Guaranteed Asset Protection (GAP) insurance provides valuable protection during your vehicle’s life. GAP insurance complements your existing vehicle insurance policy and can benefit motorists who use cash, finance or a leasing facility.
Low Cost Vans supply two types of GAP insurance:
- Finance GAP insurance
- Return to invoice GAP insurance
Finance GAP Insurance
In the event of a total loss of your vehicle due to an accident or even theft the GAP policy will pay out the difference between what your vehicle insurance pays out (this is normally the market value of the vehicle) and what is still owed to your finance lender or leasing company. Without a GAP policy in place this difference could cost you hundreds or even thousands of pounds. GAP insurance enables you to protect yourself or your company against the inevitable depreciation of your vehicle, should it be stolen – or if it is written off by your insurance company.
Finance GAP insurance is specifically to help you to cover any negative equity in the event of an insurance company write off. Let’s take a look at how this might work:
| Mr Grainger buys a vehicle for an agreed price of | £15,000 |
| He pays a deposit of | £ 1,000 |
| He finances the vehicle balance | £14,000 |
| Finance at 5% per annum over 5 years | £3,500 |
| On the day he gets his new vehicle he owes | £17,500 |
| | |
After two years Mr Grainger’s van is stolen and his insurance company decide to write off the vehicle as a total loss. To settle his finance agreement on the vehicle he no longer has:
| Mr Grainger is required to pay the finance loan company | £9,750 |
| Mr Grainger’s insurance company only pay him | £7,500 |
| Mr Grainger therefore needs to pay his lender the difference of | £2,250 |
If Mr Grainger had purchased Finance GAP Insurance the policy would have paid the difference of £2,250 to the finance company on his behalf.
Return to invoice GAP insurance
Return to invoice (RTI) GAP insurance is cover that is designed to help you recover the full original purchase invoice price in the event of an insurance total loss
It’s a fact that in most cases, your comprehensive motor insurance payout in the event of a total loss will not match the price originally paid for the vehicle. So without a GAP policy in place you would have to pay this shortfall.
Let’s take a look at how this might work:
| Mr Lewis buys a vehicle for | £15,000 |
Unfortunately after two years Mr Lewis’ van is stolen and his insurer eventually writes the van off as a total loss.
| Mr Lewis’ insurer agrees to pay out | £8,000 |
| Mr Lewis has therefore suffered a financial loss of | £7,000 |
If Mr Lewis had purchased RTI GAP insurance then the policy would have paid out £7,000. This would have enabled him to buy a replacement van for the same price he originally paid without using more of his own funds.
In summary your responsibility for any GAP deficiency can be negated by purchasing GAP cover.
To take advantage of the benefits of GAP insurance your vehicle must be:
- insured by a motor insurance policy issued by an authorised UK motor insurer, which insures against accidental damage, fire and theft.
- listed in Glass's Guide
Please refer to your insurance document for full Terms and Conditions.
Need advice on Gap insurance?
Call Low Cost Vans on 0845 22 44 125
or complete our online enquiry form