Mind the GAP

Cover the GAP – Guaranteed Asset Protection Insurance

If you have finance on a motor vehicle then you may wish to consider Guaranteed Asset Protection (GAP) insurance.

If your car is written off; arising from an accident, flood, fire or theft then your comprehensive insurance will either replace the vehicle or payout the agreed or market value of the car.

Many comprehensive insurance policies do not have a new for old replacement policy and if this is the case for you then your will get a cash settlement of either the agreed or market value.

If the comprehensive insurance payout is less than the outstanding balance on your finance, then you face a potentially large expense to settle the loan with the financier.

So, what does GAP insurance cover?

GAP insurance is protection helps cover you from a shortfall between your finance payout and insured value of your vehicle if it is written off.  The trigger for a claim on GAP insurance is the full payout on your comprehensive insurance policy for a total write-off.

The level of cover depends on what you choose and can range from $7,500 to $30,000.

There is normally no excess on a GAP insurance product.

Example of GAP Insurance cover in the event of a total write-off

A vehicle is a total loss due to an accident, fire or theft.

$25,000 is still owing on the finance borrowed, yet the comprehensive car insurance payout for the agreed or market value is only $20,000.

GAP insurance can cover the $5,000 shortfall owing to the finance company.

How do I get GAP insurance coverage?

By paying a once-off premium, GAP insurance can provide you with peace of mind for the life of your car finance. You have the option of paying the premium as an upfront lump sum or adding it to the finance on your car (only available on commercial finance products).

Check out of INSURE ONE for further details.