Accidents are unfortunately a part of life. However by having the right level of insurance cover you can have the peace of mind of knowing that in the event of an accident you will not be out of pocket.
GAP insurance bridges the gap between what you purchased your car for and the market value of the car before the accident.
All insurance claims, no matter whether they are for third party, comprehensive or GAP will take different amounts of time to settle. Several factors come into play and can depend on how quickly you report the accident or theft to your insurance company
How Does GAP Insurance work?
You may only take out GAP insurance if you have comprehensive insurance on your car. Those with third party or third party-fire and theft cover are not able to obtain GAP insurance no matter how new their vehicle is.
New cars lose their value very quickly, within the first three years they will depreciate by roughly 60% meaning that if your car is written off by your insurance company after an accident or if it is stolen and deemed to be unrecoverable, your insurance company will pay you the current market value for your car. You can clearly see that in this scenario not only would you be without a car but you would also be out of pocket financially.
By having GAP insurance, depending on which cover you go for, they will pay you the difference between the two amounts.
What different types of GAP Insurance are there?
- Finance GAP Insurance – This is more suitable for those that have taken out a finance loan to purchase their car. In the event of your car being written off or stolen you may find that you owe a lot more money to your finance company than your comprehensive insurance will pay out. With this level of cover this ensures that your finance is paid off in full.
- Return to Invoice GAP Insurance – This is beneficial for those who want to recoup their losses. This level of cover will pay the difference between the purchase price and the current market value of the vehicle.
- Vehicle Replacement GAP Insurance – This level of cover is for those that know that they would want an exact replacement of their vehicle. With Vehicle Replacement cover you will be able to get the exact same model of car with the same specifications, even if the price has increased since your original purchase.
How do I claim on my GAP insurance and how long does it take?
All insurance claims, no matter whether they are for third party, comprehensive or GAP will take different amounts of time to settle. Several factors come into play and can depend on how quickly you report the accident or theft to your insurance company, any investigations that the police have to undertake and what your expectations are. However there are several things that you must do when claiming on your GAP insurance.
- You must report the incident to your comprehensive insurance company and also your GAP insurance company.
- Your car must be written off or declared unrecoverable after being stolen to be able to claim on your GAP insurance. All other damage and repairs must be dealt with via your comprehensive insurance.
- You must be offered a settlement before your GAP insurance can be claimed against.
- You must not accept the settlement from your comprehensive insurance before speaking to your GAP insurance adviser.
It is vitally important that you do not accept a settlement before speaking with your GAP insurance. Failure to do this may result in your GAP insurance being void. The reason being that your comprehensive insurance may be offering you less than the current market value of the car.
For example –
- The current market value is £12,000
- Your insurers offer you £9,000 and you accept this.
- You purchased the car for £18,000
You would then expect your GAP insurance to pay you the extra £3000 difference between the current market value and the settlement that your comprehensive insurance has given you, on top of the £6,000 depreciation. It is extremely unlikely that they will do this, meaning you will be out of pocket despite having two separate insurance policies.
So although no one can tell you exactly how long your insurance claim will take by following the above points and acting in a timely manner immediately following the incident you have the best chance of reaching a settlement as soon as possible.