Do I need GAP Insurance?
November 22, 2016
In a nutshell GAP insurance covers the depreciation which will affect your Mk3 Focus RS value, following a total loss.
If your car is declared a write off by your comprehensive motor insurer, because of accident, theft, fire or flood damage, they will pay you the market value of your car.
As almost all vehicles are subject to depreciation this figure will, over time, be much less than you originally paid for your vehicle; most vehicles covering an average number of miles will lose around 50% of their original new value in the first 3 years, and 50% again between year 3 and year 6.
GAP insurance protects you from this by covering the difference between the insurer’s payout and either the original amount you paid for your vehicle, how much it costs to replace at the time of the claim with one matching the original at the time of purchase, or your outstanding finance; this depends upon which policy you buy.
What are the different types of GAP insurance?
Return to Invoice +
This policy covers the shortfall between your insurer’s settlement for the total loss and the original invoice price of your vehicle, or the outstanding finance balance whichever is higher at the time.
This policy covers the shortfall between your insurer’s settlement and the replacement cost of a brand-new vehicle (or one of the same age at the time of purchase if not brand new) of the same make, model and specification. Alternatively, we pay up to the outstanding finance balance, if this higher at the time of the claim.
Contract Hire +
This policy covers vehicles which are leased or on contract hire. In the event of a total loss it covers up to 100% of the outstanding rental payments and any shortfall in the market value settlement from the insurer.
We also provide an option to cover the initial rental paid at the start of the agreement. This means that you receive an additional settlement which can then be used on your next car.
Who can buy GAP insurance?
You can buy GAP insurance from ALA if:
- You’ve taken delivery of your vehicle in the last 365 days
- The vehicle is under 10 years of age
- The vehicle has covered less than 80,000 miles (for Vehicle Replacement + only)
- The vehicle is fully comprehensively insured
- The vehicle is not excluded – we cannot cover vehicles used for hire and reward, for example as a taxi/minicab, for driving tuition, delivery/courier work, for off-roading, racing, competitions or rallying.
How much is GAP insurance?
If you have been offered GAP insurance by the dealer where you bought your car you may have thought the premiums were very high.
Buying GAP insurance independently usually means you can save quite a large amount of money – A 3-year Return to Invoice + policy from ALA starts from just £77.00, with most dealer prices being at least £299!
Dealers tend to offer a “one-size-fits-all” policy so buying independently means you can get the right policy for you – With ALA, you have a choice of cover and can select a term of up to 5 years.
You can also transfer your policy pro rata if you change your vehicle early and we never charge an administration fee for transfers or amendments to your policy.
Why do I need GAP insurance?
Imagine your Focus RS is written off because of an accident (fault or non-fault), theft, flood or fire damage.
Without GAP insurance, you will receive a market value settlement for the price of your vehicle – this will be a depreciated value and, if you have finance, it may not be enough to settle the outstanding balance, never mind think about getting your next car.
With GAP insurance, you will have the peace of mind of knowing that the vehicle finance can be cleared and any money remaining is yours to use as you wish.
Here is a true life example, owner Steve Green had his Mk3 Focus RS stolen and was offered £8000 less than what he paid for it even tho it was only several months old and without gap insurance he would have to fork out the shortfall however he was covered with ALA Gap Insurance. For a few hundred pounds we think it’s a worthwhile investment and remember as a member of our club you receive a 12% discount.