Does GAP Insurance Work If My Car Is Stolen?
For many of us, preparing for worst-case scenarios is vital. We save up for emergency funds, get various kinds of insurance covers, and do our best to be ready when life starts throwing punches. As car owners, how do we prepare for car theft? Some car owners choose to get Guaranteed Asset Protection, also known as GAP insurance, to supplement the compulsory auto insurance required to drive a vehicle on UK roads. But does GAP insurance cover work if your car is stolen? What happens if you have no GAP insurance car and your car is stolen? What should you do? Let’s look into it!
What is GAP insurance?
The GAP acronym stands for Guaranteed Asset Protection. As we mentioned earlier, in the event of a "total loss" claim, where the car must be completely replaced, insurance providers will often pay the current market value of the car. Many drivers are left out of pocket by the system, especially since the value of new cars often decreases by 15% to 35% in the first year and by up to 50% or more over the course of three years. And you can see the problem if the car is being purchased or financed, or leased!
If something were to happen to your car, typical insurance would only cover its value at the time of the incident. GAP insurance pays the owner the difference between their insurer's settlement and the purchase price they had to pay for the car, making up for the depreciation of the vehicle. This is particularly useful because cars lose a lot of their value in their first few years of use. GAP insurance is frequently promoted at the point of sale because it usually becomes most useful within the first few months after buying a new car when depreciation is at it's highest.
How much does GAP insurance cost?
For three years of coverage, GAP insurance normally costs between £100 and £300. You can purchase insurance from dealerships, insurance companies, and leasing businesses. Banks, insurance agents, and dealers are prohibited from selling GAP insurance concurrently with the purchase of a vehicle and are required to wait two whole days before doing so. This gives you time to shop around on comparison websites where you can usually get a much better deal.
Do I need GAP insurance?
Although it won't make sense for everyone, GAP insurance is something that can be really beneficial and which is therefore well worth considering, especially when buying a brand new car. In general, GAP insurance will most likely be worth your while if you’re in one of the following circumstances.
If You Have an Existing Debt on a Car
If you purchased your car with a sizeable existing debt, you may want to think about getting a GAP insurance cover. In the event that your car is stolen or irreparably damaged, GAP insurance may be able to cover the remaining balance of your loan, allowing you to stop making payments.
If You Want to Cover Loss in Value
You’re worried that your car may lose value. After a total loss accident, your insurer will pay less than what you purchased for your automobile, depending on how quickly it loses value. With GAP insurance, you'll receive extra money to make up the difference.
If You're Leasing a Car Long-term
You have a long-term lease on your car. A write-off might leave you without a car and with a charge for thousands of pounds if you have a long-term rental agreement for a car with a mileage allowance. GAP insurance can offer some defence against it.
What to Know Before Buying GAP Insurance
Before you purchase a policy, GAP insurance dealers are required to disclose the sum of the GAP insurance premiums, the duration of the policy, the characteristics, advantages, and restrictions of the product that can be purchased from independent vendors elsewhere, whether the purchase of GAP insurance is required or is just an optional extra.
Dealerships are not permitted to sell you Gap insurance the same day they sell you a vehicle. Unless you want to waive the waiting period, there must be a minimum two-day pause. If you do decide to wait for two days or more, the provider needs to go through the specifics of the policy once more. You must decide whether to waive the waiting period; the dealership cannot propose it.
Will GAP insurance cover my stolen car?
Does GAP insurance cover stolen vehicles? If you need to report your car is stolen and never found and finally declared a "total loss," your GAP insurance policy will offer coverage. Your GAP policy will also pay out if a stolen car is discovered but has suffered severe damage and is no longer roadworthy. Car theft is on the rise again in the UK, so try to look after your keys and definitely lock your car as you leave it! Keep in mind that tour insurance won't cover it if you leave it unlocked! Don't let your lovely, precious car be one of the many stolen cars of 2023!
GAP Claim vs Car Insurance Claim
A GAP insurance claim is made in a somewhat different way than a typical auto insurance claim. The first thing you'll need is for your auto insurance provider to declare your car a total loss. Before accepting a claim payout and once it has been verified, you should contact your GAP provider. You can usually find a deadline in your GAP policy documentation for when you should get in touch with them.
Will GAP Insurance pay my outstanding finance?
Even if you purchased the GAP policy simultaneously with your finance or leasing agreement, GAP policies would not automatically pay off any outstanding finance you owe unless you make a claim. You can get in touch with the Financial Ombudsman Service if you believe a GAP insurance claim hasn't been handled correctly.
Your car won't be completely replaced by GAP insurance. Depending on the kind of insurance you get, it will instead guarantee that you have the money you need to pay off your debt or buy a replacement vehicle of the same brand and model. Additionally, it could fill the GAP between the amount your primary insurer has paid and the price you originally paid for the vehicle.
Steps to Make a GAP Insurance Claim
If you want to file a GAP insurance claim, you will have to follow a few steps. Let’s go through them.
Submit a Claim
Submit a claim to your auto insurance to have your car declared a total loss.
Compare Offers First
Before accepting any settlement offers from your auto insurance carrier, speak with your GAP insurance provider. They might give you a better quote.
Prepare Necessary Papers
Fill out and send back any claims forms they provide you. You could be required to produce any additional materials your insurer requires, such as your MOT certificate.
Know Your Rights
You have the right to make an appeal if your claim is denied or the resolution of your claim dissatisfies you.
The Bottom Line
Most GAP insurance subscribers will have done so in a vehicle dealership because it is frequently given as part of the package of "extras" that salespeople will try to get you to purchase. But bear in mind that dealers may no longer sell you this until you have had the car for two days.
The best place to purchase GAP insurance is probably not from your dealership though. Online, it is frequently available for far less money, either directly from brokers and insurers or through price comparison websites. The Financial Conduct Authority (FCA) established guidelines in 2015 out of concern that dealerships were offering costly GAP insurance to consumers.