently has only a few miles on the clock (usually less than 500) you qualify for Vehicle Replacement Insurance (VRI). This covers the difference between your insurer’s payout and the balance needed to buy a similarly spec’d vehicle, even if the retail price has gone up in the meantime.
Nearly New Car GAP Insurance - If you’ve purchased a second hand car from a dealership in the last few months (4 months in MotorEasy’scar case), this product is available to you. It covers you for up to the invoice total paid for the car. Although we’ve called it “nearly new”, this product is available for cars up to 7 years or 80,000 miles old.
Used Car GAP Insurance - If you purchased a car privately this is the only GAP Insurance product available to you. It covers up to the value of the vehicle at the inception of the policy. This value is established using a dedicated price guide such as Glass’s or Parkers.
MOTOREASY FINANCE GAP NOTE: The 3 GAP Insurance products above cover cars purchased outright/“in cash” or on finance deals. This includes cars purchased using loans, Hire Purchase (HP) agreements, Personal Contract Purchase (PCP), financed, contract hire or leased vehicles.
Finance GAP Insurance - Protect Your Interest
When you buy on finance you’re also paying interest on this – meaning the first instalments are really this interest rather than the fees for the car.
Some Finance GAP policies only cover the finance still owed if that sum is higher than the insurer’s pay-out. They will not pay the gap between the insurer’s pay-out and the original value of the car.
Generally, the steep devaluation experienced with new cars means that GAP insurance for cars purchased on finance is better value early on in the finance agreement, whereas the potential difference between the insurer’s pay-out and the original invoiced price becomes greater over time.
Which GAP Insurance Is Best?
Like many insurance products, with GAP Insurance you pay for the coverage you get. The price difference between the different types of GAP products (e.g. Return To Invoice, Return To Value, Vehicle Replacement Insurance) from online providers is usually nominal, yet the value of the cover can run into the thousands of pounds. As a rule of thumb you should buy the best package you are offered based on your car ownership. Here’s a simple guide from Best > Worst:
Vehicle Replacement Insurance (VRI) > Return To Invoice (RTI) > Return To Value (RTV)
GAP Insurance Transparency - The Motor Ombudsman
At MotorEasy, we care about treating our customers fairly and ensuring that we are 100% transparent with our products. That’s why we voluntarily signed up to The Motor Ombudsman’s code of conduct for GAP insurance.
The Motor Ombudsman is a dispute resolution body who offer consumers peace of mind when dealing with automotive products. By signing up, we're committed to delivering higher service standards than required by law. Buying GAP insurance through an accredited Motor Ombudsman provider allows you to rest assured that you’ll be treated fairly.
When does GAP Insurance Kick In?
Money Saving Expert says “It will only pay out if your car is stolen or a total write-off, as judged by the insurance company.”
This doesn’t paint the whole picture, the best cover includes protection for road traffic accidents, fire and theft. The claims process usually requires a notification of write off from the insurer and often a police report in the event of theft or fire (and sometimes accident). Once accepted, the best GAP Insurance providers will negotiate the fees required on your behalf and settle your claim.
MOTOREASY NOTE: MotorEasy are dedicated to giving our members the best possible service and protection in all things motoring. Which is why we have launched MotorEasy Assistance, any customer who takes out MotorEasy GAP Insurance has FREE access to this service.
Going beyond simply topping up insurance pay-outs our members have access to;
- £100,000 of motor legal expenses
- Emergency vehicle replacement
- 24/7 accident vehicle recovery
- Identity theft assistance
- Insurance claims management
These are just a few of the 20-point benefits to the MotorEasy Assistance package. MotorEasy: Everything car, done for you.
Defaqto GAP Insurance
Defaqto is a star rating service that is based on facts, not opinion. They use independent experts to “analyse policies and rate them on a scale of 1 to 5 based on the quality and comprehensiveness of the features and benefits they provide'' rather than just price. When purchasing a product awarded 5 stars you know you are receiving a high-quality service, and that is exactly what you would get from MotorEasy. We have been awarded 5 stars based on the products we offer and the level of protection they provide.
BONUS: What Does GAP Insurance Stand For
The “GAP” in GAP Insurance stands for “Guaranteed Asset Protection” - a bit of a mouthful! I find picturing the “gap” it covers much clearer and more memorable.