What is GAP Insurance?
GAP Insurance is an insurance that steps in to cover the shortfall in the payout from your motor insurer in the event that your vehicle is written off. If, as a result of accident, fire, theft or flood, your motor insurance company declare your vehicle to be a total loss (they “write it off”) they will pay you the market value of the vehicle at the time of the incident which led to the total loss claim. This “market value” payout could be considerably lower, than either the original price you bought your vehicle for, or if you originally bought a brand new vehicle, the cost of replacing the vehicle with a new one at the time of claim or, if your vehicle was the subject of a contract hire agreement, it could be lower than the amount you’d need to pay to settle the remaining balance due under the agreement.
GAP Insurance pays the difference between your motor insurance payout and either: the original price you bought the vehicle for (Invoice GAP Insurance); the cost of replacing the vehicle with a “new” equivalent at the time of loss (Replacement GAP Insurance); or the amount required to settle the remaining balance of your contract hire agreement (Contract Hire GAP insurance).