Choosing Gap Insurance

What to look for when choosing Gap Insurance

Return To Invoice Gap and Finance Insurances often set a pre-determined figure which they will pay out if the motorist claims this should be noted in the motorists’ policy document.

From this the claimant will be able to determine whether the insurance company would pay out up to the Glasses Guide Retail Value, or up to a maximum of 110 percent of the Glasses Guide Retail Value.

Extras not as standard

It is worth noted that if the insured vehicle has extras that don’t come as standard for example heated seats, upgraded sound systems or satellite navigation the policy that only pays out the Glasses Guide Retail Value of the standard car probably will not cover the original costs and the claimant will not see an adequate return when making a claim. There is not normally any extra costs involved in the cover of such extras however unless stated in an insurance agreement, they may not be taken into consideration.

In the same way policies with accessory cover should be no more expensive than ones without it is simply a case of selecting the correct policy that specifies that cover will be made for extras such as a body kit.

Gap insurance policy

It is advisable to make sure the terms and conditions of a Gap Insurance policy are read and understood, particularly note whether a Gap Insurance Provider say they will cover the costs of the smaller of two figures rather than the larger, this is particularly applicable to:

• Glasses Guide retail price and original invoice price
• Gap Insurance Buyers Check List and Original invoice price and outstanding finance.

It is highly recommended that purchasing Gap Insurance would be of no benefit if it applied an ‘annual payout reduction’ or an ‘excess deduction’. This means that insurers are legally allowed to reduce their payouts each year into the policy by a set percentage.

Some policies have certain clauses under which they will not make a payout. One such case is the theft of a vehicle if the keys to the car are stolen prior to the theft of the car which is then taken without any physical form of break in to the car. As this is an increasingly common circumstance and it may therefore be advisable to purchase a policy which includes this cover.

Car dealership gap insurance

There are some Gap Insurance Policies sold by car dealerships at the point of purchase which state that the payout of the policy will be made directly back to that particular dealership in order that you buy a replacement vehicle from them.

Ensure that in order to avoid arguably unfair restrictions that the chosen policy makes any payments directly to the claimant in order that the choices about future vehicles are made by with their discretion.

Though it is a rarity, there are some cases when a person is financing their car purchase when a Return to Invoice Gap Insurance policy will not pay out when the finance settlement charge is higher than the original purchase price of the vehicle, this may occur if for example if the motorist finances the all costs for the vehicle, they use a balloon payment plan to keep monthly instalments minimal and the car is written off within a couple of months of ownership.