Who should and should not buy a gap car insurance?

Gap Car Insurance covers the difference between what the car is worth and what you owe on the car. It comes into play if the car is stolen or totalled (damaged to the point that repair would cost more than the car is worth) while the owner is still making payments.

The three main insurance types

• Finance Gap Insurance – covers the gap between the total loss offer of your insurer and the total you still owe to your creditors. This kind of insurance is often offered by car dealers.

• Return to Invoice Gap Insurance – covers the difference between the total loss offer from your insurer and the original price you paid for your car as listed on the invoice.

• Vehicle Replacement Gap Insurance – allows you to purchase a new car by bridging the gap between the total loss offer from your insurer and the latest market cost of a new car. This helps account for fluctuation in the price of new cars.

Car Insurance Covers – Gap

1. Bought within 3 months of delivery

This covers the shortfall between primary insurer’s settlement and either:

• The original invoice price
• A new replacement for old
• Finance outstanding

Eligibility

• New and used vehicles up to five years old at the start of the policy
• Cars and vans owned outright, on finance or leased
• Trucks on finance or leased
• Motorcycles owned outright or on finance
• Motor homes owned outright or on finance
• Policies must be bought within three months of delivery

2. Bought after 3 months of delivery
This covers the shortfall between primary insurer’s settlement and Parker’s ‘Private Good’ valuation. Eligibility

• Used cars and vans up to ten years old at the start of the policy
• Vehicles owned outright, on finance but not leased
• Any type of general vehicle insurance accepted (including third parties)
• Policies can be bought at any time after delivery

Who needs Gap Car Insurance?
If you purchased or leased a new vehicle and weren’t able to afford a large down payment, you may need gap insurance.

One thing to remember if you’re leasing a vehicle: Often, leasing companies include gap insurance or loan/lease payoff coverage in their contracts, so make sure you review your contract before you purchase it from your auto insurance company.

Who should not buy gap insurance?

Car buyers who have arranged their down and monthly payments so as to ensure that they won’t be “upside down” on the car for any significant period of time.

Find more about Gap and other insurance products at Auto Trader’s Car Insurance Center