Gap Insurance Considerations

When purchasing Return to Invoice Gap insurance, a motorist should be clear about whether a payout up to the Glasses Guide Retail Value, or up to a maximum of 110 percent of the Glasses Guide Retail Value.

Manufacturer extras like built in satellite navigation would not be covered by just the Glasses Guide Retail Value and unless stated in the insurance policy the Return to Invoice Gap Insurance will not cover these.

However with a little research on the policies available this cover can be included at no extra cost. Similarly, accessory insurance for items such as an upgraded sound system can be included at no extra cost but will need to be stated before the start of the insurance policy.

Before purchasing gap insurance, ensure that the policy does not apply an ‘excess deduction’ or an ‘annual payout reduction’ which could mean the insurance company would decrease their payout by a set percentage each year of the policy.

In the terms and conditions of the Gap Insurance Policy, with regards to the Gap Insurance Buyers Check List and Original invoice price and outstanding finance and Glasses Guide retail price and original invoice price ensure that the insurance provider will pay out the greater of the two figures not the smaller.

Ensure when purchasing Gap Insurance that the policy payout will go directly to the motorist rather than to the original dealership which would mean that the purchase of the new vehicle would be from that same dealership for the same brand of car.

Some Gap Insurance policies may specify that they will not payout if the car is written off under certain circumstances for example if the car is stolen but the keys were taken from a house or work place prior to theft. It may be worthwhile to check these clauses to ensure that cover will be for these ever increasing scenarios.

Should Gap Insurance be purchased if a car is acquired under a Contract Hire or Lease agreement?

If a car purchased under Contract Hire or Purchase agreement, the costs the vehicle owner is liable to pay is significantly more than many other types of financing agreements.

Therefore owning gap insurance will significantly ease the burden on the motorist by paying off the outstanding finances and covering any balloon payment at the end of the contract. Having Gap Insurance in this instance means that, credit statuses will not be compromised and there should be nothing interfering with wanting to take out another finance agreement.